CIBIL score is an essential parameter that holds significant influence in determining the financial credibility of an individual. Financial institutions evaluate the creditworthiness of an individual through the CIBIL score. The lending companies find out about repayment patterns and the ability of an individual to repay a loan through this score. It is based on credit records, repayment behaviour, and the current debt-to-equity ratio of an individual.
CIBIL score plays a major role in affecting the chances of an individual getting a loan against a property. A high CIBIL score increases the possibility of an individual getting a loan against property, whereas a low score hinders it. Applying for a loan against property with a low CIBIL score may result in a loan at a higher interest rate or, in some cases, a rejection of the loan application.
One cannot get a loan against property without a CIBIL score check. The CIBIL score is a 3-digit number ranging from 300 to 900. The score is calculated based on the credit information report. This report includes all the major points of the credit history and repayment of the individual.
Credit Information Report (CIR) is evaluated based on the following factors:
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.
Now that we know how important the CIBIL score is while applying for a loan against property, we also should know why the CIBIL score is so important. Here are some points that would help you understand the reason for the importance of the CIBIL score:
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.
The CIBIL bureau considers various factors like credit utilisation ratio, repayment pattern, credit diversification and hard inquiry number to make a credit information report, which then gives the CIBIL score. The CIBIL score ranges from 300 to 900. Individuals with a high CIBIL score enjoy the following benefits while taking a loan:
Higher loan eligibility
Negotiable loan sanctions
Flexible repayment tenures
The CIBIL score is classified among three ranges, i.e., bad, moderate and ideal. To avail of these benefits, the CIBIL score of an individual must fall under either the moderate or ideal category. The table below shares information about these categories and the probability of each category has in getting a loan:
CIBIL Score Range
Low probability (less than 25% chances)
Average probability (30% to 70% chances)
Full probability (100% chances)
**Note - Each financial institution considers the CIBIL score differently. If an applicant has a low CIBIL score, they may still get a loan against property but not with favourable interest rates and repayment tenure.
If you are worried about your low CIBIL score, then you have to understand that it is never too late to start. You can still improve your CIBIL score for a loan against property and change its status from bad to moderate or even ideal by following some of the below-mentioned tactics:
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.
There are many things that one must keep in mind while applying for a loan against property. These include -
CIR - The credit information report plays a major role in the loan against property application review procedure. Make sure you have the report ready with you.
CIBIL Score - The CIBIL score is the most important parameter considered by the lender while reviewing the application for a loan against property. Check your CIBIL score before you start the application procedure.
Applications Frequency - When a person fills in an application for a loan, the reviewer files an inquiry for the credit score of the person. This inquiry harms the credit score of the person. Therefore, make sure you fill in a minimum number of applications.
You can easily check your CIBIL score online by following the below-mentioned steps -
Go to the official portal of CIBIL.
Create an account by filling in the required information. Once your account is created, you can access your CRI.
Verify your account by entering the required details. An OTP will be sent to your registered mobile number, enter that.
Once the verification is completed, you will be redirected to the CIBIL dashboard.
Tap on the ‘See your CIBIL score’ option.
Your current CIBIL score will be displayed on your screen.
If you wish to apply for a loan against property, the ideal CIBIL score is 750 points or above. Any score lower than this will reduce your chances of getting your loan against property approved.
To get a loan against a property with a bad CIBIL score, you can either opt for the available loan plans or work on increasing the CIBIL score. If the interest rates and repayment flexibility are not in your favour, you should use the tips and tricks mentioned in the article and increase your CIBIL score first. Once it is done, apply for a loan against the property.
Yes, the CIBIL score has a direct effect on the eligibility of a loan against property. All the major financial lenders in the market prefer to give loans to people with CIBIL scores of 750 or higher. Such individuals avail of loans with low-interest rates along with flexible repayment options. Some lenders in the market might give out loans against properties without a CIBIL score of 750, but the individual won’t get the benefit of low-interest rates and flexible repayment.
If the CIBIL score is extremely low, one of the best ways to avail of a loan against property is to get a guarantor. The guarantor will have to guarantee the lender that you will stick to the fixed terms and conditions of the loan and pay all the EMIs on time. In case you fail to do so, the guarantor will be answerable.
Yes, a CIBIL defaulter can get a loan against property, but the individual won’t be able to get a loan plan with favourable terms and conditions. In such a situation, the interest rate will be high, the repayment mechanism will be wholly decided by the lender and the tenure also will be fixed by the lender itself.