Saturday, May 18, 2024

Why Should You Check Your CIBIL Score Before Applying for A Home Loan?

It can be challenging to buy a home using savings when real estate costs are rising. Thus, taking a home loan is the best thing to opt for. You must check your CIBIL score to determine whether you qualify for a loan. Applying and getting approved for a loan becomes simple if you have a high credit score. 

The CIBIL score for home loan assesses creditworthiness using the loan application frequency, credit history, and repayment patterns for past due credit. Besides, there are various other reasons why you should check your CIBIL score before applying for a home loan. But first, let’s understand what a CIBIL score is.

Meaning Of CIBIL Score

A CIBIL score is a three-digital numerical summary of your credit history recorded in the Credit Information Bureau India Limited’s database. The score is calculated on a scale of 300 to 900, with 300 being the lowest and 900 being the highest. A borrower needs to have the least score of 750 to be eligible for the loan. 

Reasons to Check CIBIL Score Before Applying for a Home Loan

There are many reasons why financial institutions and banks consider the CIBIL score. The eminent ones are as follows:

  1. It helps them to comprehend your credit behaviour

A good CIBIL score indicates that you have handled your credit payments brilliantly in the past. It also gives them an idea if you have paid the other loans on time and can repay the home loan if provided. To qualify for the loan, you must have a credit score between 750 to 900.

  1. It helps them analyse interest rates on the home loan

If you have a good credit score, you can negotiate with the lenders to charge you with low-interest rates. Also, many lenders might agree to offer you the interest you prefer based on your credit history. If you have a low credit score, the lender might not give you a loan or agree to your negotiation for the interest rate. 

  1. It allows lenders to know if there are ongoing loans in your account

The lender checks if there are other loans to clear. Besides, they also check if you can repay the high-value home loan if they provide you with one. Since a new loan means you need to be more specific with your finances, the lenders check the monthly income that you withdraw. They analyse the loan-to-value ratio before deciding whether to offer you one. 

Read below for tips to keep your CIBIL score balanced and how you can get a home loan with a low credit score.

Tips to Keep the CIBIL Score in Balance

  • Apply for limited loans simultaneously to avoid a negative bearing on your score. 
  • Handle the finances on your credit card tactfully.
  • Enhance your credit profile by having both secured and unsecured debts. Secured debts comprise security, car, and home loans. Unsecured debts include personal loans and credit card outstanding. 
  • Try to repay the EMIs, bills and insurance payments within the deadline. 

Tips to Get a Home Loan With a Low CIBIL Score

Although you should try to improve your credit score, it is often difficult due to time constraints or other factors. Yet, you can get a home loan with a low CIBIL score. Here’s how.

  • Search for a lender who offers high-interest rates. With a low CIBIL score, you might get a lender who would agree to give you a home loan with more interest rates. 
  • Apply for the home loan with a guardian who has a good credit score. This can convince the lender to offer you a loan.
  • You can offer collateral like shares, gold, assets, fixed deposits etc., to get a home loan.
  • The lender might agree to offer a loan if you can show your bank balance and proof of stable income. 
  • You can borrow a low home loan amount to convince a lender.

Now you know why checking credit score is important and having a good credit score is even more crucial. So, try to boost your credit score as much as possible. You can follow the tips mentioned above to keep your credit score balanced or get a home loan with a low credit score. 


Devendra Singh is a Digital Marketing expert and also a blogger. He has experience in the content marketing on different verticals and operates his guest blogging website