How Does a Mortgage Loan Affect Your CIBIL Score?

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5 Min 05 Feb 2024

Highlights:

Connection Between Mortgage Loan and CIBIL Score
Know How a Loan Against Property Affects Your CIBIL Score

A mortgage loan will indeed influence your credit score as long as it stays on your credit report. In fact, it may be the most significant debt for many and hence will substantially contribute to your credit score. No wonder then, if you fail to pay the EMIs, it will affect your credit score negatively.

Relation Between a Mortgage Loan and CIBIL Score

An individual receives a percentage of the market value of their property as a mortgage loan. These loan amounts are usually sizeable, and that is why mortgage loans can significantly impact your CIBIL score. Your repayment record for the amount can increase or decrease your existing score.

Your CIBIL score plays a role in determining your eligible loan amount and the interest rate you stand to receive. Therefore, to maximise your chances of getting a loan of your preference, you should ensure that your CIBIL score is good.

The CIBIL Score is calculated considering your credit history and other details found in your CIBIL report, which is maintained by TransUnion CIBIL Limited. Your lender checks your CIBIL score to assess your ability to repay the loan before approving it. The closer you are to a credit score of 900, the better your chances of getting easy approval on your Loan Against Property. A score closer to 300 is considered low.

How a Loan Against Property Affects Your CIBIL Score?

The following aspects of Loan Against Property can affect your CIBIL score:

Repayment Discipline

Ensure timely repayments of all your mortgage loan accounts. Not defaulting on EMIs significantly enhances your creditworthiness. Lenders offer better loan terms and competitive interest rates to individuals with a healthy credit history.

Repayment Tenor

Opt for a flexible tenor for more feasible EMIs and a chance to repay your loan over an extended period. This, in turn, will help you firmly establish yourself as a reliable borrower, thereby improving your CIBIL score. It also gives you enough time to plan out your payments, minimising the chances of missing payments.

Additional Read: Does CIBIL Score Affect Loan Against Property Eligibility?

Other Factors that Affect Your CIBIL Score

Multiple Loan Applications

Numerous loan applications negatively impact your CIBIL score. It projects you as a credit-hungry borrower. Multiple loan applications result in hard inquiries on your account and are viewed adversely.

To avoid this, we recommend you apply only to those lenders who are most likely to approve your application in one go.

Nature of Loan Accounts

Your CIBIL score also considers your credit mix. A healthy mix of secured and unsecured loans is recommended for a CIBIL evaluation as it speaks to your repayment capacity and ability to repay both types of loans without defaulting.

Repayment History

Applying for a sizeable loan amount and handling it well boosts your CIBIL score. When you repay big-ticket loans without defaulting, your prospective lenders can also be more inclined toward offering competitive loan terms based on your repayment ability.

Final Thoughts

Considering its sizeable nature and repayment duration, a mortgage loan helps define your creditworthiness for your future lenders. At Bajaj Housing Finance, not only do we simplify the process of availing of financing, but we also help you save time through our fast processes. All you have to do is share a few basic details and submit the necessary documents.

*Terms and conditions apply.

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