Home loans allow everyone to achieve their dream of buying a home. Several financial institutions and housing finance companies offer home loans. Lenders check one’s eligibility based on several factors, including credit scores.
Read on to learn more about improving one’s CIBIL score, the correct CIBIL score and the required CIBIL score for a home loan.
What is a Credit Score?
CIBIL India belongs to the American TransUnion multinational group. This is why credit scores are commonly called CIBIL scores in India. It is based on the individual’s credit history and reports that range from 300 to 900. One’s credit rating is better if their score is closer to 900.
Credit Score for Home Loan
- Generally, 650 to 749 is considered the credit score required for a home loan.
- But, lenders usually consider 650 as the minimum credit score for a home loan.
- Credit scores between 550 and 649 are average, and an improved credit score is necessary when applying for a mortgage.
How to Increase Credit Score Quickly?
Increasing credit scores quickly will help one to qualify for a home loan when they follow these seven steps.
Pay Dues on Time
Credit scores are affected by outstanding debt settlements. Late EMI payments lower one’s credit score, forcing them to pay penalties. Pay bills on time to improve the CIBIL score.
Avoid Taking Too Much Loan at a Time
Take on a manageable amount of debt at a time. During a set period, one should not apply for too many loans. Taking out multiple loans at once will lead to an unforgiving cycle of insufficient funds. This will further lower one’s credit score. One may think, how to improve credit score? Taking a loan and repaying it will improve one’s credit score.
Balance Credits
It is better to use secured loans (Home Loans and Auto Loans) combined with unsecured loans (such as Personal Loans and Credit Cards) to build a good credit score.
Limit New Credit Applications
Debt affects one’s credit score. Instead of wanting credit, only apply for it when you need it.
Monitor Joint, Co-signed, and Guaranteed Accounts
Avoid joint account holders and guarantors. Negligence by one’s joint holder (or guaranteed individual) could affect credit access.
Track on Credit History
How to increase one’s credit score? Often clerical mistakes may occur, and any line of credit that has been settled may not reflect the settlement. Keep a check on such disputes and intimate any incorrect information to the lender.
Gradually Build a Good CIBIL Score
Debt is often necessary. The key is to take the right kind of debt, use it wisely, and service it well. A longer tenor could ensure a lower EMI when one takes out a loan.
How to Improve CIBIL Score Immediately?
Here are some simple steps one can take to improve CIBIL score immediately:
- Setting up reminders or standing instructions to pay EMIs on time is a good idea.
- In the CIBIL report, check for errors such as incorrect personal information, incorrect account information, mismatched overdue or collateral information, etc.
- One will get a rise in their CIBIL score if they get a credit card from leading banks like HDFC, ICICI, Axis, SBI, etc., against FD and repay the balance on the due date.
- It is essential to reduce one’s credit utilisation ratio. Don’t take advantage of the credit card to its maximum capacity.
Home Loan for Low CIBIL Score
The minimum CIBIL score for home loans is between 650 to 749. Below are the steps to get a home loan with a low CIBIL score. (<650)
- NBFCs and HFCs provide credit to borrowers in India with low CIBIL scores.
- One can show the bank their creditworthiness by arranging a high down payment and applying for a small mortgage.
- If one can convince the bank to go without a credit history, they will easily get a home loan without a CIBIL score.
- Having a co-applicant with a higher CIBIL score is another way to secure a home loan with a low CIBIL score.
Conclusion
To qualify for a home loan in India, an individual must maintain a good CIBIL score and credit history with any bank. One can increase their CIBIL score by following these tips. Get a luxury home loan today by improving the CIBIL score.
An excellent credit score lets one buy a super-luxurious apartment in Mumbai from Piramal Realty and get a home loan at the most competitive rates. Explore the houses now with an e-tour!
Disclaimer- This article is based on the information publicly available for general use as well as reference links mentioned herein. We do not claim any responsibility regarding the genuineness of the same. The information provided herein does not, and is not intended to, constitute legal advice; instead, it is for general informational purposes only. We expressly disclaim /disown any liability, which may arise due to any decision taken by any person/s basis the article hereof. Readers should obtain separate advice with respect to any particular information provided herein.
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