Having a Self-Owned House is Everyone’s dream. You may want to buy a new house or simply renovate the existing one. But you may find yourself in short of funds. Don’t Worry! Home Loan is a one-step solution to meet funds required for purchase, construction, extension or renovation of the house. Banks and NBFCs (Non Banking Financial Lenders) finance upto 75%-90% of the cost of the property.
But there are certain factors considered by the Lenders before sanctioning the Loan amount such as net monthly income, age of the applicant, work experience, qualification, number of dependants and source of employment stability. Most Importantly, the Approval or Rejection of your Home Loan application depends on your Cibil Score.
Cibil Score is a three digit numeric number ranging from 300 to 900 based on the credit history of the borrower. Borrower’s Credit Report is provided by Credit Bureaus such as TransUnion CIBIL, Experian, Equifax and CRIF High Mark. Banks check this Credit Score / Credit Report in order to know about the credit worthiness of the applicant. Lenders give quick approval and preferential rates to applicants with high cibil score. On the other hand, Lower cibil score might lead to the rejection of your Home loan application.
In order to be eligible for Home Loan, the applicant needs to have a Minimum Cibil Score of 750.
Those with Cibil score less than 750 are less likely to get approval for Home Loan. Financial Lenders extend Loan to customers with good repayment track to prevent any default on the Loan.
Therefore; it is very important to maintain good Cibil Score for Home Loan. Good Cibil Score not only leads to acceptance of your Home Loan Application but it also makes you eligible for Higher Loan Amount and Lower Interest Rate. Some of the Tips to Improve Cibil Score have been mentioned below-
Repay your Loans or credit card dues on time – Never delay or skip an EMI on Loan/Credit Card.
Do not make many Loan Enquiries – Too many Loan Enquiries lower your Cibil Score.
Avoid Multiple Loans – Taking too many Loans at the same time has a negative impact on your Cibil Score. Always keep a balance between secured and unsecured loans.
Utilise only 50% of your credit limit – Always spend less than the credit limit assigned to you. Keep your credit utilisation ratio upto 10%-40% of your Credit limit.
Prepay your Loan either fully or partially – Prepayment of the Loan improves your Cibil Score.
Before applying for Home Loan, it is important to Check your Credit Report for any errors to avoid Home Loan rejection. Any error in the Credit Report should be reported to the CIBIL and the Lender for correction.