A credit score is an important indicator for your credit and repayment capacity. It also plays a crucial role in determining your eligible housing loan and the interest rates that apply to this
Banks and financial institutions increasingly rely on creditworthiness, the repayment capacity and the financial integrity of a person to reduce the risks of standard values or loss of borrowed funds. In this context, your three -digit credit score can significantly influence the costs of borrowing and the EMI on your housing loan.
As a borrower, it is essential to consistently repay all your credit card defenses and to use personal loans earlier to ensure that your request for housing is viewed more favorably by your lender.
The idea is simple: reimbursement is directly linked to your financial integrity. If you are consistent with reimbursements and have a long history of the same, it often lays the foundation for the eligible interest rates for home credits. This article will discuss this simple concept in detail.
What is a credit score?
To reflect your financial behavior and credit history, prominent credit agencies in India-such as Equifax, Transunion Cibil, Experian and Crif Highmark-a score with three digits ranging from 300 to 900
This score is calculated on the basis of various factors, including repayments of loans, credit card use, earlier credit history, outstanding debts, reimbursement periods and standard values. A higher score is of course a positive indicator of this indicates responsible financial behavior and marks you as a borrower with a low risk. It has a significant influence on the EMI fitness of your housing loan, as well as your chances of getting premium credit cards and other financial benefits.
What is the impact of your credit score on the interest rates for housing loans?
Lenders in India offer different interest rates based on leers’ credit scores. For example
- Borrowers with a credit score of 800 or higher are eligible for the lowest interest rates for housing loans, with smoother loan processing from 8.1 percent per year of institutions such as Union Bank or India.
- If your score falls between 700 and 749, the interest rate can rise to 8.85 percent-9 percent, which considerably increases your monthly EMIs and the total repayment amount.
- A lower credit score (under 650) can result in even higher interest rates, sometimes of more than 10 percent, together with strict repayment conditions. That is why, in order to maintain a high credit score, you must keep your credit use ratio as low as possible. Preferably lower than 30 percent.
For example, if you have a £50 Lakh loan for 25 years at an interest rate of 8.1 percent (credit score: 800), your EMI will be approximately £38,923, with a total interest rate out of £66.76 Lakh. With a rate of 8.85 percent (credit score: 720), the EMI, on the other hand £41,618, and the total interest to be paid is increasing until £74.85 Lakh. This shows the significant impact, even a small change in your credit score.
Note: Data used here is only used for illustrative purposes. For the most recent interest rates for housing loans and applicable costs, together with other details, please contact your respective financial institution. These rates can be changed according to the policy of the bank or financial institution.
Why is maintaining a high credit score material?
A good credit score not only protects lower EMIs, but also improves your chances of approval of housing loan and access to pre -approved loans. It can help you to save considerably over the years. Consider the following to maintain or improve your score:
- Pay EMIs and credit card details on time.
- Keep your credit use ratio below 30 percent.
- Avoid multiple loan applications within a short period.
- Avoid requesting too many credit cards or loans in a GO.
- Continue to consistently check your credit score for discrepancies.
Current interest rates for housing loans
From April 2025, the rates of the home credit in India vary from 8.1 percent to more than 12 percent, depending on the credit profile of the lender and the borrower. Banks in the public sector such as Punjab National Bank offer competitive rates from 8.15 percent, while private lenders such as Icici Bank have rates that start at 8.75 percent.
Note: The interest rates discussed above are only for illustrative purposes. For the updated and most recent rates apply, consider making contact with your respective credit institution.
Maintaining a high credit score can save you Lakhs about the term of office of your housing loan, making it a crucial aspect of financial planning.
Disclaimer: Mint has a bond with fintechs for providing credit; You must share your information if you apply. These tires have no influence on our editorial content. This article only plans to teach and distribute consciousness over credit needs such as loans, credit cards and credit score. Mint does not promote or encourages taking credit if it comes with a series of risks such as high interest rates, hidden costs, etc. We advise investors to discuss with certified experts before we take credit.
