A credit score is a three-digit number that represents your whole credit history. CIBIL scores heavily influence home loan applications. It is a primary factor used by banks to determine whether or not to execute a house loan application. The bank will verify your credit score and history when you submit your completed home loan application.
The bank will almost certainly reject your application if you have a low credit score and a poor credit history. While no consistent score exists, every lender has a minimal CIBIL score used as a cut-off or indication when accepting or rejecting applications. The explanation below will help you understand what is a good CIBIL score range and its meaning.
Insight into CIBIL score ranges
A credit score between 750 and 900 points is considered excellent. Candidates with credit ratings in this range are favoured by banks, non-bank financial institutions (NBFIs), and other online lending companies. This range opens up most credit products to you. You may speed up the processing of your home loan application if you have a high credit score.
CIBIL scale range from 700 to 900
If you have a credit score in this range, lenders would be delighted if you approached them for a loan. The score indicates that you have used credit cards responsibly, paid fees, returned loans on time, and not accrued much debt. It also signifies that you are a financially responsible person. You have a modest default risk in terms of trading. You will also be provided with the most competitive interest rates.
CIBIL scale range from 600 to 700
Higher interest will be charged due to your lower ranking. Subprime borrowers have credit ratings between 600 and 700, which indicates that they may have difficulty qualifying for higher loan terms. Several missed or late payments are seen in this range. Banks may have problems approving personal loans, and private lenders may demand exorbitant interest rates.
CIBIL scale range from 500 to 600
Are you allowing yourself a little unfettered spending with your funds? Perhaps you will have to confront the harsh realities of your financial situation. Regardless of whether your credit score makes it difficult to get a loan, it would help if you endeavoured to improve your CIBIL score. You should maintain the CIBIL score check process to avoid lenders that send up red flags.
CIBIL scale range below 500
Your application may have been rejected. Loan and credit card applications from financial organizations are unlikely to be approved because of your history of defaults and late payments. A significant amount of work will be required to enhance your ratings. Even if it will take some time, it is not something that will be impossible.
What is a good CIBIL score for a home loan?
A CIBIL score of 700 to 900 is considered excellent. Many advantages come with a high CIBIL score, including faster approval, a low-interest credit facility, a more considerable loan amount, a longer payback time, and so on. Furthermore, numerous lenders will be prepared to accept your request, allowing you to choose the lender from whom you desire to borrow money.
Why is a CIBIL score essential when applying for a home loan?
Understanding the role of CIBIL rating in the loan approval process is essential for anybody hoping to avoid the disappointment of having their application rejected. A lender will do a credit check when you ask for a loan. The likelihood of your loan application being rejected by a lender increases if your credit score is poor.
If, on the other hand, you have a strong credit score (over 750), the lender will look into your application further to see whether or not you are a creditworthy borrower before reaching a final loan decision. Based on your prior repayment history, your credit score provides lenders with a rapid assessment of your risk of default.
You may now understand what is a good CIBIL score. To qualify for a house loan, you must have a decent credit score, which is particularly crucial if you want to take advantage of reduced interest rates. Poor credit score applicants may be denied house loans or be subjected to increased interest rates on their existing mortgages. Maintaining a decent credit score is thus essential for obtaining house loans and turning your goal into a reality.