CIBIL score to get a home loan: How high should it be? | Mint
Source: Live Mint
Many people want to become home owners, and owning a home might be as simple as taking a home loan. Obtaining a home loan however, is not just by making an application; in addition to this, several conditions have to be satisfied.
One of the necessary requirements is that you ought to be credit-worthy, as a high CIBIL score increases your opportunities of acceptance besides helping to bargain better terms for loan. Here we will know the minimum required CIBIL score for home loans.
Understanding CIBIL score
A CIBIL score ranges from 300 to 900 and it is a three-digit figure that summarizes all your credit history. According to financial institutions, it can be determined based on whether you borrow or repay them or not. The probabilities of getting loan approval increase along with better conditions at a higher score since more money will be given after less risk to lenders.
Steps to improve your CIBIL score
1. Pay the bills: Credit card loans as well as loan EMI needs to be duly cleared within due dates. Payments past the deadline not only amount to fine, but they also damage the credit score.
2. Keep looking at your credit report: Look through your credit report on a regular basis, this helps one catch and rectify inconsistencies so that it ensures true presentation of creditworthiness.
3. Avoid excessive debt: Do not close old credit accounts and maintain debt levels at manageable levels. In general, the longer your credit history, the better for your score.
4. Low credit utilisation ratio: Do not use more than a modest percentage of your credit limit. To reduce your utilisation ratio, request your bank to increase your credit limit if necessary.
5. Maintain a good credit mix: Good money management also entails maintaining a balanced mix between secured, like home or auto loans, and unsecured loans, such as credit cards, and personal loans.
Minimum CIBIL score required for home loan
According to lenders, a minimum score of 725 or higher is required for the home loan. However, scores of 750 and above are mostly preferred and get you the best loan terms with low interest rates. Although it’s a good indicator, there are other factors that your lender will look at; these include your salary, age, job security, current obligations, and your capability to make a down payment. If all these are high, you may even be approved despite having a relatively low score.
In conclusion, aiming for a score above 750 increases your acceptance chances and better loan terms to a great extent, but the minimum CIBIL score required for a home loan is usually 725. Using a high credit score grants you higher loan amounts with faster processing times and lower interest rates.
