CIBIL Score’s Role in Increasing Home Loan Eligibility

Aug 2018 | Team Rubique

There are three requirements of every human being. Good food, good clothes and a good place to dwell in. Who doesn’t want to buy their favorite house to spend their best times with their near and dear ones? Buying a house is like acquiring an asset for yourself which will forever be with you across a generation. Therefore, buying a house or building one is a very vital decision which is to be taken carefully and should involve much brainstorming regarding which place the house should be in and about how to go about managing the finances.

Buying a house is a hefty task, and definitely, nobody makes a one-time payment while buying one apparently because of the fact nobody has such huge amount of cash available at that time and nobody wants to invest all their savings all at once. So, people ultimately opt for House Loans provided by Banks which comes at a formidable interest rate. Working class people might be thinking that they can easily avail these loans due to its easy availability and the easy credit of their salary per month.

It’s not like as you have thought. Before you even meet the concerned official you have to get acquainted with a term known as CIBIL Score which is the measuring tape of your credit worthiness which is used by the bank and then it is decided whether they should go ahead and sanction you a loan. It’s a way of scrutinizing you properly before going forward and doing business with you. They have to test the waters, so that doesn’t enter into an unproductive venture.

What exactly is CIBIL Score?

A CIBIL Score is a three-digit score which measures an individual’s credit-worthiness. This score is derived from the Credit Information Report(CIR). The CIR captures an individual’s entire credit payment history across various modes under various lending institutions and makes a detailed report on it. The CIBIL Score ranges between 300 and 900. 900 is the highest score which an individual can achieve.

The CIBIL Score not only declares the credit-worthiness of an individual but also showcases the worthiness of an individual. However, in some cases, CIBIL Scores can also be misleading about the fact that wrong information can be provided from your lender regarding your loans and hence the calculation of a wrong CIBIL Score and hence jeopardizing your dreams. You should also keep a tab on your score to improve it if needed.

What is your CIBIL Score made of?

Your credit score relies on the following things:

  History of payment done or your credit availing history.

  Owed Debt.

  The number of time you took credit.

–  Types of credit availed.

  New credit availed if any.

Now let’s look at the main agenda behind calculating the CIBIL Score, i.e. how will it affect the possession of your dream house.

Let’s look at how will CIBIL Score affects your Home Loan eligibility.

This three-digit score will be your decider when it comes to the possession of your dream estate. Let’s look at some of the scenarios which arise when it comes to CIBIL Score and Home Loans:

1) The factors which will affect your CIBIL Score is the nature of your previous loan and the way you are repaying it. Whether there have been too many defaults or has it been a smooth flow? All these things culminate into making your CIBIL Score and your credit score.

2) The second scenario can be that you might get a score as NA or NH. This happens only when you haven’t taken any loan or purchased anything through your credit cards. These scores can sometimes lead to your loan not getting sanctioned because of that particular lender’s policy, but this will not always be the case.

Home Loans are risk-taking loans given by the banks which is not a meager amount which is sanctioned. The CIBIL Score assures the bank that the particular person can return the money within the stipulated time. It assures the bank.

The higher the score, more the chances of you getting the loan.

What if you are proved ineligible?

CIBIL Scores can put up disappointing figures and can crush your dreams of owning your dream house. However, you should never lose hope, instead work on it. You can easily improve your CIBIL Scores by paying off your existing loans within the given time and boost your score. You should never exceed your limit while going for payment made through credit cards. Always keep a check on it and pay off your bills on a regular time basis to avoid arrears and the further worsening of your CIBIL Score.

You should avoid loans on a regular basis because this affects your score very heavily. Both unsecured and secured loans are taken into consideration for the calculation of your score. You might be depending on the unsecured loans for improving your CIBIL Score, but the secured loans matter equally.

So, your dream house is just three-digits away. If that is done right, then you will live your dreams of living in your dream house. Next time when you are availing a loan or making a payment by credit card think of these three digits and proceed further.