A home loan is a long term commitment between the borrower and the lender. These loans are provided for a tenure of around 20 years and provide you with the financial aid needed to make your dream home a reality. The lenders offer housing loans on account creditworthiness and some pre-defined eligibility criteria which usually varies from every lender. Out of all these criteria, one of the most important is the CIBIL score of the applicant. It is a key deciding factor which determines whether your home loan application will be approved and at what terms or even get rejected.
CIBIL score is a reflection of your credit and repayment history. It clearly shows how disciplined you have been with the payment of monthly instalments of your previous and existing loans. The credit report of the applicant also gives a detailed analysis of the ongoing loans and previous loans. Banks and other home loans lenders take your credit score into consideration because they want to be sure of your credibility and repayments. A good credit score results in a quick approval of loan application whereas a fair or poor credit score may result in your home loan application getting rejected or need to meet additional norms.
The first and foremost step is to check for the CIBIL score to be clear for the
home loan eligibility . It is very important to know about your credit score before you apply for the home loan. If the credit score is poor, then it can result in rejection of the loan application which will further hinder your credit score for all future applications.
If you are not sure of what a healthy credit rating for home loan eligibility is, read on. A credit score or CIBIL score of over 750 points is considered excellent wherein the chances of approval of home loan application are very high. The more the credit score, the chances of applicants getting a better deal and increased loan amount are significantly higher. Also, a good credit score has several other advantages like it helps you negotiate with the lender for better home loan interest rate or waiving off certain fees or processing charges. The lender is assured of your credibility and offers you the best of deals on home loans.
However, if your credit score is on the lower side than what the lender seeks, then you can work towards improving your score for complying with the home loan eligibility criteria. Here are some ways of improving your credit score.
- Every delay is a loan repayment spoils your CIBIL score. Thus, simply pay on time and manage finances accordingly.
- Not paying Credit Card dues on time could be very costly as it could impact your home loan eligibility by spoiling your credit or CIBIL score
- Always keep an eye on the credit score and take steps needed to improve or speak to lenders for any corrections, if needed.
- Take an unsecured loan only for planned or absolute emergencies and inculcate healthy money management habits
KEY POINTS TO REMEMBER
- Always keep an eye on your CIBIL score while applying for a housing loan.
- Avoid multiple loan applications with various home loan providers.
- Ensure a low debt to income ratio before you apply for the loan. If need be, aim at closing all other debts before applying for a home loan.
Home loan providers take CIBIL score as a very important factor. Thus, one must strive to maintain and improve it to get the best deal on a home loan. Also, different lenders have different eligibility criteria. One lender may accept a credit score of 650 for home loan application while some may be strict for credit score over 750. Thus, it is imperative to search and compare different lenders before choosing on the one.
Fintech enablers like LoansJagat offer an excellent platform wherein the borrower can compare different lenders off their offerings on account of home loan eligibility criteria, rate of interest offered, loan amount, EMI, processing charges, foreclosure fees etc and choose the one which best meets his needs and requirements. Their online portal ensures quick processing of home loan application and faster disbursal of the sanctioned loan amount in the bank account.
One must remember that availing a home loan is easy if one meets the eligibility criteria, have a good credit score and have all the documents in place which are asked by the lender.
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