What to know about CIBIL scores before applying for Home Loans?

All you need to know about CIBIL Scores for Home Loans

Your CIBIL score is one of the vital parameters used by banks to decide whether they want to offer you a loan or not. It applies to various types of loans, including home loans. Here is all you need to know about CIBIL scores for home loans and how they affect your chances of getting one.

What is your CIBIL Score?

The CIBIL score is a three-digit score between 300 to 900. Essentially, it is your credit score calculated by CIBIL, which is one of the four credit bureaus authorised to give a credit report.

The higher the number, the better the applicant looks to the lender. For any type of loan, a candidate with a credit score of 700 or above has a higher chance of being approved than someone with a lower or a bad CIBIL score. For home loans, a credit score of 750 or more is considered ideal.

The table below will give a better idea of a good and a bad credit score.

CIBIL Score for Home Loans

Home loans are granted by lenders to candidates who seek to either buy or build a house. These loans are secured, so your property is mortgaged to the bank until you have repaid your loan in full.

Lenders will usually give about 80%-85% of the property value as a loan amount. It differs from one lender to another. Given their nature and intent, these loans are long term. Depending on the amount, the borrower can commit to repaying these loans for 5 years to 30 years.

As with most other loans, a CIBIL score over 750 is one of the important factors with which you can ensure approval. Some of the other parameters include:

• Employment Status: You should ideally be a salaried employee or a self-employed individual who can provide suitable proof of income.
• Age: A prospective homeowner is expected to be over 21 years of age.
• A steady history of income and employment.

The documents you will be required to submit for a home loan application will vary depending on where you are applying. However, there are some common requirements. These include:

• Proof of identity
• Proof of address
• 3-6 months of bank statements
• Income proof or past salary slips

In addition to this, the bank will also check the documentation related to the property you are seeking the funds for.

“Your CIBIL score can make or break your home loan application. To increase your chances of successful loan approval, ensure that you have a healthy CIBIL score.” A healthy CIBIL score for home loans is over 700. Also, this needs to be supported by the requirements we discussed.

In cases where an applicant has a lower CIBIL score but still seeks to apply for a home loan, they can still do so. Some banks are willing to consider a lower CIBIL score for home loans, provided all other parameters are being fulfilled. However, this may mean higher home loan interest rates.

CIBIL score is an important factor that signifies your financial health and reliability. Irrespective of whether you are planning to apply for a home loan or any other loan, it is ideal to maintain a healthy credit score. You can do this by paying off your debts and bills on time and using your wealth responsibly.

If you still have any questions about your CIBIL score, you can head on to the Metra Trust website. On the website, they have details on the intricacies of the CIBIL score and the do’s and don’ts associated with it.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Metra Trust or its affiliates to any licensing or registration requirements. Metra Trust shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.