Complete Guide on the Minimum CIBIL Score For Home LoanPosted on November 22, 2019
Purchasing a home or an apartment from a reputed builder in Calicut is the dream of every citizen because it will not only give you security and satisfaction but also will uplift your status in society. A well-planned and decorated home is appreciated by everyone. As the property value is rising hurriedly these days, it won’t be possible for you to purchase a home or apartments in Calicut using your cash. That’s why you need to take a home loan to build up your personal assets. There are many banks or financial institutions who will help you in taking home loans for your home or apartments. But your credit score plays an imperative role in getting a good home loan with favourable rates. What is this credit or CIBIL score and what is the minimum CIBIL score for home loan?
- 1 What is a CIBIL Score or a Credit Score?
- 2 Benefits of Having a Good Credit Score
- 3 Mistakes That Can Spoil or Lower Your Credit Score/CIBIL Score
- 4 How Can You Improve Your CIBIL Score/Credit Score For a Home Loan?
- 5 How Do Lenders Use Your Credit Score?
What is a CIBIL Score or a Credit Score?
A credit score or CIBIL score is a three-digit number that summarizes your entire credit history. The value of a credit score or CIBIL score is between 300 to 900. Based on your credit history, your CIBIL score is prepared. This score includes all secured or unsecured loans and debts that you had or may have. You can also get some ideas on property documents required for home loan.
By giving a nominal fee, you can easily get your credit report and CIBIL score. You should always know your CIBIL score or credit score before applying for a home loan. A credit report can be prepared by using the following information.
1. Record of credit that is sanctioned by the banks or financial institutions to you
2. Your record of repaying loans and credit card bills.
3. Late payments or any credit default held by you.
4. Loans and credit cards which you are holding presently
5. Recent and detailed information about loan
6. Credit card applications that you have submitted
Minimum CIBIL Score For Home Loan
Your CIBIL score plays a pivotal role in your home loan application process. Based on your CIBIL score, a bank will decide whether you are eligible for a home loan or not. Once you have submitted your home loan application, the bank will check your CIBIL score and credit history. If your CIBIL score is low and credit history is bad, the bank can reject your home loan application. On the other hand, if your CIBIL score is good, you will quickly get the home loan. The range of CIBIL score is between 350 to 900. You need to maintain a minimum credit score of 750 if you are looking for a home loan. Because credit score between 350-750 is considered average and your application may not be accepted by the banks or financial institutes. A credit score below 350 is considered poor. If your score is nearer to 900, the banks and other financial institutes consider you as a trustworthy person and you have the capacity to repay your loan. In this case, the bank will quickly process your loan application. You can also checkout the best ways to increase home value.
Benefits of Having a Good Credit Score
Let’s take a look at what are the benefits that you will get if your credit score or CIBIL score is good.
Higher Chances of Loan Approval:
If your credit score is good, then this will automatically enhance the chances of loan approval. This is because the lenders have full faith in your capacity and willingness to repay the loan amount. Moreover, if your CIBIL score is impressive, you can also expect quick processing of your home loan application.
Enhanced or Improved Borrowing Ability:
If your credit score is good, it will improve your chances of getting the loan application. Not only this but also you could get a slightly larger loan amount if you required.
Better Negotiation with the Lenders:
A strong credit score will give you the power of negotiation with your lenders. You can expect lower interest rates from the lenders and also, there is a chance of waiving of processing fees and other charges.
Mistakes That Can Spoil or Lower Your Credit Score/CIBIL Score
Your credit score/CIBIL score is the first impression as a customer in front of your lenders. A good credit score will help you to earn many benefits from your lenders. So, you should always try to maintain a healthy credit score by avoiding the following mistakes. Also read what are the economic factors affecting housing market.
1. Delay or Default in Repayment of the Loan Amount:
Timely repayment is an important criterion that you should maintain when you are borrowing an amount from your lender. Every time you should repay your loan amount within the stipulated time. Any late payments or default in repayment of loans will certainly make a negative on your credit score and credit report. Credit bureaus consider the payment history associated with different types of loans and dues such as
- Bank loans
- Car loans
- Housing loan
- Credit card bills
- Utility bills
- Other payment (telephone bills, electricity bills, premiums, etc.)
2. Higher Utilization of Borrowed Funds:
If your debt is very high and you are very much dependent on borrowed funds, then this will reflect poor financial health status. It will create an adverse impact on your credit score/CIBIL score.
3. Frequent Loan Application:
If you apply frequently for a loan or if you go for multiple enquires, then also your credit score goes down. Because this increases credit risk and minimizes your overall credit rating. In this case, your lenders get cautious while processing your loan application for a home loan.
How Can You Improve Your CIBIL Score/Credit Score For a Home Loan?
Knowing your credit score will not help you to avail a home loan from banks or any other financial institutes, you can also rebuild or improve your credit score. Improved credit score will enhance your eligibility for getting a home loan or housing home. Here, we are mentioning some tips that you should follow to improve your CIBIL score. Take a read on the important future home technologies that are most likely to be part of our homes soon.
- Always try to make all your payments on time and pay the entire due amount. Because part-payments will be considered as overdue in your credit report. And, banks and other financial institutes won’t appreciate any late or default repayment.
- Never use your entire credit limit. Always check your credit utilization and try to keep your outstanding balances low. Because this will help you to get a good credit score/CIBIL score.
- If possible, monitor your accounts (both single and joint accounts) regularly to ensure that no payment is skipped at the end of the month.
- Track your credit score and credit history by accessing your credit information reports. Monitor everything from time to time and rectify any error.
- Instead of having too many unsecured loans, always try to maintain a balanced combination of secured and unsecured loans. This will uplift your credit score and will enhance your eligibility.
How Do Lenders Use Your Credit Score?
In earlier days, the banks and other lenders need to make a partly subjective internal assessment and used to do a background check to sanction your loan process. But now using credit score/CIBIL score and a credit report history, it has become easier for the lenders to access accurate, data-based credit information of the applicant.
- CIBIL™ has a database which comprises all the credit-related activity of the customers. This is used to calculate the credit score of an individual person.
- If your credit score is low (below 700), the lenders might see you as a high-risk customer who had a history of defaulting on payments. In this case, they might not approve or reject your loan application.
- If your credit is good or impressive, the lenders will see you as a low-risk customer with a low probability of default. In this scenario, they will sanction your loan with attractive terms and conditions.
- Though there is no fixed limit to maintain a minimum credit score for your home loan application process, still, it is recommended that you need to maintain a score of 750 before applying for a home loan.
These days you may find a plethora of websites from which you can check your credit score before making an application for a home loan. Get some informations on the real estate portals.
A good or healthy credit score/CIBIL score is an important parameter which discriminates disciplined or trustworthy customers from the rest. All lenders prefer those customers who have an impressive and strong credit score because a good credit score minimizes the chances of default payment. By making your repayment on time and avoiding excessive use of credit limit, you can improve your credit score. But you should try to maintain a minimum CIBIL score for home loan to accomplish your dream.
PVS Builders & Developers is one of the most renowned builders in Calicut and provides some of the most efficient apartments in Calicut, Kannur, and Aluva. If you are looking for flats in Calicut with some of the best features and high-quality amenities then contact us today or visit our website for more information on our latest apartments in Calicut.