Your CIBIL score is a critical determinant of the direction your home loan application might take. While a good score expedites the approval process, a less-than-ideal score can be a challenge. Understanding your CIBIL score for a home loan enables better assessment of loan eligibility and availing viable interest rates as it demonstrates your ability to manage long-term credit. In this article, we unlock the secrets of this three-digit number that can directly make and mar your housing loan prospects.
Understanding CIBIL Scores
In India, there are four credit bureaus authorised to maintain credit information. These are TransUnion CIBIL, Equifax, Experian and CRIF HighMark. Whenever required, they generate an extensive Credit Information Report (CIR) detailing your credit history, current loans and credit card balances, late payments, defaults and other relevant information. Based on this data, they calculate credit score and assign a number to each report ranging between 300 to 900. Thus, credit scores are a numerical summary of your credit history.
Significance of CIBIL Score for Home Loans
The table below indicates the different ranges of credit scores and what they denote for prospective borrowers:
Credit Score Range
|Less than 300
|300 – 550
|Very poor score
|551 – 620
|621 – 700
|701 – 749
|Good credit score
|750 – 900
NH or NA – When a person holds no credit history, their status is represented as NH or NA.
300 to 549 – Lenders are wary of extending loans to such applicants considering them high-risk due to adverse credit history.
550 to 649 – Credit scores in this range are regarded as average and may require remedial measures.
650 to 749 – Although viewed as a good range, lenders may examine other eligibility aspects and financial information before granting approval.
750 to 900 – This is the accepted CIBIL score for home loans. Such applicants enjoy smoother loan sanctions and negotiation leverage.
Impact of CIBIL Score on Home Loan Eligibility
Credit scores are a vital indicator of financial health and credit worth, which showcases your ability to handle debts. This is why banks and financial organisations look at credit scores when evaluating loan applications. While the minimum CIBIL score requirement varies among lenders, lower scores impede loan eligibility whereas higher scores raise your chances. Regardless, the final decision to grant credit will be influenced by a combination of numerous other factors such as your age, income, ongoing debts and commitments, etc.
Can a Good CIBIL Score Give You Lower Home Loan Interest Rates?
CIBIL scores impact not just loan eligibility but also the interest rates that you receive. Higher scores mean promising interest rates, smaller EMIs and manageable borrowing costs. On the other hand, low-score applicants might face heavier credit costs with bigger interest rates and stricter terms.
How to Check CIBIL Score Online
Individuals may initiate online CIBIL score checks through the official portal of any credit bureau. Every user is entitled to one free credit report annually. Anything beyond that will require a specific fee payment. Several lending companies also allow you to freely access credit scores on their websites.
Here, we run through the basic steps to receive CIBIL scores using the TransUnion CIBIL portal:
- Click and open the concerned application form
- Enter your personal details and credit information as asked
- Provide details of your PAN card
- Pay the requisite fee if you have previously availed of the free report
- You will then be sent to an authentication page
- Upon submission, you will receive your updated CIBIL score via email within a day
Enhance Your CIBIL Score for Home Loan
If you possess unfavourable credit scores and wish to take a home loan, it may be wiser to work on raising the score first. This can be done by inculcating responsible credit behaviour in the following ways:
- Make prompt payments of your bills and EMIs
- Always strive to pay off the whole amount owed rather than just the minimum sum
- Apply for new loans or credit only when necessary
- Lower credit usage; maintain credit limits under 30%
- Ensure a healthy mix of secured and unsecured loans in your credit portfolio
- Retain older credit accounts to build a longer credit history
Possessing the right CIBIL score is the main element in acquiring the best house loan offers. It is an important measure of your creditworthiness and financial responsibility. Since higher scores spell advantageous rates and larger loan amounts, monitor your credit score regularly to safeguard against falling scores and potential errors.