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What Is the Role of CIBIL Score in Getting a Home Loan?

What Is the Role of CIBIL Score in Getting a Home Loan?

If you’re planning on taking a home loan, you must be looking for ways to get loan approval in the first go. While different lenders have different ways to assess your loan candidature, you should know that your CIBIL score plays a crucial role in getting your application approved. Wondering how? Check out the importance of the CIBIL score for home loan below.

What is a CIBIL Score?

The Credit Information Bureau India Limited (CIBIL) is the most esteemed credit information company licensed by the Reserve Bank of India (RBI). CIBIL holds the following credit information for millions of individuals and enterprises:

  • Credit history: The record of your repayment towards a loan or a credit card.
  • Credit report or CIBIL report: The exhaustive record of your credit histories for multiple sources like lenders, credit card companies, and government agencies.
  • CIBIL Score: A numerical value calculated based on all your credit information to date. It is a 3-digit number between 300 to 900 that summarises your credit history, credit rating, and credit report. Besides, your creditworthiness is based on your CIBIL score range. 

Additional Read: Minimum CIBIL Score Required for Home Loan

Why does the CIBIL score matter?

When you apply for a home loan, your chosen lender will first perform a CIBIL score checkto evaluate your creditworthiness. Have a look at the table below to understand the implications of each CIBIL score range.

Serial no.RangeRatingWhat does the score mean for you?
1N/A or NIL If you do not have sufficient credit history, you do not have a credit score. Lenders may hesitate to give you a loan as they cannot assess your creditworthiness.
2300-549PoorThere is a very slim chance of approval.
3550-649AverageYour options are limited, and you may get higher interest rates.
4650-749GoodYour chances of approval are good, and you can get more competitive interest rates.
5750-900ExcellentYour chances of loan approval are extremely high, and you can also get lower interest rates.

What is the ideal CIBIL score for a home loan?        

For most lenders, a CIBIL score of 750 and above is ideal for advancing home loans. Maintaining an excellent CIBIL score guarantees your loan approval, and also has the following benefits:

  1. The lender may offer your lower interest rates.
  2. You are eligible for a higher loan amount.
  3. You can negotiate further for more preferential loan terms, such as even lower interest rates, concession on processing fees, etc.

Additional Read: How much CIBIL Score Required for Home Loan

How to do a CIBIL score check, free of cost?

To check your credit score or CIBIL score, free tools are available online such as this one by Tata Capital.

If you are a new customer, submit your personal details and PAN to get your credit report and your CIBIL score. If you are an existing customer, you can check your CIBIL score instantly by entering your mobile number and verifying your OTP.

Regardless, at Tata Capital, you can find a broad range of housing loan products, customisable to suit your unique requirements. To learn more, connect with us today!

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