According to the Ministry of External Affairs, 7.5 Lakh Indian students are currently pursuing their higher education abroad. Also, the expenses on tuition fees in the country witnessed a massive rise of about 67% between the fiscal year 2013-14 and 2017-18.
The need to avail of a high-value loan is also increasing with the rise in such expenses. Individuals are now inclined towards availing an education loan on the property due to the high credit amount it comes with. However, there are a lot of factors that affect the eligibility of an applicant in case of such credits. The CIBIL score is one such important factor that affects the terms offered by a lender to the borrower.
Importance of CIBIL Score
The Credit Information Bureau of India Limited issues a score to every individual depending on the financial history of an individual. This score is a numerical representation of an individual’s financial habits. Where a missed EMI payment is considered as a negative, timely payment is considered as a positive. There are numerous other financial behaviors that are also considered for the score.
CIBIL score ranges between 300 and 900. Individuals with a higher score have a higher chance of their loan against property for higher education getting approved faster with favorable terms. A CIBIL score of 750 or above is usually considered good enough. As per a report from CIBIL, 79% of the loans that are approved have applicants with a CIBIL score of 750 or above.
CIBIL score is usually determined by taking into account a lot of factors like payment history, types of credit, outstanding loan amount, etc. Availing different forms of credits like home loans, personal loans, student education loans also can improve the CIBIL score.
Tips to Improve CIBIL Score
A high CIBIL rating is required to avail of any form of credit. Borrowers can follow the steps mentioned below to improve their credit score.
Avail A Study Loan Against Property
A loan against property is a form of secured credit and can be availed by keeping any residential or commercial property as collateral. It usually comes with a high loan amount, and it can boost the CIBIL score of an individual if repaid in time.
The loan amount comprises about 25% of the CIBIL score of an individual. So, availing a large loan and repaying it properly can significantly improve the CIBIL score of an individual.
However, mortgage loans can also negatively impact the CIBIL score if not appropriately handled. Borrowers should plan their repayment strategy to reduce the chances of defaulting.
Pay your EMIs in Time
The repayment of outstanding debt can have a significant impact on the credit score of a borrower. Delayed EMI payments can lower the CIBIL score along with forcing borrowers to pay a penalty for that. Borrowers can also set reminders to ensure that they pay the installments on time.
Also, they can avail of a Flexi Loan facility that allows them to withdraw as many funds they require from the sanctioned loan and pay interest only that withdrawn sum of funds. They can even choose to pay only the interest as EMIs and repay the principal part at tenure end.
Bajaj Finserv this Flexi Loan facility for student education loans against property and other forms of credit, including home loans. They also provide additional benefits like balance transfer facility, zero part pre-payment and foreclosure charges, etc.
They also provide pre-approved offers on such credits to make the process of availing them hassle-free and straightforward. Pre-approved offers are valid on secured credits like home loans, unsecured credits like business loans and personal loans along with a plethora of other financial products and services. You can check your pre-approved offer by providing only a few essential details like your name and phone number.
Opt For A Long Tenure In Case Of A Loan
Borrowers should opt for a long tenure when they avail of an education loan on the property or any other loans for that matter. It will ensure that the amount of EMI is low, and there is no chance of defaulting.
The CIBIL score will automatically increase if they repay the loan in time. Financial institutions offer flexible tenure of up to 20 years for such credits. Borrowers should determine the ideal tenure of their loan against property according to their repayment capabilities.
The points mentioned above should give you a clear idea about the required CIBIL score for a loan against property and how to improve it. Now that you know how to get a student loan with favorable terms, make sure you apply for one with a high CIBIL score and successfully avail it.