Your Credit score is one of the most important eligibility considerations when applying for a home loan. If your CIBIL score is good, you can take advantage of several interesting perks and services. As a result, most people with a low CIBIL score have trouble getting credit. It’s a common fallacy that you can’t acquire a home loan if you have a low credit score. Some people are even scared that if their CIBIL score goes below 650, they would be denied a home loan. In this circumstance, lenders usually charge a hefty interest rate. You can only qualify for a home loan if your credit score is above 700 out of 900. In India, many people do not have a good credit score. The rejection of their lender is a major problem. To address this issue, banks and other financial institutions have developed a variety of house loan options that allow people with poor credit to obtain financing.
Impact of Credit Score on Home Loan Application
Your credit score affects your financial health directly, but the only way to know if it’s helping or hurting you is to check it at least once a month. The general population is rarely given access to financial products. Before making any form of loan to an applicant, banks and NBFCs evaluate a variety of crucial financial variables.
Categorization of CIBIL Score:
|Credit Score Range|
Your CIBIL Score, which runs from 300 to 900, reflects your creditworthiness and repayment capacity. Customers with a credit score of more than 750 have a 79 percent chance of obtaining a loan approved, according to CIBIL (Credit Information Bureau (India) Limited. A client with a poor credit score may find it difficult to obtain a house loan even at higher interest rates.
How to Get Home Loan with Low CIBIL Score
If you have a low CIBIL score, you can still apply for a home loan by negotiating with your bank or financial institution in the event of a loan or credit card payment default. When you reach an agreement, you can pay the settlement sum and receive a NOC (No objection certificate). The NOC makes the process of applying for a home loan much easier. However, you must review your CIBIL score before applying for the loan to confirm that there are no discrepancies or inaccuracies, and that your credit score, including settlement data, is accurately stated. A bank, for example, with whom you have successfully repaid a loan. It might also be a bank where you have a payroll account or a savings account where you deposit and withdraw money on a regular basis. Even if your CIBIL score is low, your customer loyalty may be able to help you get a home loan. However, you can acquire a loan from a bank or non-bank financial institution if you have a large account balance and a series of recurrent or fixed deposits. Moreover, there are numerous ways on how to improve CIBIL score that you can adapt and increase your overall CIBIL score.If your CIBIL score is low but your spouse’s is high, you could enlist his or her help in obtaining a home loan. You can speed up the approval process for your home loan by including your spouse as a co-applicant or joint account holder on the application.