Home Loans and CIBIL Score- What You did not Know?

Applied for a Home Loan and worried about the status of your application? Well, if your CIBIL score is in good shape, there is no reason for you to worry, but if your score is not very impressive- then you might have reasons to worry. Lending institutions always check the credit score of the applicant before granting Home Loans. A high income and a sound employment history do not necessarily guarantee that a Home Loan application will be approved and the requested amount will be granted; the CIBIL score is the underlying factor which can affect the status of a Home Loan application.

CIBIL Score is a statistical figure that is provided by a body established by the government of India in 2000 that keeps track of an individual’s credit history and spending habits. This is the Credit Information Bureau (India) Limited. The importance of CIBIL Score while availing Home Loan is much prior because it represents the financial trustworthiness and credit repayment capability of an individual.

A credit score of 750 or above out of 900 is considered a good score by lending institutions. In addition to being eligible for a Home Loan, a good credit score is also necessary to avail the loan with a low credit score.

Payments made against an existing loan or credit card bill are recorded in the credit report of an individual and contribute towards the credit score- over time, regular payments will help in building a high credit score.

Given below are a few ways to increase the credit score and eligibility for a Home Loan with a low rate of interest:

• Make timely and regular payments on any existing financial liabilities and make sure to complete repayment as soon as possible.
• Limit the dependence on credit cards and keep the maximum at 30% of the available credit limit.
• Avoid making multiple credit applications as for every credit application made, a credit enquiry is made too. This reduces the credit score and thereby affects eligibility for future debts.
• Outstanding dues need to be kept to a minimum and any pending bills should be cleared at the earliest.
• The individual credit score should be monitored from time to time as it helps in keeping possible errors in check that can affect the status of the Home Loan application.

​These are simple and easy to implement ways that have been tested time and again by Home Loan seekers. If you are planning on settling down in a particular city, start early and follow these steps to find the best housing finance scheme.