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Minimum CIBIL score required for a home loan

Minimum CIBIL score required for a home loan

Are you planning on taking a home loan? Well, then you should know that you need a good CIBIL score for home loan eligibility.

A home loan is an excellent way to finance your dream home. However, home loans are normally hefty amounts and last for years, sometimes even decades. Therefore, when lenders consider loan applications, they need to be extra cautious. To ensure repayment, they determine your capacity using several parameters. CIBIL score is one such, in fact, the primary determiner of your home loan eligibility.

So, what is a good CIBIL score for a home loan? In this article, we will outline what a CIBIL score means, the minimum CIBIL score for a home loan, and how you can increase your CIBIL score. Let’s dive in!

What is a CIBIL score?

Credit Information Bureau (India) Limited (CIBIL) is one of the four credit bureaus authorized by the Reserve Bank of India (RBI) to keep a credit record of every Indian citizen. You can check your CIBIL or credit score for a home loan once a year for free and multiple times a year at a nominal fee.

So, how can you check your CIBIL or credit score for a home loan? It is a simple process. To get your CIBIL score, you need to visit the CIBIL website, fill in the form, make the payment (if you are subscribing to multiple credit scores a year), and your score will be sent to your registered email id within 24 hours.

A CIBIL score is a three-digit number between 300 and 900. CIBIL determines your score based on your credit history and other financial information provided by you while filling out the form.

Let us now look at what is the minimum CIBIL score for a home loan.

Minimum CIBIL score required for a home loan

The minimum CIBIL score required for home loans differs from lender to lender. Usually:

  • A CIBIL score of 750 or higher is considered to be excellent
  • A score between 650 and 750 is considered to be a good CIBIL score for a home loan
  • The 550 – 650 bracket is considered to be average
  • A score below 550 is considered bad

A score of 650 and above gives you a good chance of getting your loan application approved. Typically, this is considered the minimum CIBIL score for a home loan. However, having a lower CIBIL score does not nullify your chances. It just means you will have less room to negotiate, the lender will have to look at more financial documents, and you might have to do more in terms of convincing them that you will be able to repay the loan, such as including a creditworthy guarantor.

What is a good CIBIL score for a home loan?

A CIBIL score of 750 or higher is generally ideal for a home loan. It indicates strong credit health, increasing your chances for approval and better loan terms.

Also,Read-  What are the Documents Required for Home Loan  


Factors that influence your CIBIL score for a home loan

Your credit score for a home loan is influenced by several factors, including:

  • Repayment history: Paying your EMIs and credit card dues on time impacts your CIBIL score positively, while delays or defaults reduce it.
  • Credit utilization: Using a high percentage of your available credit limit can lower your score. On the other hand, lower utilization can show that you are financially more disciplined, thereby increasing your score. 
  • Credit mix: A healthy balance of secured and unsecured loans improves your score and reflects responsible credit behavior.
  • Credit enquiries: If you make frequent loan or credit card applications, it can negatively affect your CIBIL score.

How to check the credit score offered by CIBIL?

Follow the steps below to check your CIBIL score:

  1. Visit CIBIL’s official website.
  2. Choose the option to check your credit score.
  3. Fill in personal details (DOB, ID, etc.).
  4. Complete identity verification steps.
  5. View your credit score on the dashboard after submission.

Also,Read-  What is a Home Loan Balance Transfer?


Benefits of a high CIBIL score

A high CIBIL score for home loan applications has several benefits. With a high CIBIL score:

  • You will have more options and can pick and choose as you will be eligible for loans from different lenders.
  • You will be eligible for bigger loans since you have high credibility.
  • Having a higher CIBIL score shortens the documentation process because the score itself is more or less enough to assure the lender of your repayment capabilities.
  • You get to borrow money at lower home loan interest rates.

How to improve your credit score if it is low?

What if you do not meet the criteria of the credit score required for home loans? Well, the good news is that you can increase it over time.

Your CIBIL score can be low for many reasons. Here are some common ones:

  • Delay in the repayment of your existing loans
  • Using your credit card to its credit limit
  • Frequently exceeding your credit limit
  • Late or missed payment of credit card bills
  • Having a high debt-to-income ratio. This means that you have more debt obligations than your net monthly income. 

A low CIBIL score increases the chances of your loan application being rejected. If rejected, you should avoid applying repeatedly since that could further hurt your score. Instead, you should work towards improving your CIBIL score by paying your existing EMI dues promptly, keeping credit usage to a minimum, and decreasing other debts.

If you are unsure about your eligibility, head to Tata Capital. Use our home loan EMI calculator today and learn all about terms and repayment schedules.

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FAQs

What credit score is needed for a home loan?

Lenders typically prefer a CIBIL score of 750 or above for home loans, as it indicates reliable credit behavior and can result in better loan terms and interest rates.

Does my CIBIL score affect my home loan eligibility?

Yes, your CIBIL score directly impacts eligibility. A higher score shows responsible credit usage, which improves the chances of approval and could provide access to competitive loan terms.

How often should I check my CIBIL score when applying for a home loan?

Checking your CIBIL score monthly during the application process helps monitor any changes and ensures it remains favourable for loan approval.

Can I get a home loan with a CIBIL score of 550?

While it is possible to get a home loan with a low CIBIL score, you may face higher interest rates and stricter conditions. Focus on improving your credit by settling debts and making payments promptly to increase your chances.

How much CIBIL score is required for a home loan?

Most lenders look for a minimum score of 750 for home loan applications. A higher score typically results in easier approval and access to better interest rates.

What CIBIL score is required for a home loan?

Most lenders look for a minimum score of 750 for home loan applications. A higher score typically results in easier approval and access to better interest rates.

Does a high CIBIL score guarantee home loan approval?

No, a high CIBIL score does not guarantee home loan approval. Lenders also assess your income stability, employment history, age, existing liabilities, and repayment capacity. The property’s legal and technical aspects are also considered.

What happens if my CIBIL score is below the minimum required?

If your CIBIL score is below the minimum required, lenders may reject your loan application. They may also offer the loan at a higher interest rate. In some cases, you may receive a lower loan amount or be asked to add a co-applicant.

Can multiple loan applications affect my CIBIL score?

Yes, your CIBIL score is negatively affected by multiple loan applications. Each application leads to a hard inquiry. Frequent inquiries indicate your credit hunger, making lenders view you as a higher-risk borrower.

Is there a difference between a CIBIL score and a credit score?

Yes. A CIBIL score is a type of credit score provided by TransUnion CIBIL in India. A credit score, on the other hand, is a general term that may also include scores from other bureaus like Experian, Equifax, and CRIF High Mark.

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