Many people want to become homeowners, and owning a home can be as easy as getting a mortgage. However, you do not just have to apply for a home loan; In addition, a number of conditions must be met.
One of the necessary requirements is that you must be creditworthy as a high CIBIL score increases your chances of acceptance and also helps in negotiating better loan terms. Here we know the minimum required CIBIL score for home loans.
Understanding CIBIL Score
A CIBIL score ranges from 300 to 900 and it is a three-digit number that summarizes your entire credit history. According to financial institutions, this can be determined based on whether you lend them or pay them back or not. The likelihood of getting approved for a loan increases, along with better terms and a higher score, because more money will be given with less risk to the lenders.
Steps to improve your CIBIL score
1. Pay the bills: Both credit card loans and EMI loans must be properly processed within the stipulated timeframes. Payments made after the deadline will not only incur a penalty, but also damage the credit score.
2. Continue to review your credit report: Review your credit report regularly, which will help you identify and correct inconsistencies, ensuring a true representation of creditworthiness.
3. Avoid Excessive Debt: Don’t close old credit accounts and keep debts at manageable levels. In general, the longer your credit history, the better for your score.
4. Low credit utilization ratio: Don’t use more than a modest percentage of your credit limit. To lower your utilization rate, you can request your bank to increase your credit limit if necessary.
5. Ensure a good credit mix: Good money management also means maintaining a balanced mix between secured loans, such as home or car loans, and unsecured loans, such as credit cards, and personal loans.
Minimum CIBIL score required for home loan
According to lenders, the home loan requires a minimum score of 725 or higher. However, scores of 750 and above are usually preferred and will give you the best loan terms with low interest rates. While it is a good indicator, there are other factors your lender will look at; these include your salary, age, job security, current obligations, and your ability to make a down payment. If these are all high, you may even be approved despite a relatively low score.
In conclusion, aiming for a score above 750 will significantly increase your chances of acceptance and better loan terms, but the minimum CIBIL score required for a home loan is usually 725. Using a high credit score will get you higher loan amounts with faster processing times and lower interest rates.
