CIBIL score is a three-digit number that reflects an individual’s creditworthiness. Lending institutions evaluate the credit report before sanctioning a loan application. Hence to get prompt approvals, prospective home loan applicants must know the significance of a high CIBIL score for home loan and keep a tab over their credit profiles.
Reasons why high CIBIL score is essential when applying for a home loan
Here are some reasons why a high credit score is essential if one is looking to avail a home loan:
- To avail of a low home loan interest rate
The credit score tells the lender about an individual’s borrowing history and repayment activity. This signifies that the lending institutions assess the score and determine whether it is prudent to approve a home loan application from a borrower.
If an individual goes ahead and apply for home loan with a low credit score, lenders will charge high-interest rates and processing fees. This is because the lender will see him/her as a risky applicant. In comparison having a higher CIBIL score assures the lender that he/she does not pose a risk, allowing them loans at low-interest rate.
- Determining the loan amount one can receive
Because the score demonstrates an individual’s ability to repay a loan, a higher credit score means a higher loan amount that can be applied for. In addition, financial institutions go through a borrower’s credit history to understand how he/she managed the previous loans.
An applicant’s credit score will be affected if they have a history of late or missed EMI payments.
- To expedite the loan approval
While applying for a home loan, individuals need to check their eligibility for a particular lender. The CIBIL score is one of the most important eligibility criteria that borrowers have to meet. Henceforth one must meet the minimum CIBIL score for home loan set by financial institutions.
Many financial lending institutions offer competitive loan terms to applicants with strong credit profiles and CIBIL scores over 750. Hence it is crucial to build strong credit history and get a score as it makes an individual eligible to apply for a home loan with excellent terms.
The CIBIL score is an important parameter that affects one’s home loan eligibility. Therefore to improve the chances of availing the best home loan against favourable terms from a lender, it is necessary to have a higher score.
Steps to check CIBIL score online
Now that free online portals are available, checking the CIBIL score is much simpler. All individuals have to do is follow these steps:
Step 1: Visit the website of a preferred lending institution’s website.
Step 2: Fill up a form by entering personal details like PAN card information, identity proof, etc., to obtain the CIBIL score for free
Step 3: End thesteps by clickingon the “accept and continue” option.
Step 4: Enter the OTP received in the designated space
Accordingly, the screen will display an individual’s credit report, along with the three-digit number. One can further download the soft copy by submitting his/her email ID.
Besides the free CIBIL score check, leading financial institutions also extend pre-approved offers, making the home loan application process hassle-free. Such offers are available on several financial products like loan against property and many others. Individuals can check their pre-approved offers by entering their names and contact numbers. Now that individual knows the significance of a good CIBIL score for a home loan, they can work to improve their credit scores. Consequently, it will be easier to increase the chances of getting a loan approved.