Minimum CIBIL Score for Home Loan: Do you know what is the CIBIL Score for a home loan? If not, then that’s absolutely fine. The reason why you shouldn’t be so surprised is because not everyone knows about it either.
The CIBIL score is a measure of how much risk banks are taking in lending money to individual homebuyers. It’s the score that lenders use to determine how much they trust you as a borrower. The lower the CIBIL score, the less risk the bank is taking in lending money to you.
Minimum CIBIL Score for Home Loan
Therefore, the higher the CIBIL score, the lower the risk they are taking in lending money to you. So, if you don’t know much about the CIBIL score, read on to find out what it is, Minimum CIBIL Score for Home Loan, why it is important, and why you should care about it.
What is the CIBIL Score for a Home Loan?
The CIBIL score is a national score that lenders in India use to determine whether or not to offer you a home loan. It’s also called the “general home loan information sheet” or the “marketing score” because it’s used by lenders to decide how much marketing effort to put into it.
The score takes into account the information about you that is provided by your loan application. It’s typically calculated using loan application data from the last two years, credit information from up to two credit reporting agencies, and a weighting system in which each piece of information is assigned a weight.
“Credit information” includes things like your loan repayment history and your credit score. “Market data” includes things like your house value, your nationality, and your income. This score is most relevant for people who want to buy a home, since the score is used by lenders to decide whether or not to offer you a loan. It can also be used to determine how much you get financed with.
Why is CIBIL Score for a Home Loan Important?
CIBIL score is used by lenders to determine the risk they are taking in lending you money. The lower the risk, the lower the interest rate you will be charged on your home loan.
Therefore, you want to make sure that the CIBIL score of your loan application is as low as possible. If you want a lower interest rate or a lower monthly payment for your home loan, you can also improve your CIBIL score.
How to Get Lower CIBIL Score for a Home Loan?
The most obvious thing to do to lower your CIBIL score is to apply for a home loan. But you can also try to do the following things to lower your CIBIL score:
- Take out a home loan for the amount you can comfortably repay. If you only have a certain amount of income and you decide to borrow the full amount against it, you will increase the risk of default by that much. It’s called self-financing and it is not a good idea to do it. The best way to lower your CIBIL score is to take a home loan for the amount that you can comfortably repay.
- Reduce your monthly payment. If you are going to borrow a large amount against your home loan, borrowing the minimum amount is going to increase the risk of default by that much. It’s called self-financing and it is not a good idea to do it. The best way to lower your CIBIL score is to reduce your monthly payment.
Tips to Improve CIBIL Score for a Home Loan
There are many ways to improve your CIBIL score, but they all come down to being careful and being careful with money.
- Start repaying your loans as soon as you get approved for a home loan. Borrowing money is one of the top contributors to a CIBIL score.
- Lower your loan amount. The lower the amount of money you borrow in loan amount, the lower your risk of default.
- Borrow from a bank. Lending money from a non-banking finance company is riskier than a bank.
- Make your loan repayment schedule flexible and open-ended. Paying a loan off early and on terms that allow for late payments is an important way to lower your CIBIL score.
Final Words: Should you care about CIBIL Score for a Home Loan?
Let’s get back to the original question: should you care about CIBIL score for a home loan? The short answer is yes. Here’s why:
- Lower CIBIL score means lower interest rate. Lower interest rate saves you a lot of money in the long run. – CIBIL score is used by most home mortgage lenders to determine the amount you will be approved for. A lower score means you will be approved for a lower amount.
- Higher CIBIL score means lower risk for the lender, which results in lower interest rate for the lender.
- There’s one other reason why you should try to lower your CIBIL score: a lower score means that you will be approved for a larger loan amount. And that is something everyone should strive for.
What is minimum CIBIL score for home loan?
A score ranging between 650 and 749 is considered good, and lenders may offer you a home loan after inquiring into your other financial details. 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.
Can I get home loan with 600 CIBIL score?
There is no standard definition of a Low CIBIL Score. Generally, a score below 600 is considered low for the grant of a Home Loan. This may vary from lender to lender. A minimum CIBIL score of 700-750 is desired by banks for sanction of Home Loan.
Is 720 a Good CIBIL score?
Its score ranges from 300 to 850. While a score of 720 and above is considered good, 640 and below is deemed to be poor.