Loan on Property

Loan Against Property for Low CIBIL Score: Can You Get Approved?

By Tata Capital
06 January 2026
9 mins read
2924

If you want to avail of a loan for any reason, one of the most critical factors determining your eligibility will be your credit score. This applies to loans against properties (LAPs) as well. For loan against property applications, lenders will evaluate your credit report to determine your eligibility. The minimum credit score required for an LAP varies depending on the lender. However, a higher credit score enhances your chances of availing credit at better terms and lower interest rates.

But what if you have a low credit score? Fortunately, there are certain steps you can take to improve your credit score and secure a loan against property for low CIBIL score.

In this article, we will understand what credit scores are, how much cibil score is required for loan against property, how CIBIL determines credit scores in India, how to get loan against property for low CIBIL score, and how you can improve your credit score.

What is a Credit Score?

A CIBIL or credit score is a three-digit number that represents your credit history. In India, our major Credit Information Companies (CICs) release credit reports for various reasons. These include:

TransUnion CIBIL
Experian
Equifax
CRIF High Mark

Out of these, TransUnion CIBIL is one of the first and most widely used CICs, with over 900 member institutions. Established in 2000, CIBIL collects financial information from public and private sector banks, housing finance companies, and non-banking financial institutions. Based on this data, it issues a score known as a CIBIL or credit score.

CIBIL scores usually range from 300 to 900, with anything over 750 considered a “good” score. They are vital for approving loans, credit cards, and other financial offerings. A low score indicates a low probability of the individual replying to the loan or credit card bill, whereas a higher score indicates a higher likelihood of repayment.

How CIBIL Score Affects Loan Against Property Approval

A loan against property (LAP) is a secured loan that allows you to avail of credit using your existing property as collateral. It comes with zero restrictions and can be used for various big or small expenses. With an LAP, you can benefit from the value of your property while continuing to occupy it.

Financial institutions use your CIBIL score to determine your creditworthiness for loan against property. A higher CIBIL score can lead to quick loan approvals and favourable terms, whereas lower scores may lead to the rejection of your application. The impact of CIBIL scores on LAP approvals is as follows:

1. Interest Rates for Low CIBIL Score

When applying for loans against property, lenders often look at your credit report and CIBIL score. Lower CIBIL scores indicate a lower likelihood of repayment, whereas a higher CIIBL score reflects a strong capability to repay the loan. Therefore, loans against property interest rates are dependent on your CIBIL score. Maintaining a high score can help you avail of lower interest rates and better terms.

2. Loan Amounts and Tenure with Low CIBIL

Lenders assess your CIBIL score to assess the risk of lending to you. A high credit score signals low risk, allowing you to negotiate better terms for your loan. It also makes you more likely to qualify for higher loan amounts and flexible repayment tenure.

How is a CIBIL score calculated?

CIBIL scores are calculated based on the complete record of an individual’s repayment history. This includes loans, credit cards, other borrowings, whether they were repaid on time, and their consistency. Settlements, defaults, and write-offs are also considered when determining your credit score. The two factors that impact your credit score the most are:

1. Payment history

Your payment history has a huge role in determining your credit score. Paying loan EMIs and credit card bills timely can greatly improve your credit score, whereas delayed payments can reduce it. Missed payments have an even more negative impact on your credit score.

2. Credit amount

The total amount of credit you use also affects your credit score. To maintain a good credit score, it is essential not to use more than 30% of your approved credit limit.

Can You Get Loan Against Property Without CIBIL or With Low Score?

Yes, you can explore a loan against property for low CIBIL score if you demonstrate stable income and provide strong collateral.

Getting a loan against property without CIBIL score is difficult but not impossible. While your CIBIL score plays a major role in the loan approval process, other factors are also considered and equally important. These include your income stability, current debt-to-income ratio, and the value of the property you own. If you have a stable income source, your debt-to-income ratio is low, and the property is high-value, the chances of approval are good.

Additionally, your property used as collateral already acts as a safety net for your lender.

And if you don’t even have a CIBIL score, then your credit score will actually be zero. In this case, you’ll be considered a new-to-credit-borrower. While this doesn’t automatically disqualify you from getting a loan, especially since the property itself acts as strong collateral, it does make lenders more cautious. Approval is still possible, but the odds are slightly lower compared to applicants with an established credit record.

Also, read – Will a Loan Settlement Ruin My CIBIL Score?

Minimum CIBIL Score Required for Loan Against Property in India

How much CIBIL score required for loan against property? Well, most lenders usually require a minimum CIBIL score of 700 to approve the loan against property. Some might even consider a score as low as 650, though it often comes with higher interest rates and stricter terms.

Your chances of approval increase quite a lot if you have a score above 750. Then, you’re in a better position to negotiate preferred interest rates and favourable loan terms.

Even if you’re applying for a loan against property with bad CIBIL score, like below 700, there are some steps you can take to improve it. Some of them include paying all outstanding dues, reducing credit utilization to below 30%, and avoiding multiple loan applications at once.

Loan Against Property for Bad Credit

Securing a loan against property with bad CIBIL score isn’t impossible. That’s because the lender has collateral to fall back on. In the event of a default, they have the legal right to seize and sell the property to recover their losses.

But, even if your loan gets approved, you may expect stricter terms, including higher interest rates and additional collateral requirements. Some lenders may also require a co-applicant with good credit or demand larger down payments to further mitigate their risk.

Before applying for a loan against property with bad CIBIL score, consider improving it by clearing small debts, settling any dues, and maintaining consistent repayments for 3-6 months. This way, you can avoid paying high interests over the loan tenure and save significantly.

How Lenders Assess Applicants with Low or No CIBIL Score?

When you apply for a loan against property without CIBIL score or with a low score, this is what lenders assess:

The Property’s Value: Lenders conduct thorough property assessments to determine market value, location desirability, and legal clarity. Prime properties in well-developed areas strengthen your credibility and increase the chances of loan approval.

Your Income Stability: This demonstrates your repayment capacity for a loan against property without CIBIL score. Lenders require proof of consistent income through salary slips, bank statements, and IT returns of the last 1-2 years. If you’re self-employed, you must show healthy business continuity, stable cash flows, and profitability.

Debit-to-Income Ratio: Lenders calculate your existing monthly obligations against income to approve your loan against property with bad CIBIL score. A ratio below 40-50% indicates you can comfortably manage additional EMI payments.

Co-applicant Credentials: If you add a co-applicant to increase your chances of approval for a loan against property for low CIBIL score, lenders will assess their credentials as well. They must have an excellent CIBIL score, stable income, and sound financial profile to offset your credit limitations.

Also, read –How a Bounced Cheque Will Reduce Your CIBIL Score?

How can you Improve your Credit Score?

While a lower credit score may be intimidating, you can take a few simple steps to improve your score. These include:

Regularly checking your CIBIL score to identify and address errors and discrepancies early.
Limiting your credit usage and maintaining a low credit utilisation of 30% to 50% of the available limit.
Repaying your credit card bill and monthly EMIs promptly.
Limiting the number of unsecured credits, like personal loans or credit cards.
Paying off existing debt.
Reducing the number of credit inquiries by applying for new credit only when necessary.
Setting up automatic payments to prevent missing due dates.

There are alternate ways to get a loan against property with low CIBIL score. Some institutions may provide LAPs if you offer a high-value property or show stable proof of income. Having a co-applicant on the loan can also enhance your chances of getting your LAP application approved.

Summing up

When applying for an LAP, CIBIL scores can play a huge role. A good CIBIL score can ensure a faster application and documentation process, giving you lower interest rates, more significant loan amounts, and flexible repayment tenures. But even when you apply for a loan against property with low CIBIL score, demonstrating income stability and a low debt-to-income ratio can considerably improve your approval chances.

Having a good credit score is vital to achieving your financial goals. If you want to obtain a loan against property at competitive interest rates and with minimal paperwork, consider Tata Capital. We offer quick and easy LAP application processing, flexible repayment tenures, tailored solutions, and more. By availing of a LAP with Tata Capital, you can also enjoy a hybrid term loan facility and a hassle-free application process.

FAQs

How much CIBIL score is required for a LAP loan?

The minimum CIBIL score for a loan against property depends on the lender’s policies. Any CIBIL score of 750 or more is typically considered good.

What impacts CIBIL scores?

Your loan and credit repayment history, credit utilisation ratio, credit inquiries, and other factors affect your CIBIL score.

Can I get a loan against property if I have a low CIBIL score in India?

Yes, it’s possible to get a loan against property with low CIBIL score in India. In such a case, you’ll have to demonstrate your income stability, a low debt-to-income ratio, and have a highly valued property for collateral.

What is the minimum CIBIL score required for a loan against property?

The answer to how much CIBIL score required for loan against property is above 700. A score below 700 usually means higher interest rates and stricter loan terms.

Are there lenders that offer loan against property without CIBIL score?

Yes, some lenders may offer a loan against property without CIBIL score. However, expect significantly higher interest rates and stricter terms, such as short tenures, additional collateral, and mandatory co-applicant.

How can I increase my chances of getting a loan against property with low CIBIL score?

To increase your approval chances for a loan against property with low CIBIL score, demonstrate income stability, add a qualified co-applicant, and provide additional collateral.

Will taking a loan against property improve my CIBIL score?

How you manage the loan against property can influence your CIBIL score. Timely EMI payments boost your score, while missed or delayed payments negatively impact it.

Can a co-applicant help me get a loan against property with bad credit?

Yes, adding a co-applicant with a strong CIBIL score and stable income improves the chances of approval for your loan application and helps you negotiate better interest rates.

What documents are required for a loan against property for low CIBIL score holders?

Standard documents required for a loan against property for low CIBIL score holders include property papers, identity and address proofs, income proofs, bank statements, and co-applicant documents, if applicable.

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