Purchasing a home today is challenging without availing a home loan. These loans have becomes an integral part of real estate sector. However acquiring home loan is not as easy as it seems. There are certain obligatory protocols and guidelines laid down by Reserve Bank of India which have to be followed by each applicant before applying for home loan. One of the most critical factors that decide the home loan criteria is a good CIBIL record.
What is CIBIL Score?
CIBIL Scores are utilized by banks or financial institutions to analyze the creditworthiness of loan applicants or borrowers. It plays a significant role in processing the home loan applications. It is numeric summary of an individual credit history that helps them to get their loan applications processed and approved. More often Banks and other financial institution rely on CIBIL scores to calculate the potential risk demonstrated by offering credit to buyers and to alleviate losses. CIBIL score plays a key role in India’s financial organization which not only enables buyers to secure credit faster but also lets banks to manage their business proficiently.
The CIBIL scores are evaluated based on several factors such as payment history, loan account, credit record, outstanding debt and many other parameters.
Why is CIBIL score important when applying for a home loan?
Every person who wants a loan sanctioned must know that the CIBIL score plays a crucial role in acquiring a positive approval. When the home buyer submits loan applications to the banks, the first thing a moneylender does is to check the credit score and past history. If the credit score is low, the bank or housing finance company mostly reject the loan applications. However, if the credit score is high then the bank will analyze the credit worthiness of home buyers and will pass on the application for further processing. In general, less than 350 is considered as poor score, 350-750 is regarded as an average score and more than 750 is considered as best score for borrowers.
CIBIL score is one of the key factors that determine the eligibility criteria to avail a loan or a credit card. These can affect home buyers financial journey depending on how good or bad the score is.
The home buyer’s approvals of credit by banks or financial institutions are mainly based on CIBIL data. Banks will check the credibility of applicant before granting credit approval and CIBIL Score greatly assist in determining the eligibility to avail credit. A bad CIBIL score will reduce the chances of acquiring credit where as good CIBIL report for home loan will help avail a credit card, home loan, mortgage loan, personal loan, car loan or any other types of loan.
There are many other options to avail home loan credit without a CIBIL score such as borrowing from private lenders, family members, corporative banks, friends, relatives etc. with high interest rates. However, the rate of interest on such loans will be comparatively higher.
A good CIBIL score will also enable home buyers to get loans at competitive rates. Higher the credit score lower is the interest rate thereby amounting to considerable saving over the tenure of home loan.