With the festive season fast approaching, a lot of us may finally want to put our home buying plans to action. Home loan lenders and developers tend to offer lower rates and prices on properties and loans, making it easier for you choose a home that suits your family’s needs within a price range that meets your financial standing.
One of the prime offerings headlining the festive season are the low interest rate home loans that several lenders have taken to offer, basis your eligibility. The eligibility parameters lenders send are usually easy to meet and are common across most lending institutions, which means that these are indicative of your general financial health.
One of the key parameters all lenders want to see is your CIBIL score. Most lenders offer attractive promotional offers to home loan applicants whose CIBIL score is either 750 or higher. However, certain lenders may choose to employ a stricter screening policy, accepting a CIBIL score of only 775 and above. In an advent of higher CIBIL requirements, you should ensure that you can still meet their eligibility mandate, to use these opportune offers to make your dream of owning a property come true.
To maintain the perfect CIBIL score, there are several things one can do, and it is imperative that they do this before they apply for a home loan, so they can avoid high charges on their home loan and an application rejection.
What Does CIBIL Score Mean?
Your CIBIL score, issued by the Credit Information Bureau (India) Limited, is indicative of your financial health and creditworthiness. The regulatory body maintains a record of your financial report by taking the following into account:
- Your past repayment records
- Your income to obligation ratio
- Your ongoing debt obligations
- Your financial obligations
- Your credit mix and utilisation
Your CIBIL score helps lenders assess your creditworthiness to gauge whether you would make for a safe home loan applicant and how likely you are to repay the loan amount in full. Home loan applicants should focus on building their credit profile to meet the lender’s expectations, if their current CIBIL score is not up to mark. A low score is not a dead-end and can be remedied with the correct actions. To learn more, read on.
How Can You Improve Your CIBIL Score?
There are many ways for someone with a low CIBIL score to improve their score, thereby enhancing their chances of getting approved for a low interest rate home loan . Some of them include:
- Repay your old dues
If you have long-outstanding dues pending, prioritise clearing them at the earliest. Not having a time repayment record can impact your CIBIL score and the chances to secure a new loan adversely, as it projects you as credit irresponsible. Lenders want to be assured of their repayment and seeing a disciplined repayment history can allay their fears and project you as a low-risk loan borrower.
- Maintain a well-balanced credit mix
What’s also important for your credit health is a healthy credit mix. What this means is that your credit history should show a good variety of credit types – secured, unsecured and credit cards, among other types. It shows that you are capable of bearing the responsibility of different types of payments and debt obligations without defaulting on them.
- Pay your monthly bills on time
CIBIL not only overlooks your debt repayment history but also your commitment toward your monthly bills and dues. Ensure that you clear your monthly bills such as your credit card and utility payments on time without delay, so your financial health remains stable.
- Check your CIBIL report regularly
Lastly, ensure that you check your credit report regularly to weed out any discrepancies, should they occur in your report. This will save you a significant amount of hassle if it is brought to the agency’s attention at the right time – allowing them to rectify it, and you, the benefit of applying for a low interest rate home loan with ease.
Maintaining a good CIBIL score is not difficult, as an individual should be implementing these practices in their day-to-day life as well – for the benefit of their financial health. Having a CIBIL score of 750+ significantly improves your chances of securing an attractive home loan at a low interest rate and other compelling features.