The Key to a Successful Home Loan: A Good CIBIL Score

A CIBIL score is a numeric expression of your credit history. On a scale of 300-900, it represents how well you are with managing credit. Lending institutions look into the CIBIL score to determine your eligibility for a home loan. Borrowers with high credit scores are more likely to have their loans sanctioned faster and enjoy lower interest rates. A lot of times, the loan application may get rejected due to a poor score or credit report. Read this article to know what is a good CIBIL score for a home loan and how it can help you get to your goal. 

What Is a Good CIBIL Score for a Home Loan?

Most lenders consider a score between 750 and 900 as an ideal score for home loan eligibility. A score anywhere between 650 and 749 is also good enough but a CIBIL score further below indicates poor creditworthiness, which may prompt the lender to reject your application or charge you a higher rate of interest due to the high risk involved.

The various CIBIL score ranges for a home loan are as follows –

CIIBL Score Range	Remarks	What It Implies
750-900	Excellent	Eligible for home loans with lower interest rates and faster approvals
650-749	Good	Eligible for home loan approvals but may need to improve the score to get better interest rates
550-649	Average	Decent chances of loan approval but interest options are limited
501-549	Poor	Interest charged will be high but the loan may still get approved
Below 500	Bad	Chances of home loan approval are almost nil

How to Get a Good CIBIL Score for a Home Loan?

In case you are facing trouble getting your home loan application approved due to a low credit score, there is no need to stress. Here are some tips on how you can achieve a good CIBIL score for a home loan –

1. Keep a Healthy Mix of Credit

Try to maintain a healthy mix of secured and unsecured loans because balancing both exhibits your ability to manage a diverse portfolio of debts, which improves your CIBIL score.

2. Limit Your Credit Utilization Ratio

A high credit usage implies a high dependency on credit cards, which is likely to delay repayment and lower the CIBIL score. That is why you should reduce your credit utilization ratio below 30% to improve your score.

3. Pay Off Your Dues 

If you want to get a good CIBIL score for a home loan, you must ensure that all your bills and outstanding loans, EMIs etc. are paid before the due date. 

4. Avoid Too Many Hard Inquiries 

Each time you apply for a loan, the lender runs a hard enquiry to check your eligibility, which lowers your credit score. Therefore, to avoid too many hard inquiries at once, stop sending in multiple applications within a short period.  

5. Check Your Credit Report 

A string of inaccuracies or errors in the CIBIL report often leads to poor credit scores. To ensure a good CIBIL score for a home loan, monitor the credit report at least once a year and get it fixed.

Summary

Having a good CIBIL score for a home loan is imperative to get the amount sanctioned at affordable interest rates. If your score falls below 750, you should focus on improving it by paying off your existing liabilities, limiting credit utilization ratio, fixing the credit report and so on. Check your CIBIL score online for free to know if you are eligible for a home loan before applying.