If you are someone who has on-going loans or a credit card user, you must be familiar with how big a role CIBIL score plays. Maintaining a good CIBIL score is absolutely necessary to procure future loans and credit cards. It’s like your financial report card. As you may be aware, personal loans are unsecured loans, meaning you can avail it without having to submit any security with the lender. So, here the CIBIL score plays a major role because your CIBIL score serves as the sole factor for judgement, whether you are worthy of the loan or not. But, in the case of home loans, it can take a back seat. This is because while approving home loans lenders ask you to leave a collateral with the bank. However, CIBIL is not entirely discounted. Some lenders definitely require you to have a minimum score even if you are ready with the collateral. So minimum CIBIL score for home loan which lenders need you to have is 650.
How Important is CIBIL Score in the case of Home Loan Application Process?
Like we discussed earlier, CIBIL score is important in the case of home loans, but, not as important as it is in the case of personal loans. Reason being the loan applicant has their security mortgaged with the lender. In case of failing to repay the loan amount, the bank or the NBFC can seize the collateral submitted by you onto its own name. This is why CIBIL score is less relevant in the case of home loans. However, some lenders are stringent in their approach. They demand you to hold the minimum CIBIL Score for home loan requirements in order to grant you the final thumbs up.
Why maintaining a good CIBIL Score for Home Loan is important?
High Loan Amount: A person with a high CIBIL score can negotiate for a higher loan amount. On the other hand, this privilege is not applicable to a person with a low score. Here’s you incentive to receive more funds in your hand.
Rate of Interest: Being good has always an edge over being bad. Time and again, the good has been rewarded. Similarly, a good credit score puts you in a sweet spot with the bank. It puts you in a position where you can negotiate with your bank regarding the rate of interest. You can demand a low rate of interest if your credit score is extremely good.
Credit Worthiness: Maintaining the minimum CIBIL Score for home loan gives your lender the assurance that you’ll repay the loan in time. It helps lenders assess your credit-worthiness. Whereas, a bad credit score will put you in a tough spot where the chances of you getting a home loan might get slim. However, you might be able to get it on the grounds of some terms and conditions.
Approval with Ease: If you possess a good credit score, the bank approves your home loan easily without any terms and conditions attached to it. Once it has a vivid picture of your credit health, the funds are released into your account in a short period of time.