When it comes to home loans or loans of any type, lenders want to make sure they are lending to people who will not default on loan payment. All lenders, therefore, have eligibility requirements or qualifying criteria for home loans. These qualifying criteria help lenders identify and remove applicants who raise red flags. 

Lender home loan eligibility requirements revolve around factors, such as age, income, job stability and credit score. While lenders give a lot of importance to these factors, credit score or CIBIL score is the factor that affects a borrower’s home loan eligibility the most. 

India has four credit information companies: CRIF Highmark, Equifax, Experian and TransUnion CIBIL. Most lenders in India use TransUnion CIBIL and the credit score that TransUnion CIBIL assigns borrowers is known as the CIBIL score. The CIBIL score is a three-digit number that ranges between 300 and 900. The CIBIL score is reflective of a borrower’s ability to repay loan money on time. It shows their creditworthiness and attitude towards credit. A good CIBIL score for a home loan is 750. Such a credit score indicates high creditworthiness and almost zero chances of loan default. Borrowers whose credit score ranges between 700 and 750 also get approved for a loan quickly. However, since such a credit score belongs to borrowers who have defaulted on credit repayment once or twice in the past, these borrowers get approved for a loan quickly but are often charged a slightly higher interest rate. Borrowers whose CIBIL score is below 700 are seen as risky borrowers by lenders. Home loan applications from such lenders usually meet with quick rejection. In the case a lender approves the loan application, they often charge a high rate of interest or get the borrower to agree to a lower loan amount or tenor than they are eligible for to cover up for the risk involved. 

If you are planning to apply for a home loan, do a CIBIL score check and move ahead with the application procedure only if your CIBIL score is 750 or above. If your CIBIL score is below 750, make use of the tips we have shared in this article on how to improve CIBIL score.

How to Improve CIBIL Score? Here’s How. 

If your CIBIL score is below 750, do not worry. Simply do the following and your credit score will improve in no time. 

– A borrower’s credit score is greatly impacted by how regular they are with loan repayment. Borrowers who always pay loan EMIs and credit card bills on time, have a high CIBIL score. Many borrowers miss EMI payments not because they do not have the money to pay bills but because they forget due dates. If you are someone like that, authorize your bank to make auto-payments on your behalf. Paying all your bills before the due date will certainly reflect positively on your credit score and it will start improving within a few months. 

– Maintain a low credit utilization ratio. Credit Utilization ratio denotes the percentage of your credit card’s total limit that has already been used. A high credit utilization ratio means that the credit user is excessively dependent on credit. Lenders, therefore, do not see a high credit utilization ratio as a good sign. The credit utilization ratio usually goes up when people exhaust their credit card’s limit or when they keep using their credit card but clear only the minimum amount due each month. If you want to have a good CIBIL score, maintain a credit utilization ratio of 30% or less.

– Borrowers’ credit score also goes down when they apply for too many loans together. Thus, an easy answer to how to improve CIBIL score is to make sure there is ample gap between your credit card and loan applications. If you are planning on applying for more than one loan, make sure to spread out your loan applications over a few months. 

– Lastly, your CIBIL score will also improve if you maintain a mix of both secured and unsecured loans. So, if you only have a secured loan, such as a home loan, add an unsecured loan, such as a personal loan to your loan kitty to convince lenders of your ability to handle all kinds of debt and improve your CIBIL score.

Let us finally move to how to check CIBIL score. 

How to Check CIBIL Score? Here’s How

A lot of people ask about how they can perform a CIBIL score check. There are many websites that allow borrowers to check their CIBIL score for free. These websites are easy to use and safe. The information you enter here will stay with the website owners and will never be made public. All a borrower needs to do to check their CIBIL score on such a website is enter basic information, such as their name, email address, PAN Card details, etc. These details help the website owners match your profile with your CIBIL profile and fetch your CIBIL rating. Borrowers can also have their CIBIL score sent to their email by availing of a subscription with TransUnion CIBIL. Based on the subscription or plan you have chosen, TransUnion CIBIL will send you your CIBIL score and credit report on a monthly, bi-yearly and yearly basis.

Final Words 

A borrower’s CIBIL score tells a lot about them. A good CIBIL score indicates that the borrower can be trusted with the timely repayment of loan money. Therefore, borrowers with a high CIBIL score get approved for a loan quickly. On the other hand, a low CIBIL score compels one to look for a co-borrower or buy insurance to become eligible for a home loan. Borrowers must therefore always check their CIBIL score before initiating a home loan application and move ahead with the application process only if their CIBIL score is at least 750.