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The score is primarily calculated based on the past loan repayments, loan tenure, number of loan accounts, credit utilization ratio, etc of the individual. Good credit score indicates that a borrower has paid his/her loan instalments on time, hence is at a lower risk of defaulting than someone with a poor loan repayment track record. The major factors that affect CIBIL score include the borrower’s poor payment history, a poor mix of credit, high credit utilization, and multiple loan enquiries, among others. If you are an NRI, you have a credit rating in the country you’re currently residing in.
Based on the information collected, CIBIL calculates the credit score for each individual. They believe that if your record states that you are not good at repayments, then it becomes quite difficult for them to approve your loans further. Increasing your home loan eligibility means improving your credit score. If your score is good then the chances of approval become higher & even the process becomes smooth. Home Loan is the sum of money borrowed from a bank or a financial institution to purchase or construct a house.
Why is a CIBIL™ score important when applying for a home loan?
EMI to Income Ratio – Borrowers have a higher chance of securing a loan with an EMI that is not more than about 50% of his/her monthly income. This will be lower if the borrower already has other loans to be repaid. Check your credit report before applying for a loan to ensure there are no errors or omission of transactions. If you find inaccuracies or frauds, get it rectified by raising a CIBIL dispute before you apply for a home loan.
CIBIL™ is one of the four authorized credit bureaus in India which provide a credit score, the others being Equifax, Experian and CRIF High Mark. If your credit score has gone down due to an error, get your report rectified immediately. As a potential Home Loan applicant, you must now be wondering how to calculate CIBIL score for Home Loans? There are many online websites that give you your credit score within seconds, based on the information provided by you. You can use one of these websites to check your CIBIL score.
CIBIL Score: Tips to improve credit score after loan default
Complete the credit or loan obligations on time without skipping any payment. Get a copy of credit report and search administrative or reporting errors. If there is any dispute, contact the credit bureau and the designated bank. The changes may appear after 30 to 45 days in the report and do not forget about follow-ups.
So, it’s always desirable to have a higher CIBIL score in terms of the upper limit. If you or a loved one needs a home loan, then reach out to Tata Capital today. You can avail reliable consultation on your financing options, as well as your CIBIL score. Also, you can take advantage of Tata Capital’s competitive interest rates, multiple financing options, and flexible repayment options. The CIBIL score is a measure of your ability to repay loans.
FAQs about CIBIL or Credit Score
To check your credit score, you must visit the credit agency website or you can check it for free on Credit Mantri. You can also benefit from adding a co-applicant to your application. However, remember that this co-applicant must be someone with a good credit score and a decent monthly income. CIBIL score ranges between 300 and 900, calculated based on various factors such as the history of loans availed and repaid by the applicant. The higher the CIBIL score, the higher the chances of the individual getting a Home Loan. Click here to check your free CIBIL Score and Report and ensure that your credit history and personal details are in order so as to avoid rejection from the lender.
However, home loans are normally hefty amounts and last for years, sometimes even decades. Therefore, when lenders consider loan applications, they need to be extra cautious. To ensure repayment, they determine your capacity using several parameters. CIBIL score is one such, in fact, the primary determiner of your home loan eligibility. CIBIL Score determines your eligibility for securing a loan. Having a loan or multiple credit cards does not negatively impact your score.
How CIBIL evaluates home loan eligibility
To further improve the chances of approval of a home loan application, your total EMI to income ratio should not cross the 30% threshold. Through this way, you can ensure there is enough disposable income at hand to meet the necessary expenses and don’t add to any financial stress. The lender may also consider you to be a good candidate and offer you better terms on the loan.
CIBIL score is one of the major criteria evaluated by SBI and various other banks to determine the borrower’s creditworthiness and financial capability. If you have too many unsecured loans as compared to secured loans, you will face much difficulty in raising your CIBIL score. Therefore, it is crucial to maintain a good balance between the number of unsecured loans and secured loans. Individuals who wish to buy a home or build one usually apply for home loans. Home loans are secured loans where the house acts as the collateral with SBI till the time the borrowed amount is paid back in full as per the agreed terms & conditions of the loan agreement. If your Home Loan eligibility is low, add a co-applicant to your application.
To get a home loan that matches both your CIBIL score and your debt-to-income ratio, use a Home Loan Eligibility Calculator or simply before applying and avail home financing on personalized terms. Single-step verification here gives you instant approval through a customized home loan deal. Your CIBIL score, in simple terms, is a 3-digit figure ranging between 300 and 900. CIBIL evaluates your repayment history, credit handling tendencies, and existing finances to arrive at a justified score. Clearing dues and other liabilities is certainly a great move to improve your CIBIL score. However, it will take a few months for the improvement to reflect in the report.
The age of your credit history is the number of years that have passed since you opened your first credit account. CIBIL considers the average number of years for which you have been holding a credit account. Having a good balance of secured loans as well as unsecured loans helps to boost your score. To maintain a high score, you need to be prompt with your monthly credit card bill payments as well as loan EMIs. If you are delaying your payments or are defaulting on EMIs, it will hamper your score. A recent CIBIL analysis revealed that 30-day delinquency can reduce your score by 100 points.
However, lenders usually consider 650 as the minimum CIBIL score required for a home loan. Scores ranging between 550 and 649 are average and need working on. Bad scores are the ones that fall in the 300 to 549 bracket. Finally, NH or NA implies that you do not yet have any credit history. Lenders prefer that a customer’s CIBIL score for a home loan be around 700, if not 750 and above.
We ensure that you have a better shot at getting an approval for a loan or credit card you apply since we match the lender’s criteria to your credit profile. We help you avoid loan rejection by carefully determining your eligibility and matching you with the right lender/product. We achieve this with a cutting edge combination of data science and technology that ensures that both lenders and borrowers have a transparent common platform to make their decisions. We treat your data with the utmost confidentiality and will never share or sell it to anyone.
Do not worry -- even those who do not have the credit score required for Home Loans can avail of good Home Loan deals. Home loans are big-ticket size loans and the repayment tenure usually ranges between years. These factors increase the risk factors for lenders as it gets extremely difficult to judge whether the borrower will make timely repayments or not. The cost of purchasing an apartment or a flat is prohibitive, leaving a home loan as the rescuer. Many things are taken into consideration for banks to accept your loan application.
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