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CIBIL Scores for Home Loans


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Title: CIBIL Scores for Home Loans

CIBIL Scores for Home Loans
It is every persons moral right to claim a roof
over his or her head. And it is every bodys
dream to own a place of their own and call it
home. In todays time, given the property prices
it is next to impossible to assume that one can
buy a home without seeking external financial
assistance. So whether you are looking at a dream
apartment, buy a plot of land, seek loan for home
improvements and renovations, planning to buy a
home for your retirement days, construct a new
home at a plot you own, make additions to your
existing house or just make an investment in
property, there is near surety that you will need
a home loan to help you achieve your residentiary
An ideal score for home loans
  • There is no specific benchmark score declared by
    banks or other financial institutions for home
    loans. However, it has been broadly observed that
    loans which are approved are for individuals who
    have a score of 750 or more. So, be it a car
    loan, home loans or a simple credit card, lenders
    prefer a score greater than 750.
  • Your score is a numerical representation of your
    creditworthiness. Having a good score will
    instantly leave a good and lasting impression on
    a lending institution. Timely repayments of
    existing credit, moderate use of credit, low
    portion of unsecured loans in your portfolio and
    not seeking too much credit are some of the
    factors that impact your score positively. This
    means, that once a lender views a decent score,
    it assumes that you follow healthy credit
    practices. This is a huge plus for a borrower.

  • You may have a score of -1. This means that
    your credit history is less than six months old
    and therefore you have not been given a score
    yet. A score of NA or NH may also mean that
    you have not had any credit relationship for the
    past two years. In both these situations, a bank
    may decline your application. What you can do is
    seek a minor credit like a simple credit card.
    Make small charges on it and repay them in full
    every month before the due date. After six months
    review your report and once you notice a
    favorable score, reapply for that home loan.

While one does not get a free CIBIL report in
India, one can pay and get his report from any of
the four bureaus in India.
Is a good score good enough to get my loan
It would be misleading to state that your scores
alone are factors deciding the fate of your
future loan approvals. A good score must be
endorsed with an equally good credit report. We
have had instances where clients would have a
fairly fine score of 750 yet, their applications
would be rejected. The main reasons for this
could be one of the following
1. There is a settlement or written-off
account in your report. This means that either
you paid less than what was due to you on an old
credit account. Or that you did not repay it at
all and the previous lender has written off your
loan as unrecoverable. This is a good enough
reason to put off a lender while evaluating your
loan application.
2. You have maxed out your debt to income ratio.
The rule of thumb is that your monthly EMIs
should not exceed 50 of your monthly income. So,
if you have already maxed out your eligibility
based on this rule, then even though you may have
an impeccable record, banks will not indulge in
future lending to you.
3. Apart from your credit history, your income
proofs and tax returns, standard KYC documents,
bank statement, a clean title on the property are
some of the other things that a bank considers
while assessing your application. Any missing
document or a fault in these documents can also
be grounds for rejection of your loan. When
looking for a home loan, taking steps like buying
a home insurance policy will help put a positive
impression on the lender. This is because the
lender will perceive you as a risk averse person
and will view your portfolio with a less risky
I have bad credit. Are there home loans for me?
You may have had a stroke of misfortune. It may
have had shattering effects on your score.
Nonetheless, you are willing to make a fresh
start with a fresh dose of credit. The good news
is that inspite of bad credit, home loans are not
a distant dream. Some very simple steps are
listed here that you can undertake before you
seek a loan. 1. Seek your copy of credit report
at least six to twelve months before you apply
for a loan. Work on ways to improve credit score
fast. You will find helpful articles on this on
our blog. 2. Support your loan application with
income documents, which will help you to convince
lenders of your payment capacity. 3. Find
yourself a guarantor of loan or a co-applicant,
with a favourable score. 4. Take adequate
measures to make sure that you do not default on
any of the payments. Over time your score will
improve and in future you will have a less
hassled process to deal with.
In a nutshell Whatever be your residentiary
needs, there is high probability that you will
have to ask for a home loan to help you fulfill
it. A high CIBIL score is imperative to your loan
application being approved. Thus, it makes it
absolutely obvious that maintaining a high credit
score and a healthy report endorsing your score
should feature on the top of your priority list
of your financial deeds. Patience pays.
Especially in the credit world.
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