The CIBIL score is a metric used by financial lenders to determine a borrower’s financial behavior or management of credit-based financial products. It is defined by your credit history, which includes previous loan payments, types of credits availed, etc.
Top financial institutions consider CIBIL score for a home loan as an essential criterion other than the income gradient and employment stability of the individual in concern. Having a high credit score not only make you eligible for the loan but can also provide various advantages.
Role of CIBIL score in home loans
Top financial institutions regard a minimum of 750 CIBIL score for home loan eligibility. A low score can increase not only the interest charges but also reduce the probability of your loan application being approved.
Advantages of a high CIBIL score
- It allows the borrower to negotiate for more affordable interest rates on home loans. This is because they are more likely to pay back the amount.
- Such borrowers can apply for a higher loan amount.
How to increase your CIBIL score?
- Timely payment of EMIs or dues on other credit-based financial products.
- Clear your credit card bill before the due date.
- Advisable credit utilization ratio for credit cards - 60% or lower.
- Avoid applying for loans by physically approaching the financial institution to avoid multiple hard inquiries on your credit history.
To avail the most attractive interest rates, individuals are advised to maintain and monitor their credit history constantly. Discrepancies and errors can lead to the CIBIL score being reduced. Also, it is just as vital to meet the eligibility criteria of the lender in question to avail the loan at the most beneficial terms.
