Know the Ideal CIBIL Score for Availing a Home Loan

A prospective borrower’s creditworthiness is judged by the lenders with the help of his/her credit score. The four authorised credit bureaus that provide this information are Equifax, Experian, CRIF High Mark and CIBIL. Of the four, CIBIL is considered the highest authority. 

A credit score is a number within 300-900 used by financial institutions. An above-par CIBIL score for home loan usually needs to be higher than 700. A high CIBIL score makes a positive impact on the lender. 

Credit Information Report (CIR)

The CIBIL score is calculated based on one’s Credit Information Report (CIR). It contains all the information about the credits that an individual has availed over time, such as home loans, automobile loans, credit cards, etc.

Follow the Steps Below to Know Your CIBIL Score

  1. Fill the relevant form in CIBIL’s website.
  2. Details like contact number and address are required.
  3. The user is required to pay a nominal amount as a fee to know their CIBIL score and CIR.
  4. After payment and submission of the fee, the user can refer to the CIBIL score and CIR attached intimated via email.

How to Maintain a Satisfactory Cibil Score?

  • Making payments within the due date is important. Late payment or failure to repay will hurt your CIBIL score for home loan or any other such loans.
  • A mix of both secured and unsecured loans will create a positive impression while too many unsecured loans may have a negative impact.
  • Revision of credit history is vital before an important financial transaction.  
  • Jointly owned and co-signed accounts need regular supervision. Joint or co-applied individuals are held liable for missed payments or defaults on such loans or credit card accounts.

It is vital for a borrower to know the impact of CIBIL score on home loans. A positive CIBIL score is important when you are applying for a loan. It affects both loan approval and loan amount. Unlike credit cards, it is mandatory for the CIBIL score for a home loan to be at least 750. Lower credit score may result in rejection of the loan. Apart from a high CIBIL score, there will be factors affecting home loan eligibility

Some of these include – 

  • Self-employed individuals within the age group 25-70 can apply for home loans from those institutions. Salaried applicants need to be within the age group of 23-63 years.
  • Salaried individuals with a work experience of 3 years can easily apply for home loans. Self-employed applicants can apply only when they have been conducting business for five years.
  • Income is one of the most crucial factors besides CIBIL score that decides whether a person is eligible for a home loan or not. 

Additionally, one’s income also plays an important role in deciding the loan amount. However, the minimum salary requirement may vary from city to city and between lenders.

  • Borrowers who are Indian by birth or residing within the country are eligible for a home loan.

How to Improve Home Loan Eligibility?

  • Longer tenor will mean increased time for the borrower to repay his/her loan fully. It will also be less risky for the lender. Hence, there are higher chances for the lender to approve your home loan.
  • Foreclosure or part pre-payment of existing loans before applying for a new home loan will also increase the chances of being eligible. 
  • Applying for an amount that lowers the LTV of a home loan will make an individual more eligible. 
  • Adding another source of income will also increase the applicant’s chances. 
  • Opting for a loan at an early age can make the customer more favourable to the lenders. These are several reasons why the 20s are the ideal time for taking a home loan.

Applying for a home loan may be one of the toughest decisions an individual has to make. Consider the above steps to know your ideal CIBIL score for home loan. Implement them to increase your home loan eligibility and buy your dream home.

Priya Bagga