CIBIL Score for Home Loan
If you want your home loan to be approved, besides eligibility and selected property, your CIBIL score will be of much help for quick sanction or the same. CIBIL score is the credit reliability of an individual. CIBIL score stands or credit score of a person and that displays the authenticity of a borrower in terms of repayment of loan.
Healthy CIBIL Score or getting home loan sanctioned
An acceptable CIBIL score for home loan usually starts rom 700 upwards. As the score tends to be closer to 850 and more, you will earn better scale of reliability from credit institution that you are capable to repay your home loan with enhanced eligibility. Good CIBIL score is one of the ways to get home loan up to 85% of your property value.
How it is used in Home loan sanctioning process
CIBIL score is used by bank to evaluate credibility of an individual for repaying the loan. When an applicant submits his application, the bank checks the CIBIL score of that individual. CIBIL score consists of credit history and credit score. When credit score is found low and there is bad credit history, the loan application mostly gets rejected.
However, good credit score and positive credit history is not the factor that makes an application through. Rather, positive CIBIL score makes an application eligible for sanction and it processes the loan application in further level. There is no specific score designated for getting home loan sanctioned, however A-category banks prefer to have 750 and above score good for sanctioning the home loan and 350 or below as negative profile.
How to know CIBIL/Credit Score?
You will get your CIBIL score online against a fee, which is prepared based on your credit history. A credit score will contain information about:
- Record of credit you have availed so far.
- Repayment track for loans and credit card bills.
- Your history of late payments and defaults on past credit.
- Loans and credit card(s) presently hold by you.
- Recent info about loan and credit card applications submitted by you.
Steps you should follow when applying for a Home Loan
By following a few tips you can use your CIBIL score for sanctioning your opted home loan. These are:
Check the CIBIL score before applying
Know your credit score before applying for a home loan so that your credit history and personal details are in order to avoid the risk of rejection from bank. You may buy your credit report online from the CIBIL site by paying a nominal amount of Rs.560.
Stop applying repeatedly:
If your credit score is found lower than benchmark and your home loan application gets rejected by a particular bank, don’t apply further. This may decrease your credit score as different banks raising enquiries on an individual’s credit rating is observed with negative effect.
Limit your unsecured loans:
Try to close or limit you unsecured loans such as personals loans and credit cards with high credit limits. These loans are indicators of outstanding debt. Banks calculate and take in consideration debt to income (DTI) ratio before sanctioning a home loan. A higher DTI indicates that you are unable to invest your complete eligibility due to over burden of other loans.
How to improve your CIBIL score for a housing loan?
Thankfully there are ways to improve credit score for enjoying its advantage.
- Make all your payments on time and pay the entire amount due. Part-payments will be recorded as overdue in your CIBIL report and late payments are not appreciated by banks.
- Never use your entire credit limit. More you will get a check on your credit utilization and will keep your outstanding balances low, your credit score will go up.
- Monitor your single and joint accounts frequently so that no payment is missed.
- You should keep a track of your credit score and history by accessing your credit information reports from time to time and rectifying errors, if any.
- Instead of having unsecured loans, you may use balanced combo of secured and unsecured loans. It will help in improving credit score.
These are the points you need to remember about your CIBIL score. Once you maintain good repayment track records, your CIBIL score will help you in getting your home loan sanctioned.