Been hearing too many people advocate for a good CIBIL score, but still confused about how it impacts you?

Top Four Tips to Improve CIBIL Score for Home Loan ImmediatelyPixabay
Tuesday, November 23, 2021 - 19:39

Let us step in – your CIBIL score is a mark of your creditworthiness and decides whether you are a good home loan applicant. If you are in the market for a home loan, your CIBIL score is of utmost importance, as it will be one of the primary things your lender will assess, before sanctioning the loan amount.

What is CIBIL Score and How Much is Necessary for a Home Loan?

Your CIBIL score is awarded to you by the Credit Information Bureau India Limited, based on your financial patterns. The CIBIL score is a three-digit number that ranges between 300 and 900. The closer the score is toward 900, the better it is. Your CIBIL score depends on how well you’ve been able to stick to your financial obligations – paying bills on time, clearing off past debts, and your financial standing.

Most lenders expect a score of 750 and above to consider loan applications. Think of it as your gateway pass to good home loan deals, reasonable interest rates, and favourable lending terms.

Does CIBIL Score Affect Home Loan Eligibility?

Simply put – yes, your CIBIL score factors in significantly, determining your home loan eligibility. Amongst other things, your lender primarily depends on your CIBIL score to assess your creditworthiness and your repayment capacity. The improve your CIBIL score is, the less hesitant your lender will be to give you high loan amounts at low interest rates – as they’d be assured of your repayment commitment.

If you have a CIBIL score of 750 and above, meeting the lender’s home loan  eligibility criteria will be a breeze, but if it is any lower than that – the chances of getting the home loan deal of your choice may be considerably slimmer.

However, having a low CIBIL score doesn’t spell the end of your borrowing journey. With the correct efforts put in, you can work towards enhancing your CIBIL score which in turn will qualify you for better home loan deals. Here are some measures you can adopt to help your cause. 

  1. Pay Your Dues on Time 

A sure shot way to ensure that your CIBIL score doesn’t sink is to stick to your repayment commitments and pay your dues on time. This could mean loan EMIs, or even credit card payments. By making timely payments, you become a financially responsible individual whose discipline makes them a low-risk borrower.

It is also suggested that you keep a record of your old account transactions, so prospective lenders can trace your timely repayments and use the information to give you the loan you desire. 

  1. Maintain a Balanced Credit Mix 

Your credit record should ideally display a mix of credit, including secured and unsecured loans to balance it out. If one has too many unsecured loans and bounces, it could reflect poorly on their credit score. 

  1. Keep a Regular Eye on Your Credit Report 

Irrespective of whether you’ve spotted an error or not, it is essential to keep a check on your credit report from time to time. Doing so will help detect errors and inconsistencies. Credit bureaus are legally bound to offer borrowers a free credit report every year and by making use of this facility, you can be proactive in getting your CIBIL score rectified if the need arises. 

  1. Balance Credit Utilisation 

Your lender would like to see how well you manage your credit extensions, and your CIBIL score is the perfect medium for them to do so. One must strive to strike the right balance when it comes to credit utilisation and manage their credit cards bill well – paying them back on time. This proves to lenders that you are responsible in your utilisation of credit and can successfully manage repayments on time.

Note that owning too many credit cards may also jeopardise your home loan application, as it increases your credit liability – thereby increasing your repayment obligations considerably.

The Final Word

We hope that you can now adopt these measures and focus on enhancing your credit score before you apply for bajaj housing finance home loan. It will also interest you to note that despite having a low CIBIL score, applying for a home loan isn’t impossible. With Bajaj Housing Finance Limited, one can apply for a co-applicant and increase the eligibility of their loan application, and earning the chance to get a loan with an interest rate start as low at 6.70%* p.a. if you are a salaried or professional applicant.

This content is distributed by Bajaj Housing Finance. No  journalist is involved in the creation of this content.