Require a home loan? Here’s how a good CIBIL score can be helpful
We all wish to live in our dream house. And this wish can be fulfilled easily by taking a home loan. With so many lenders available in the market, it has become quite convenient and hassle-free to avail of a home loan.
The eligibility criteria for applying home loans are easier to meet. You can even check your eligibility using the home loan calculator. One of the most significant factors that help in a quick approval of your home loan is the CIBIL score.
There are various factors through which you can improve your CIBIL score. So, please keep reading to know everything about it.
What is a CIBIL score?
CIBIL score is a three-digit number that ranges from 300-900 and based on which your credit history can be determined. The closer we get to 900, the better our CIBIL score becomes. It improves the chances of getting quick approval. It is one of the essential criteria set by lenders when analysing the loan application process.
How the CIBIL score affects the interest rate?
Your home loan interest rate is highly dependent on your CIBIL score. It is because your score signifies your credit history and an excellent credit score shows that you have acted responsibly by always repaying your loans on time. Depending on your credit score, you will be charged a high or competitive home loan interest rate. Your monthly instalments are dependent on the interest rate. If the interest rate is lower, then the monthly EMI will be more affordable.
Interest Rate Based On Your Credit Score
- Credit Score Between 760-900
It is an excellent credit score to avail home loans at a nominal interest rate ranging between 8.35%-8.45%. It also indicates that you have repaid all your previous loans responsibly.
- Credit Score Between 700-760
It is considered to be a good credit score. With a score like this, your loan will get successfully approved but with a slightly higher interest rate.
- Credit Score Below 700
With such a score, you might still get an approval of a home loan from the lender but with a higher interest rate.
Factors That Affect Your CIBIL Score
- Repayment Of Loans-
Paying all your bills and repaying your debts on time is essential for a good credit score. Missing your payment dues can adversely affect your credit score.
- Credit Mix-
Your credit history must have a mix of secured and unsecured loans. Having too many unsecured loans make it seem like you might not be able to repay them on time. So, it leaves a wrong impression on your CIBIL score.
- Credit History-
A longer loan usage history determines that you have managed all the past loans well and thus, enhances your credit history.
Your CIBIL score plays a vital role, but it is not the only factor that determines swift approval. Your monthly income, age, place of residence and employment history also plays a significant role. So, make sure to meet all the eligibility criteria for a smoother application process. You can check your home loan eligibility here.