CIBIL is the credit record of every Indian citizen, which the Reserve Bank of India authorizes. If you apply for a home loan, CIBIL score determines whether you are eligible for the loan or not. You can check your CIBIL score on the CIBIL website once a year for free. You can visit the site several times to check the score at a nominal fee. The score is based on the credit history, and the three-digit number comes between 300-900.
What is the minimum CIBIL score required for the home loan?
The minimum CIBIL score should be more than 550. However, it varies from lender to lender. Usually, a score below 550 is considered bad, whereas a score above 750 is deemed excellent. A score between 650-750 is considered to be good. You get a good chance of home approval if the CIBIL score is above 650. However, a low CIBIL score does not mean that the home loan won’t get sanctioned but has to furnish more financial documents and a credit-worthy guarantor for home loan approval.
Benefits of high CIBIL score
A high CIBIL score gives you the option to choose and pick lenders as you are eligible for home loans. On the other hand, a high CIBIL score means bigger loans. Also, shorten the documentation process because a high score assures lenders that you can repay the loan. In addition, you are also eligible for lower home loan interest rates.
Steps to check credit score online
- Log in to the official CIBIL website.
- Fill up the form asking for details like birth year, address proof, past loan history, and relevant data.
- After filling the form, choose the mode of payment to get the credit report.
- After the payment, five questions are asked related to credit history. At least three questions must be answered correctly to prove your identity with CIBIL.
- Reports are sent via mail within 24 hours.
Factors that affect CIBIL score:
1.Types of credit and duration- Credit history is based on the number of years passed since opening the first credit account. CIBIL takes into account the number of years to determine the credit score. The score gets a good boost if a good balance of secured loans like car loans and unsecured loans like credit cards. A healthy credit mix depicts your repayment behavior and considers you the low-risk borrower.
2.Payment history- The score depends on your payment history. Prompt payment of monthly credit card bills and loan EMIs mean a good score. However, if payment is delayed or defaulting on EMIs, the score can be reduced by 100 points.
3.Credit utilization ratio- The score will go down if the credit utilization is high. Ideally, spending 30% of the credit limit is advised, and avoid maxing out the limit.
Conclusion- If you are on a house-hunting spree, check out your CIBIL score before checking out 1 BHK flats for sale in Wakad. Pay your loan EMIs and credit card bills on the due date. Maintain a clean financial record and avoid over-leveraging to give a boost to your CIBIL score.