A credit score is a numerical score of an individual that determines whether and how much a person is reliable in returning or repaying a loan amount. It represents one’s creditworthiness. A good CIBIL score for a home loan is 750 or above.
What is a CIBIL score?
CIBIL score is a credit score provided by the credit bureau TransUnion CIBIL. It generally ranges from 300 to 900.
The CIBIL score is an RBI authorized credit score system used in India along with others like Equifax, Experian, and Highmark. The score is a part of your credit history, which is a statement of all your credit transactions and loan repayments.
There are several factors that influence a CIBIL score. It is important to know the impact of the CIBIL score before applying for a loan.
The relation between CIBIL score and loan approval
Every NBFC or lending institution has its own parameters or criteria to approve a certain amount of loan. The RBI guidelines have made it mandatory for all lenders to check the CIBIL score of every applicant before sanctioning a loan.
To avail a home loan, a CIBIL score above 750 is considered a high score. The higher the CIBIL score, the more are your chances of availing a home loan. On the other hand, if the score is below 650, it needs to be improved.
Having a good credit score makes you eligible for Home Loans from NBFCs like Bajaj Finserv. The company provides up to Rs. 3.5 Crore with tenors up to 20 years.
They also bring pre-approved offers that make the process of availing finance convenient and help save time. These offers are available on home loans, business loans and personal loans along with several other financial products. You can check your pre-approved offer by providing a few essential details like your name and contact details.
How to improve the CIBIL score?
If you have a low CIBIL score, there are several ways you can improve your home loan eligibility.
Learn how to improve your CIBIL score by following the steps mentioned below –
Clear unpaid dues – Pay your bills on time. If there is any kind of on-going credit or loan, repay it first before applying for a new loan.
Resolve discrepancies – Even lenders can make mistakes. Report errors and make sure to resolve any sort of discrepancies before a 30-day period as this might affect your CIBIL score for a home loan.
Timely clearance of EMI – While buying a car or a house, pay your EMIs on time. If you defer the credit, it reduces your CIBIL score, which affects your chances of applying for a new home loan. Before applying for a new home loan, know how credit scores can determine your home loan EMIs.
Don’t throw away old cards – If you are not using an old credit card, refrain from closing the account. A well-maintained credit card account has a significant impact on your CIBIL score.
Maintain a credit utilization ratio – Maintain your credit utilization ratio to 30% or less as it lowers your monthly balance and improves your CIBIL score.
For the first time loan seekers with no credit history, you will obviously have a low CIBIL score. You can build your credit history with time. Repay your loans in time and improve your home loan eligibility.
Also, in case your credit score is lower than the loan amount, you can apply for a joint loan. In this case, the co-applicants CIBIL score for a home loan must be high.
Similar Read: Know the Ideal CIBIL Score for Availing a Home Loan