Given that a home loan is usually the largest loan you will ever take out, it seems reasonable that lenders have a minimum credit score for home loans. A high credit score indicates that you can complete your timely payments to banks and other financial institutions. Your credit score and report can greatly impact your chances of getting approved for a house loan and receiving great interest-rate offers.
It is important to check your credit score and report before applying for a home loan. One way to do this is by signing up for a free CIBIL score login. By checking your score and report regularly, you can ensure that there are no errors and that you are in a good position to apply for a home loan. Additionally, by maintaining a high credit score, you can increase your chances of getting approved for a loan and receiving better interest rates. So, don’t wait until the last minute, check your credit score and report today and take the necessary steps to improve it.
What is CIBIL Score?
A CIBIL score is a three-digit number that ranges between 300-900, which is used to determine creditworthiness depending on your credit history. The TransUnion CIBIL (Credit Information Bureau India Limited) keeps track of each person’s credit scores.
A lender’s CIBIL score is among the most significant elements when making a home loan disbursement. It will demonstrate your ability to repay any debt.
How to Know Your CIBIL Score?
One can follow the following steps to know their CIBIL score:
Step 1: Visit the official CIBIL website.
Step 2: Click on the ‘Get Your CIBIL Score’ tab.
Step 3: Sign up for a free CIBIL score login.
Step 4: Enter your details such as your name, email address, date of birth, address, PAN and Aadhaar number, etc.
Step 5: Enter the OTP received on your registered mobile number.
Step 6: Click on the ‘Go to dashboard’ option. Your CIBIL score will be displayed on the other page.
Minimum Credit Score to Avail a Home Loan
Although no minimum credit score is required for home loans, a score of 750 or more is typically considered a decent score for approval. Depending on the sort of home loan you’re asking for and your bank or lender, the required credit score to buy a house might range from 500 to 700. While getting a home loan with a poor credit score is possible, the best conditions usually require good or exceptional credit.
Factors Affecting the Credit Score
Several factors that affect the credit score are as follows:
Repayment History
The most significant aspect of your credit score is whether or not you are trusted to return money that has been allocated to you. When reviewing you for new loans, banks want to ensure that you will repay your debt on time. If there are any delays in your credit card payments or your loan payments, that will project a negative score on your credit score report.
Credit Utilisation Ratio
Your credit utilization ratio is computed by dividing the total amount of revolving credit you have available by the sum of all your available revolving credit limits. This ratio measures how much of your credit limit you are using and might provide an overview of your dependence on non-cash resources. An inconsistency in the way you spend your money has a negative impact on your credit score.
Credit History
Your credit score also considers how long you have been using credit. A long credit history is beneficial, but a short one is acceptable as long as you’ve completed your regular payments and don’t have too much to pay back. The credit history contains the average duration of all your accounts and the durations of your oldest and newest credit accounts. Your credit scores increase with the length of your credit history.
New Credit
Lenders normally conduct a thorough check whenever you apply for a loan, such as a home loan. It is a process of examining your credit report throughout the loan application. The score considers that if you’ve opened many accounts recently and a huge portion of those relative to all of your other accounts, you could be at higher credit risk.
Credit Mix
People with excellent credit often have a broad credit portfolio, including a vehicle loan, credit card, education loan, home, or other financial services. Credit scoring systems evaluate the varieties of accounts you hold and the number of each to determine how well you handle a diverse variety of credit products.
Conclusion
Owning a home is a big step in every person’s life. A home loan makes it very easy to fulfill your dream of owning a home. Credit score has always been considered an important factor when getting any loan or other credit services. Before applying for a home loan, one can check their credit score using the CIBIL score app available online. You can also get your credit score on the CIBIL website by just signing up for a free CIBIL score, login into your account, and getting the details.
