A CIBIL score is a three-digit-long numerical figure that is assigned to an individual by TransUnion CIBIL, one of the oldest credit bureaus in India. It is the first thing a lender sees when they receive an individual’s home loan application. There are several reasons why a lender will do that. This article will tell the reader everything they need to know about it.
As such, the lenders have not explicitly specified the minimum CIBIL score an individual must have for a home loan, but the lenders do expect a CIBIL score of at least 750 while applying. A CIBIL score of 750 or above that will tell the lender that the individual can repay the loan as per the agreed-upon terms. If the CIBIL score of the individual is between 651-750, he/she can still get the home loan, but they may get it from Housing Finance Companies (HFCs) at higher interest rates and perhaps even with a shorter repayment tenor. If the individual’s CIBIL score is below the 650 mark, securing a housing loan will become all the more difficult for him/her. A CIBIL score in such a range may even cause a rejection of the housing loan application.
A CIBIL score is an indicator of the creditworthiness of an individual. A high CIBIL score usually translates into better chances of home loan approval for the individual. If an individual has a CIBIL score of 750 or more, the lender will think of him/her as a creditworthy individual who has made timely payments towards their past credit obligations. If the CIBIL score, however, is on the lower side of the spectrum (650 or under it), the lender could even reject the individual’s home loan application, implying that an individual’s home loan approval is heavily dependent on their CIBIL score.
An individual’s CIBIL score undoubtedly affects their home loan approval in a significant manner. The CIBIL score of an individual determines his/her maximum home loan amount, interest rate and repayment tenor length. One can take a look at the table below to see the relation between their CIBIL score and the chances of them getting a home loan.
CIBIL Score Range |
Home Loan Approval Probability |
750-900 |
High as all lenders prefer applicants with a CIBIL score of 750 or above. A score above that threshold will serve as an indicator of the fact that the individual is a financially disciplined individual who can make timely repayments towards their housing loan. |
600-750 |
A CIBIL score in this range is far from ideal, but most of the lenders, but majorly HFCs, will give an individual a home loan if his/her score is in this particular range. The individual may, however, get a relatively lower principal amount and that too at a high interest rate along with a shorter repayment tenor. |
300-599 |
Low since a CIBIL score in this bracket is a sign of inability to repay any kind of credit on time. It may also lead to the loan application being rejected. In such a scenario, the only ways one can probably get a housing loan is by either bringing a guarantor on board or jointly applying for the loan with a co-applicant. |
Some ways in which an individual can enhance their CIBIL score are as follows:
Some of the things one must be mindful about before putting in that home loan application form are:
If an individual wants to check his/her CIBIL score for a home loan, he/she can do so through the official CIBIL portal itself. One is entitled to one free CIBIL report every year. Alternatively, one can even check their CIBIL score for free via Bajaj Markets itself.
Home loan providers consider a credit score of 750 or above to be fairly ideal. If one has a CIBIl score above that, he/she should be easily able to get a home loan. One can also get a home loan if he/she has a CIBIL score between 650-750, but in that case, the individual may get a smaller loan amount and that too at a relatively high interest rate.
If one has a low CIBIL score, he/she can submit proof of their creditworthiness by proving that they have additional sources of income. Alternatively, if an individual’s CIBIL score is below what lenders consider ideal, he/she can even get a co-applicant or a guarantor on board.
The short answer is, yes, the CIBIL score of an individual definitely affects their home loan eligibility. The CIBIL score of an individual plays a major factor as it is an indicator of his/her loan repayment ability, financial management skills and creditworthiness, the three most important things a home loan lender looks for.
If one does not have a CIBIL score, getting a home loan can prove to be a tricky affair for them, but the individual can still secure a home loan. One can either get a home loan by pledging any of his/her existing assets or through tie-ups that the company the individual works with. Alternatively, the individual can even perhaps get a guarantor on board.
Although difficult, a CIBIL defaulter can still get a home loan. To get a home loan, the individual will need to prove that he/she is earning a significant amount of money every month and has been doing so for many years. One can even get a co-applicant or a guarantor on board to improve their home loan approval chances. But, an individual must remember that the interest rate applicable to him/her will be much higher than what a non-CIBIL defaulter will have to bear and he/she may not get more than 60-70% of the property value as a housing loan.