You Must Know What is Perfect CIBIL Score for Housing Loan in India
Even though housing loans have become more affordable in the past year, a large section of India’s population cannot avail such credit due to improper eligibility. Most remain unaware of the basic concept related to home loan CIBIL score. Lenders across India use this scale to determine the creditworthiness of a loan applicant. It is essentially an indicator of whether an individual can repay a specific loan amount.
According to a survey, only 52% of the borrowers truly understand what importance the credit score holds in determining loan eligibility. To educate the rest of the population wanting to make use of attractive housing loan schemes, here are some necessary information mentioned below.
What is an ideal CIBIL score for housing loan borrowers?
As mentioned earlier, the three-digit CIBIL score holds utmost importance in determining borrowers’ creditworthiness. Lenders generally set certain eligibility criteria for each loan variant, and meeting those parameters is mandatory to get your loan sanctioned.
A CIBIL score of 750 and above is considered ideal if you are applying for a home loan. However, before applying for such a credit, you should also visit your preferred lender’s website to check how much CIBIL score is good for a home loan as per the company’s internal policies.
To avoid repayment defaults, lenders assess both the credit score and repayment track record of an applicant. It is advisable to keep the score between 750 and 900 to get your home loan application immediately approved.
Additionally, individuals obtain a sizeable amount at lower interest rates with high scores. Borrowers opting for a balance transfer facility to ensure maximum savings on their existing loans can easily avail the most favourable terms. Since the benefits are numerous, you must monitor your credit report and be aware of factors that can affect your CIBIL score.
Which aspects can influence the credit score?
While the overall eligibility factors can differ from one lender to another, the minimum home loan CIBIL score requirement is mostly same for all. It is better to keep maintaining a decent credit score to get prompt loan approvals in case of an emergency situation. In this regard, find the factors mentioned below that can easily affect your CIBIL score:
- Delayed payments
Given the current scenario, it might be challenging to service payments for your existing debts. Inability to repay dues on time is one of the key reasons why borrowers struggle to maintain their credit score.
Lenders generally go through the repayment history, check the home loan CIBIL score to understand how you are handling your finances and if you are ready to take on further financial burden. Making payments after the due date will inevitably impact your credit history. Therefore, try not to get yourself involved in additional liabilities before clearing your existing ones.
- Multiple credit applications
Borrowers generally apply for multiple credit facilities during a financial crunch to arrange funds and tackle the situation. However, it is advisable not to opt for numerous financing options within a short span as that might affect your credit score.
Applying for a home loan in India can be a tedious process if you are not aware of all the basic components. Generally, whenever you apply for a credit facility, that lending institution goes through your credit history by sending enquiry request to credit agencies. That data remains stored in your credit report. Too many hard enquiries at one time lowers your CIBIL substantially, as it indicates a credit hungry nature.
- Considerable CUR
Aspects like the credit utilisation ratio play a significant role when lenders determine your creditworthiness. This ratio refers to the amount available to you as credit against the amount you utilise from the same. For instance, if Rs.2 lakh is available as credit and you end up utilising Rs.1.2 lakh from it, your CUR would be 60%.
Exceeding 50% of your credit limit can be harmful to your CIBIL score since it shows a credit hungry nature. Despite being a secured credit facility, the home loan interest rate in India can be challenging to handle if you fail to meet the basic eligibility parameters, among which is credit score.
- Checking your credit report at regular intervals
Individuals need to keep an eye on their credit score after specified periods. While this does not directly improve the score, it allows one to identify any discrepancies or errors in the report.
Having a high credit score not only helps in getting a convenient repayment schedule it also makes the documentation process smoother while applying for the loan. Apart from keeping the above mentioned factors in mind, you should also be aware of the factors that can improve your home loan CIBIL score. This way, you will not have to compromise on the loan amount or interest charges.
