Achieving the Ideal CIBIL Score for a Successful Home Loan

The Reserve Bank of India (RBI) has authorized four credit information bureaus in India: CRIF Highmark, Experian, Equifax and TransUnion CIBIL. The RBI closely monitors the working of these four credit information agencies.

TransUnion CIBIL is the oldest credit information bureau in India. It has been operational in the country since 2000 and it maintains credit records of over 600 million individuals. The majority of lenders approach TransUnion CIBIL when they wish to enquire about a loan applicant’s creditworthiness. The credit score that TransUnion CIBIL assigns borrowers is called the CIBIL score. To avail of a home loan on the most beneficial loan terms and conditions, an individual must have a CIBIL score of 750 or above. A CIBIL score below 750 takes away one’s negotiating power, compelling people to accept loans on terms and conditions unfavourable to them.

Do not feel disconcerted if you do not have a good CIBIL score for a home loan. Here are a few simple things you can do to improve your CIBIL score and increase your chances of loan approval on the most beneficial loan terms and conditions.

1. If you are trying to improve credit score, one of the first things you must do is review your credit reports frequently. As previously stated, TransUnion CIBIL maintains records of over 600 million credit users. So, sometimes, information gets mixed up. If you have a low CIBIL score even after doing everything right, you must check your CIBIL report to ensure no errors.
2. Being excessively dependent on credit or coming across as a credit-hungry person won’t work in your favour. Having a high credit utilization ratio will make your lender and credit information agencies perceive you as a credit-hungry individual; so will having too many hard enquiries under your name. So, if you want to build and maintain an excellent credit score, one of the first things you must do is make sure your credit utilization ratio does not exceed 30%. This is only possible if you pay the entire amount due on your credit cards each month. More importantly, do not apply for too many loans and credit cards at the same time. If you get rejected, wait at least a few months before making another loan or credit card application.
3. Many people make the mistake of closing old loan accounts and credit cards. One should refrain from making this mistake. The age of a person’s credit history has a direct impact on their credit score. The older a person’s credit history, the higher their credit score. Closing old loan accounts and credit cards will cause your credit history to get permanently deleted, which in turn, will not work favourably for your CIBIL score. So, always maintain all old loan accounts and credit cards.
4. Lastly, never be late on your EMI and credit card payments. While missing one or two EMIs won’t have a devastating impact on your credit score, constantly missing EMI and credit card bill payment due dates will cause your credit score to go down by a considerable margin.

Maintaining a high credit score is quite easy if you are someone who practices financial discipline and is not excessively dependent on credit.