The credit reports of consumers are generated by the Credit Information Bureau India Limited (CIBIL) as per their repayment activities. This numeral demonstrates a borrower’s creditworthiness. Based on this parameter, lenders decide whether the borrower is worthy to get the loan.
A high credit score increases the likelihood of loan approval and vice versa. However, there are many who are unaware of the best CIBIL score for a home loan and how they can improve it.
Ways to keep a healthy CIBIL score for a home loan
It is better if individuals have a credit score of 750 or above for instant approval. Before applying for a home loan, borrowers need to keep certain things in mind in order to increase or retain a healthy credit score, as mentioned below:
Paying dues timely
Making the payments of credit card bills and loan EMIs on time is truly one of the most effective ways to improve a credit score. Borrowers need to clear their monthly dues before the due date. Doing so can help increase their CIBIL score, thereby improving their creditworthiness. If a borrower tends to forget about the payments, he/she can set payment reminders.
Checking errors in the credit report
Another way to keep a good CIBIL score is by performing periodical verification of the credit report. Borrowers can navigate to the official website of CIBIL or other credit bureaus for checking their credit scores and reports. Their portals help borrowers track their repayment status which includes outstanding loan amounts and missed payments that can potentially diminish the CIBIL score. After checking a credit report, an individual can detect if there is any error and can report it to the credit bureaus for rectification.
Reducing credit utilisation
To keep a healthy CIBIL score for a home loan, individuals also need to ensure that their credit utilisation ratio is low. The ratio refers to the total credit individuals have used against the total credit limit. People must try to keep the ratio around 30-35%. For instance, if an individual has a credit limit of Rs.30000, they should use around Rs.10000. If they withdraw or utilise more, it will increase the credit utilisation ratio, thereby impacting the credit score. So, an individual should ensure that they use their credit cards sensibly.
Maintaining credit mix
Remember that borrowings can be either secured or unsecured. Secured loans like home loans, loans against property, etc. feature a backing of collateral while unsecured credits like personal loans or business loans require no involvement of collateral. Having a good mix of both types of credit can be beneficial for the borrowers as it improves credit scores, thereby increasing their creditworthiness.
With the help of these strategies, individuals can secure or maintain a healthy CIBIL score in the range of 700-900 and get a home loan without difficulty.
How to see CIBIL score online?
Individuals can view the CIBIL score by following these steps:
Step 1: Navigate to the official website of CIBIL
Step 2: Click on the ‘Get your CIBIL Score’ button
Step 3: Enter the credentials, PIN code, date of birth, and registered mobile number
Step 4: Select the ‘Accept and continue’ option
Step 5: After this, the user will get an OTP on his/her mobile number
Step 6: They have to enter this OTP and click on ‘Continue’
Step 7: Then click on the ‘Go to dashboard’ option and check the credit score
Following these easy steps, borrowers can check whether they meet the requirement of a minimum CIBIL score for home loan. However, there are also some other eligibility criteria that they need to meet to get the credit.
Eligibility criteria for a home loan
Following are the eligibility parameters that an individual needs to follow while applying for a home loan:
- The applicant must have Indian citizenship
- Age of salaried individuals should be between 23 to 62 years
- Age of self-employed persons must be between 25 years and 70 years
- Salaried applicants must have at least 3 years of working experience in the corporate world
- Self-employed persons with at least 5 years of experience in the business field
Documents required for a home loan
Mentioned below are the important documents required to be submitted while applying for a home loan:
- Identity Proof (include PAN card, Aadhaar card, driving licence, passport)
- Address Proof (Aadhaar card, passport, electricity bill)
- Income Proof Documents (ITR of last 3 years, audited balance sheet, profit and loss statement for last 3 years, TDS certificate, and so on.)
Once individuals meet the eligibility criteria and gather the necessary documents, they can proceed with the application process for a home loan.
Steps to apply for a home loan
Following is the step-by-step process to apply for a housing loan:
Step 1: Go to the official website of a preferred lending institution
Step 2: Navigate to the loans section and select the ‘home loan’ option
Step 3: Fill out the housing loan application form with the required information
Step 4: Select the credit amount, rate of interest, and loan tenor
Step 5: Upload the required documents as instructed
Step 8: Double-check the application form and select ‘Submit’
After completing these steps, the application for a housing loan will be submitted. Then applicants should wait till the lending institution conducts the loan verification. If everything regarding the home loan application is without any mistakes, the lender will approve the loan request.
Before availing this credit option, borrowers should ensure that they have met the requirement of CIBIL score for a home besides other eligibility parameters. They should also remember that the eligibility criteria for home loans vary from one lender to another. Hence, they should conduct research before finalising their lender.