One of the most significant eligibility factors when applying for a home loan is your CIBIL score. If you have a decent CIBIL score, you can take advantage of certain intriguing bonuses and services. As a result, most persons with a poor CIBIL score find it difficult to obtain credit. It’s a frequent misconception that if you have a bad credit score, you won’t be able to get a home loan. Some people are even afraid of getting turned down for a home loan if their CIBIL score falls below 650. Lenders typically charge a high interest rate in this case. Only if your credit score is above 700 out of 900 may you apply for a home loan successfully.
Many people in India do not have a good CIBIL Score. Their lender’s rejection is a serious concern. To resolve this concern, banks and other finance companies have created a number of home loan plans that allow people with bad credit scores to get a loan.
Impact of CIBIL Score on Home Loan
Your credit score has a direct impact on your financial health, but the only way to know if it’s helping or hurting you is to check it at least once a month. Financial products are rarely made available to the general public. Banks and NBFCs assess a number of critical financial aspects before making any type of loan to an applicant.
Categorization of CIBIL Score:
| Credit Score Range | |
| 750-900 | Excellent |
| 650-749 | Good |
| 550-649 | Average |
| 300-549 | Poor |
Your creditworthiness and payback capacity are reflected in your Credit Score, which ranges from 300 to 900. According to CIBIL (Credit Information Bureau (India) Limited), customers with a credit score of greater than 750 have a 79% chance of getting a loan authorised. Even at higher interest rates, a consumer with a bad credit score may find it difficult to secure a home loan.
How to Get a Home Loan with Low CIBIL Score
In case of a Low CIBIL scores, another option to apply for a home loan is to reach an agreement with your bank or financial institution in the case of a loan or credit card payment default. You can pay off the settlement sum and get a NOC when you reach an agreement (No objection certificate). Obtaining the NOC simplifies the process of applying for a house loan. However, you must examine your Credit Score before applying for the loan to ensure that there are no anomalies or inaccuracies, and that your credit score is accurately stated, including settlement details.
Another bad credit home loan alternative is to visit a bank with whom you already have a relationship. For instance, a bank with which you have successfully repaid a loan. It might also be a bank where you have a salary account or a savings account where you make regular deposits and withdrawals. Despite having a poor CIBIL Score, your customer loyalty may be able to assist you in securing a home loan. Even though your CIBIL Score is low, a high account balance and a series of recurring or fixed deposits can help you get a loan from a bank or non-bank financial organisation.
If your Credit score is low but your spouse’s is good, you might ask for his or her assistance in getting a home loan approved. By enrolling your spouse as a co-applicant on the home loan application or a joint account holder, you can speed up the approval process for your house loan.
If your CIBIL Score is Zero
Not everyone in India uses credit, but a large number of people desire to take out their first loan. These applicants are classified as ‘New to Credit’ or ‘First Time Home Buyers.’ Customers with no credit score might still apply for a home loan because there is always a beginning. In this case, the lender becomes extra cautious and conducts additional checks to ensure that all requirements are met before authorising a mortgage. People with no credit history or a low CIBIL Score can use a guarantor with a high CIBIL Score to increase their loan approval prospects.
While acquiring a home loan with a low CIBIL score is not impossible, there are some considerations to make. It’s important to know that having a poor CIBIL score can lead to a higher interest rate on a house loan. Furthermore, if you fail to make an EMI payment. Your credit score will suffer, making it more difficult for you to get a loan in the future. You must make certain that you pay your EMIs on time.
