CIBIL Score for Home Loan: How to Check and Improve CIBIL Score?
CIBIL score is one of the first criteria lenders check to process home loan application. CIBIL score or credit score is generated by the TransUnion CIBIL (Credit Information Bureau of India Limited). It’s a 3-digit summary of an individual’s credit history that ranges between 300 and 900. The higher the CIBIL score, the greater the chance of home loan approval. Ideally, lenders prefer applicants having a CIBIL score of 750 or above? But, what would be the minimum CIBIL score for home loan?
This post discusses the minimum score you need to get a home loan, the importance of CIBIL score and how to improve your CIBIL score. Read on!
What is the Minimum CIBIL Score Required for Home Loans?
A minimum CIBIL score of 700 to 750 is considered good CIBIL score for a home loan and getting a home loan approved faster. Many financial institutions have set up 650 as the minimum CIBIL score for home loans, however, having a score of 750 or above is ideal for home loans, as it gives you the negotiating power to secure favourable terms. With a high credit score, you can also enjoy lower home loan interest rates (solely at the discretion of the lender) with up to 90% LTV (Loan-to-Value Ratio).
Lenders consider CIBIL score between 300 to 549 to be poor and usually reject a loan application of individuals falling under this bracket. Scores from 550 to 649 are average scores and can help get a loan approved if the applicant meets other eligibility criteria. But barely meeting the mark could mean negating favourable terms and conditions. Meaning you could still get a home loan but the interest rates could be much higher.
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How To Check Your CIBIL Score?
You can check your CIBIL score for home loans once a year for free or multiple times by paying a certain charge. Follow the given steps to check your credit score:
- Visit the official website of TransUnion CIBIL
- Click on ‘Get your CIBIL score’ on the top right corner of the screen.
- Choose one of the given plans to subscribe to CIBIL. With a paid membership, you can constantly monitor your credit score, get daily updates and alerts and tailored loan offers.
- If you want to check your CIBIL score for a home loan for free, navigate to www.cibil.com/freecibilscore.
- Click on ‘Get your free CIBIL score’ and then ‘No thanks’ when presented with the subscription plans.
- Enter your email address, mobile number, name, and PIN code. Next, select an ID type for identity proof and enter the ID number. Click on ‘Accept and Continue’ to create a new account on CIBIL.
- Enter other personal details like your address, date of birth, Aadhaar number and PAN.
- Next, enter the OTP sent to your email or phone number. Afterwards, you will be asked to verify your loan account details, credit card information, etc.
- Finally, you can get your CIBIL score and report.
What is the Importance of CIBIL Score for Home Loans?
CIBIL score plays an important role in determining whether an applicant’s loan application will be accepted or rejected. Since home loans are usually long-term advances usually with repayment tenures going up to 30 years, lenders will make every effort to know about your repayment capacity before approving a loan. A good CIBIL score makes you eligible for a high-value loan with lower interest rates. At times, if you have maintained an excellent credit history and CIBIL score for a long period of time, banks/NBFCs could offer you home loans at interest rates lower than the advertised rate.
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Benefits of Maintaining a High CIBIL Score
Following are some benefits one can enjoy by maintaining a high CIBIL score:
- Having a good CIBIL score for home loans translates to higher chances of loan approval.
- Can help you get the best interest rates from the lender.
- You can get quick access to other credit products like personal loans, credit cards, etc.
- Helps you negotiate with the lender for better terms and conditions (lower processing fee, maximum tenure, etc.
- Can help you get special offers and discounts on loans.
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How to Improve CIBIL Score for Home Loans?
If you have a bad or average credit score, you can improve it to get your loan processed. Follow the given tips to improve your CIBIL score:
- Make sure to pay your dues on time as lenders view late payments negatively.
- Not utilising all of your total available credits and maintaining a low credit utilisation ratio.
- Seeking new credit in moderation also keeps your credit score from dropping.
- Regularly monitoring your CIBIL score and filing reports rectifying any errors.
- Maintaining a healthy mix of credit with both secured and unsecured finances.
- Not making multiple loan applications with several lenders at the same time.
- Always repaying all debts in full.
Final Word
Financial institutions prefer applicants with high CIBIL scores for home loans as they carry low lending risks. With a high credit score, you can enjoy not only fast loan approval but also favourable loan terms. With lower interest rates, you can save substantially, while a longer tenure makes the repayment easier.
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FAQs
Ans: A minimum credit score between 650- 750 is good for being eligible for a home loan. The minimum credit score may vary depending on the lender.
Ans: Yes, the CIBIL score affects your home loan eligibility. If you have a CIBIL score above 750, the chances are higher that you will qualify for the home loan at a lower interest rate. On the other hand, a low CIBIL score will reduce your chances of home loan eligibility. Also, you will be offered a home loan at a higher interest rate.
Ans: You can check your credit score online for a home loan. Visit the official website of CIBIL and enter your name, date of birth, ID proof, address, loan history, etc. After submitting this, you will be directed to a payments page. A minimum fee of Rs. 470/- will be charged. Next, you will be directed to the authentication page that contains 5 questions about your credit history. Answer at least 3 of them correctly to get your credit score mailed to you at your home address within 24 hours. If you fail to authenticate, then fill in the hard copy and send it to CIBIL.
Ans: Usually, lenders prefer a CIBIL score of 750 or above for home loans. However, you can still get a home loan if you have a CIBIL score of 600 or less. Let’s say you are taking a joint home loan with your spouse having a CIBIL score of 850. In such a situation, the lender may consider giving you a loan considering the average credit score between you and your spouse is above 700. Hence, it’s advised to take a joint home loan if possible, to increase the loan approval rate, especially if your spouse has an above-average credit score.
Ans: The minimum CIBIL score for a home loan is 700-750. However, if your CIBIL score is not that high, you may have a co-applicant or a guarantor to get a home loan approved easily.
Ans: To avail of a home loan without a CIBIL score, check with the nearest cooperative bank. However, the interest rates will be high in cooperative banks. You may also get a personal loan from the bank you have a salary account in and use the amount for the purpose of buying/renovating your house. The last option is to get a loan from private lenders. However, the interest rates will be higher.
Ans: A credit score of NA(Not Applicable) or NH (No History) for someone can mean one of the following things.
If you do not have a credit history.
If you have had zero credit activity for several years.
If you only have add-on credit cards.
Ans: Yes. But it is difficult to get a loan with a low CIBIL score. And if you do get one, it could come with high-interest rates or other unfavourable terms.
Some of the factors that can affect your CIBIL score:
36 months of credit history
Duration of existing credit
The trend of outstanding balances
Repayment amount
The total amount of loans
Transaction history of credit cards
Number of enquiries
Ans: You can get a home loan without a CIBIL score from the cooperative banks. However, you will be paying a higher interest rate. You may also get into a home loan-like agreement with your parents/family members/friends. A personal loan from a bank that has a tie-up with your employer/company. A guarantor who has a good CIBIL score can also help you get a home loan without a CIBIL score. The last option could be borrowing from private lenders. However, the interest rates could be sky-high.
Before you go…
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Disclaimer: This article has been prepared on the basis of internal data, publicly available information and other sources believed to be reliable. The information contained in this article is for general purposes only and not a complete disclosure of every material fact. It should not be construed as investment advice to any party. The article does not warrant the completeness or accuracy of the information, and disclaims all liabilities, losses and damages arising out of the use of this information. Readers shall be fully liable/responsible for any decision taken on the basis of this article.
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