Owning a home is on everyone’s wish list. Home is a place which you can call your own and enjoy a lifetime of happiness with your dear ones, and a safe investment for the future. With many futuristic apartments coming up in thriving parts of the city like the flats for sale in OMR as the buyer there are many options available for you, but planning for the finances is one activity which you have to start early. When you apply for a home loan to buy your home your CIBIL Score is what matters the most.
What is a CIBIL Score?
CIBIL (Credit Information Bureau of India Limited) is one of the major credit bureaus in India that calculates the Credit Score, a number that depicts the credit worthiness of the borrower, higher the score, better is your credit worthiness. The 3 digit CIBIL Score ranges between 300 and 900 and is calculated based on many Factors such as credit history, loan repayment history, earlier debt and other such relevant information.
The Impact of CIBIL Score in Home Loan Approval –
When you apply for a home loan to buy your house the first thing that the lender, be it a bank or a financial institution, looks at, is your CIBIL score, for that reflects your ability to repay the loan. A CIBIL Score more than 750 is generally considered good by the lender and it offers many benefits like –
- Easy loan approval – A higher credit score indicates that you have good credit history and are a reliable and low-risk customer and this betters the chances of loan approval.
- Higher loan amount – A higher CIBIL score will reinforce the lender’s confidence of on time loan repayment and this will encourage them to sanction a higher loan amount.
- Reduced home loan interest rate – A good CIBIL score works in your favour as it projects your good credit history, reliability and on time repayment of dues, this gives you the power to negotiate with the lender for a better home loan interest rate.
- Lower Down Payment – A lower CIBIL Score will encourage the lender to request for higher down payment as they always associate a risk factor with the loan. A good CIBIL score speaks volumes about your reliability as a borrower and works in your favour encouraging the lender to settle for lower down payment.
- Increased loan tenure – Having a good track record of loan repayment and thereby a good credit score encourages your lender to offer you a longer loan tenure.
How to improve your CIBIL Score? –
Here are some of the ways you can improve your CIBIL Score –
Ensure On time payment of your EMIs & Credit Card Bills –
Ensure on time payment of the EMIs on your loans, for any delay in payments will attract penalties and thereby would lower your credit score. Regular on time clearance of the dues would ensure a good CIBIL score that would work in your favour.
Create a good Credit History –
Ensure on time payment of your credit card bills, for this will build you a good credit history, the primary concern for all the lenders.
Choose longer tenure loans –
When you opt for longer tenure loans it will help you build a good credit history. The EMI is also lower in this case and will encourage you to pay it ontime there by helping you establish a good credit history.
Avoid availing too many loans at a time –
It is always better to have one active loan for repayment at any given juncture. Multiple active loans will portray you as in dire need of funds, instead one active loan will weigh low on your mind and your pocket and will ensure on time loan repayment helping you improve your credit worthiness.
Keep a Check your credit score at regular intervals –
Always remember to check your credit report and credit score at regular intervals. This way you can catch any error in information management which might affect your credit score. There are many agencies which offer free credit score reporting and you can avail their services for it.
As you apply for a home loan to own your dream apartment in OMR your CIBIL Score is one important deciding factor that influences your home loan approval process. Maintain a good credit history, repay your loans on time and ensure a good CIBIL score that works in your favour.