A CIBIL score is a three-digit numerical summary of your creditworthiness, ranging between 300 and 900. The CIBIL score is assigned by the Credit Information Bureau (India) Limited, an authorised agency responsible to collect and evaluate credit-related data.
When you apply for a Home Loan, your CIBIL score is assessed. It provides an accurate insight into your repayment history and highlights your creditworthiness.
While the minimum credit score required to apply for a Home Loan may vary, a score of 750 or above is preferred. A higher CIBIL score increases your eligibility to avail of a Home Loan at favourable terms. The table given below shows the credit score range and what it signifies:
| CIBIL Score Range | What it Implies |
|---|---|
| 800 - 900 | Falls within an excellent range, indicating consistent EMI and credit bill payments without defaults |
| 750 - 800 | Considered very good, enabling negotiation for lower interest rates on loans |
| 625 – 750 | Represents a decent credit history with minimal irregularities, though loans may come with slightly higher rates |
| 300 – 625 | Reflects frequent defaults and irregularities, making loan approvals challenging without score improvement |
The higher your CIBIL Score is, the better your chances of being approved for a sizeable loan amount with a lower Home Loan interest rate. If you are planning to apply for a Home Loan, it is essential to meet the credit score requirements determined by your lender.
In case your credit score is low, you can improve it by clearing off existing debts, paying EMIs on or before the due date, and ensuring that your information on the credit report is accurate and updated.
Here is how a good CIBIL score can be helpful when applying for a Home Loan:
• A CIBIL score of 750 or higher reflects your credibility as a reliable borrower, increasing your chances of being approved for a Home Loan quickly.
• With a good CIBIL score, you can secure substantial funds on favourable terms, such as a competitive interest rate. A low interest rate can help you keep your EMIs manageable and save funds.
• You can leverage a high CIBIL score to negotiate for a competitive interest rate, a flexible loan tenor, or a higher loan sanction.
The purpose of a CIBIL Score is to give a consolidated summary of your financial health to interested parties, and in the case of a Home Loan approval – it is essential for a lender to determine the terms they may offer you.
To enhance the chances of your Home Loan approval, you can also check your credit score eligibility beforehand with our Home Loan Eligibility Calculator. With a good CIBIL score, you stand the chance of securing the most competitive housing loan interest rate.
Credit information bureaus are authorised to calculate your credit score based on your financial information. Some of the factors that CIBIL considers before assigning a score to you are:
● Repayment history
● Credit utilisation habits
● Income-to-expenditure ratio
● Outstanding debt obligations
● Credit exposure
To check your CIBIL score online, you can visit the official website of CIBIL:
1. Visit the CIBIL portal and log in.
2. Click on ‘Get your CIBIL Score.’
3. Choose a subscription plan that meets your requirements.
4. Set up a login password.
5. Provide your PAN and ID type to verify your identity.
6. Complete the payment for the subscription fee and authenticate using OTP or email.
7. Fill in your personal details to access your credit score.
Also Read: How to Check Your CIBIL Score for Free
Listed below are several ways in which you can improve your CIBIL score to secure competitive terms on a Home Loan:
Timely Repayment of Credit Dues
Never miss your EMIs or delay your payments. If you have missed payments in the past, consider setting monthly reminders to ensure timely payments.
Limit your Credit Utilisation Ratio
To keep your credit utilisation ratio low, try to use only a small portion of your available credit limit. Ideally, aim to keep your spending below 30% of the total limit. If necessary, consider spreading your expenses or making early payments to reduce the outstanding balance.
Have a Balanced Credit Mix
Having a healthy mix of secured and unsecured loans may portray you as a versatile credit user who understands various types of credit. Having too many unsecured loans can negatively impact your CIBIL score.
Check your Credit Report Frequently
While this action may not directly impact your credit score and improve it, it could act as a guide to understand where you stand and give you a push in the direction to take the right steps for improvement. Also, checking your credit report frequently lets you identify any errors present on it and get them rectified in time.
*Terms and conditions apply
Frequently Asked Questions
While it is possible to get a Home Loan with a low credit score, it may come with some challenges. Lenders may require you to pay a higher interest rate or provide additional collateral to secure the loan. You may also have a lower loan amount eligibility, or the loan may be subject to stricter terms and conditions
It is not impossible to get a Home Loan even if you are a CIBIL defaulter. Some lenders may still consider your application if you can provide sufficient proof of your ability to repay the loan, such as a steady income, employment stability, and collateral.
In such cases, you may be required to pay a higher interest rate or a higher down payment, and the loan amount may also be lower compared to what you could have received with a good credit score.
While it is possible to get a Home Loan with a score of 600, you may face a higher interest rate, and the loan amount may be lower than what you could have received with a higher credit score.
Yes, a CIBIL score above 750 is a good score.
Yes, your CIBIL score does matter while applying for a Home Loan. Your credit score is a measure of your creditworthiness, and lenders use it to evaluate the risk of lending you money.
The minimum CIBIL score requirement for a Home Loan may vary based on your lender. Typically, a CIBIL score of 750 or above is considered ideal.
Yes, a low CIBIL score can result in the rejection of your Home Loan application. To increase your chances of approval, work on building your credit score by paying off outstanding dues, reducing your credit utilisation ratio, and making timely payments.
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