Your credit score
plays an important role when it comes to avail any form of a loan. It plays a
decisive role because the home loan is for a longer tenure and it builds an
opinion about the borrower if they would be able to make payments towards their
monthly installment or not. A credit score is a 3 digit number which narrates
the entire credit behaviour of a person. It usually varies from 300 to 900.
Credit/CIBIL score is adjudged upon the credit history. You can get it free of
costs from rating agency like Experian, Fitch, ICRA, CARE, etc.
Most people wonder what will be the ideal
CIBIL score for home loan. Well, experts say it
should be somewhere 700+ to apply for home loan and if it’s 800+ you're in a
good position to negotiate with the lenders for low-interest rate deals.
Your credit report consists of
information such as a record of credit card bill payments, late payment,
payments of any other form of loans like personal or car loan, defaults of past
credits, rejection application, and many more.
If you apply for a loan with a good
credit score and credit history background, you're likely to get that credit
easily as lenders will put a faith in such individuals. If the credit records
are good, then there are high chances for the loan to be sanctioned. If the
person doesn’t hold good credit record then loans will give at the higher
interest rate or might be rejected as well. It impacts home loan more because
the amount and the duration of the loan will tend to increase as well.
If you hold good credit score and have all the requisite
documents in place its possible you can secure up to 80-85% of your home loan
finance to buy a new or resale home or construct a new property.
Why lenders need CIBIL score for home loan?
From
the lender's perspective, they wish to minimize the risk of themselves and make
optimum use of their financial resources. They also look at your loan to income
ratio, to see how streamlined and diligent you are in repaying the loan. Since
they lend the money it’s obvious they are careful in their screening process of
home loan sanctioning, to maintain the quality asset.
