Having an good CIBIL TransUnion credit score is one of the basic requirements for a home loan. It is imperative that you monitor your credit history and have a good credit score in order to have a home loan approved.
An acceptable CIBIL score for home loans would start somewhere around 700. Having a credit score of more than 700 is generally considered good. However, as you start going towards 900, credit institutions start placing greater trust in you. If everything goes right, and you have all other requisite documents in place it is very much possible to secure financing of up to 85% of the total expenditure that you incur on acquisition or construction of the property.
CIBIL-101 for home loan applicants:
How does CIBIL score affect your home loan process
One of the important criteria that is considered for deciding whether or not you get a home loan is your CIBIL score. It plays a major role in the processing of home loan applications. In fact, the first thing that banks check when processing your loan application is your CIBIL score. If you have a bad credit history or a low credit score, chances are your application won get processed. This is the basic check that all banks perform to weed out ineligible applicants.
Having a good credit history and even a decent credit score will help speed up the home loan process. Applications that have a good credit score are processed a lot faster than others. There is no universally accepted credit score for processing applications, but as a rough estimate of 750 and above is considered to be a good credit score. Anything between 350-750 is considered decent, while anything below 350 is considered to be a bad credit score.
A few common mistakes that could be hampering your chances of securing a home loan:
1. Not checking your CIBIL score before applying for a loan: Check your CIBIL score before you apply for a home loan to avoid rejection from the bank. Being turned down for a loan application drastically impacts your credit score.
2. Keep unsecured loans such as personal loans, credit card loans under control. These loans show outstanding debt balance. Banks take a look at the applicant debt to income ratio, to determine whether the applicant is too burdened to make regular payments, in which case the application is rejected.
3. Stop repeatedly applying for loans. If you have a bad credit score, don make it worse by continuously applying to various institutions for loans. Being rejected by banks shows on your credit information report and can be potentially deadly when applying for a new loan.
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