CIBIL Score for Loan Against Property

Payment History - The first and foremost important thing to consider while evaluating your CIBIL score is your payment history. This includes how often you default on your repayment, methods of repayment, etc. This has around 30% influence over the CIBIL score.

Credit Utilisation - The ratio of the credit available to you and the credit you are utilising shows the level of risk. Financial institutions prefer individuals with low credit utilisation as the risk of bad debt is lower with such people. This has around 25% influence over the CIBIL score.

Credit Diversification -  At the time of CIBIL score evaluation, the officials also consider your credit-active period and the pattern of your credit decisions. Ideally, a balance should be maintained between the secured and unsecured loans taken. This has around 25% influence over the CIBIL score. 

Credit/Hard Inquiries - Credit/hard inquiries are inquiries made by any lender for your credit report. Each inquiry made by a lender makes a negative impact on the score. Therefore, it is suggested that you apply for minimum loan requests. If you have only filled out a few applications,  the impact on your CIBIL score would be neglectable. This has around 20% influence over the CIBIL score.

Thus, to get the loan against property of your choice with competitive interest rates, it is suggested that you maintain a minimum CIBIL score of at least 750 points. Various financial institutions in the market may provide you with a loan against property with a low CIBIL score, but the loan plans provided by them won’t be beneficial for you. The interest rates will be high, which will turn into a burden in the long run.

Credit Score - The CIBIL score is a 3-digit number score calculated after analysing the data from various financial institutions. The CIBIL score can range between 300-900. Individuals with higher CIBIL scores have more chances of getting loan approval.

Creditworthiness -  CIBIL score is a parameter for the lenders to determine how capable an individual is of paying the loan EMIs. Lenders check the CIBIL score and analyse whether the individual will be able to repay the loan in the decided loan schedule or not. This gives the lender a clear picture of the level of risk they are taking by giving the concerned individual a loan. On the other hand, we cannot conclude that individuals with lower CIBIL scores do not get loans at all. For such individuals, lenders have other loan plans ready where the interest rate is high, along with additional costs.

Application Approval - CIBIL score plays a major role in the quick review of a loan application. As soon as the lender receives the loan application, they review the application and the CIBIL score of the individual. The lender then gets a clear idea of whether to approve or reject the application. This further contributes to the timely disbursal of the loan amount.

Rate of Interest - The most important factor considered by a borrower at the time of loan application is the interest rate. When a borrower has a high CIBIL score, almost all the lenders in the market are ready to provide a loan. In such a situation, the borrower gets to choose the lender offering the lowest interest rate. Along with the interest rate, the borrower can also negotiate for the loan repayment tenure and EMIs. When all these factors stand in favour of the borrower, then the individual will be able to repay the entire loan in time which will again be a plus point when calculating the CIBIL score in future.

Loan Amount - CIBIL scores not only affect the chances of you getting a loan but also affects the amount of loan approved by the lender. Individuals with high CIBIL scores get loans of high amounts while individuals with low CIBIL scores have to manage with lower amounts of loans.

Disciplined Credit - The repayment pattern of your current debts plays a major role in the evaluation of your credit score. Therefore, you need to maintain all the operations related to the current debt in a disciplined manner. Any kind of default in your repayment will increase the payable penalty and harm your credit score. So make sure you start setting up reminders to pay your EMIs on time.

Existing Credit Cards - In case you have any existing credit cards registered under your name, make sure you pay all the bills on time so that it builds up a solid credit history that would contribute to a high CIBIL score.

Customised Credit Limit - The credit utilisation ratio plays a crucial role in the calculation of your credit score. The lesser amount of your allotted credit you use, the better impact it has on your credit score. Using the maximum amount of allotted credit score harms your credit score. Therefore, one of the ways to improve your CIBIL score is to manage your allotted credit amount and expenses in such a manner that the overall credit utilisation ratio can be maintained.

Go for Long-Term Loans - Whenever you apply for a new loan, make sure you choose a longer tenure so that the amount of EMI is lower. Lower EMIs will ensure timely payment and prevent any kind of default. This will prevent your credit score from any kind of negative impact.

Keep a Track of Existing Debt - Try to keep the number of loans you avail of in a specific period to a minimum. Manage the debt with planning. You should first repay the existing loan amount and only then go for a new one. Do not burden yourself with multiple loans, as you might end up in a debt trap. This will adversely affect your CIBIL score.

Diversify your Credit - If you think that not borrowing at all will increase your credit score, then you are wrong. Not borrowing at all will result in a report with no credit history and therefore the CIBIL score will be low. To ensure a solid credit score, you must have a balanced number of secured and unsecured loans of both long and short tenures. Make financial decisions with utmost care.

Rectify Past Mistakes - Keep a regular check on your CIR and try to identify all the mistakes made. Consult professionals and try to rectify these mistakes.