What is the Importance of CIBIL Score when applying for a Home Loan?
Published: June 28, 2022
CIBIL score can be used to assess an individual’s repayment capacity while availing loans. Most lenders prefer a CIBIL score of 700 and above when it comes to sanctioning home loans in India. It also helps lenders to detect applicants who might default on their loan repayments. If you are planning to apply for a home loan, you must know that lenders do check your CIBIL score while evaluating your home loan application.
Basic Definition of CIBIL Score
CIBIL score is a credit score given to an individual by the credit bureau. CIBIL is authorized by the RBI (Reserve Bank of India) to maintain the credit records of every Indian citizen. CIBIL score is quite important when it comes to applying for a loan.
What is an Ideal Credit Score?
Credit scores have a range of 300-900. The best credit score that an individual can have is 900. However, you can apply for a home loan with a credit score of 750 which is considered quite healthy too. It gives you the ability to look for better interest rates for your home loan. Do note that the minimum CIBIL score for a home loan is 650. If your credit score is less than 650, then it might be a bit difficult for you to get a home loan. Follow these steps to check your credit score:
1) Visit the official CIBIL website
2) Click on Get your CIBIL score
3) Click on Click here to get your annual CIBIL score
4) Enter your personal information and submit a copy of your PAN card and Aadhaar card.
5) Click on continue
6) Enter OTP
7) Check your credit score
CIBIL Score Required for a Home Loan
As mentioned earlier, if you have a credit score of 750, then you should not face any challenges in applying for a home loan. However, it also depends on the lender. With certain lenders, you might still get a home loan with a lower credit score albeit with higher interest rates. Hence, a better credit score implies better interest rates.
How to Improve your Credit Score?
If you are applying for a home loan but have a low CIBIL score, then that needs your immediate attention. There are plenty of ways to improve your credit score. These include: –
1) Check your credit score.
2) Find out why your credit score is low.
3) Start by paying your outstanding debts.
5) Don’t try to get rid of your old accounts; that might have a reverse effect on your credit score.
6) As you continue to pay your outstanding bills, your credit score will automatically improve.
As a thumb rule, you can maintain a healthy credit score by being prompt on your loan repayments. Inculcate this good financial habit so that availing a home loan isn’t bothersome whenever the need arises for it.