Unlocking your Dream Home: Ideal CIBIL Score for Home Loan Approval
A person’s credit score is a crucial factor in determining their eligibility for a home loan. It is a key consideration for lenders when they decide whether to approve an application. The CIBIL score, a 3-digit number ranging from 300 to 900, reflects a borrower’s creditworthiness and repayment behaviour.
A score of 750 or more is generally considered an ideal CIBIL score for a home loan. Lenders use this score to assess credit risk. An ideal cibil score indicates a lower-risk borrower who is likely to repay on time. On the contrary, a poor score suggests a higher risk for the lender.
What is the CIBIL score?
A CIBIL score, ranging from 300 to 900, is a numerical summary that represents the creditworthiness of a borrower. Authorised by the Credit Information Bureau (India) Limited and licensed by the Reserve Bank of India, it is a crucial factor for lenders when considering a home loan application. The score reflecting an individual’s credit and repayment history provides a clear picture of their creditworthiness.
What is the minimum CIBIL score for a home loan?
The minimum credit score one needs to get a home loan sanction varies from lender to lender. However, to get a home loan with a score of 650 and below is very difficult. The higher this score is, the better the chances.
What is a good CIBIL score for a home loan?
Long-standing and reliable financial institutions prefer applicants who have CIBIL scores over 750. For lenders, these applicants are most likely to repay a home loan with no considerable difficulty.
How to improve CIBIL score for a home loan?
These are some of the essential steps one can take to get the ideal CIBIL score for home loan approval:
Checking credit report
One has to review the number of open accounts. Ensuring they are reported as “closed” if they are no longer active and checking the status of each account is crucial. Accounts with a label of “settled” or “written off” can impact one’s score negatively.
If an applicant notices incorrect information, they should raise a dispute. Examining the payment history of every account and looking for any past-due payments is necessary. If one notices anything except “000” or an “XXX” they should address it promptly.
Paying dues on time
Apart from correcting errors, one should always pay dues on time. Agencies examine the repayment histories of individuals while creating credit reports.
To safeguard themselves from delayed payments, one should opt for payment reminders to support their commitment to maintaining a good repayment history. Another option for always paying EMIs on time is setting up automatic payments through net banking.
Keeping the credit utilisation ratio low
It is necessary to keep your credit utilisation ratio between 30% and 40% to maintain a good CIBIL score. To maintain the credit utilisation ratio one has to clear all the dues at the end of the month. In case a borrower’s credit utilisation ratio is high as of now, they can increase the credit limit.
Top financial institutions extend pre-approved offers to existing customers so they can get faster approval for their home loan or LAP application. Interested individuals can check their pre-approved offers by visiting the official website of the financial institution and entering their basic details.
Achieving and maintaining a good CIBIL score, ideally above 750, greatly enhances a home loan applicant’s chances of securing a housing loan. By understanding its importance and working toward an ideal CIBIL score for a home loan, one can pave the way to realising the dream of owning a home.
