CIBIL is short for Credit Information Bureau (India) Limited (CIBIL). It is a platform that assesses a person’s creditworthiness based on their financial history. A person’s CIBIL score shows his ability and track record to repay a loan. A high CIBIL is considered a ticket to easier home loan terms. Lenders trust high CIBIL scores.
The preferred CIBIL score is around 700-750, but a CIBIL close to 900 is best.
The CIBIL score is a factor banks consider important for a home loan. It builds the bank’s faith in a home loan seeker. Persons with a good CIBIL score are eligible for home loans of up to 80-85 percent of the property’s value against which the loan is being sought.
Of course, other conditions apply for home loans. These also must be fulfilled, but the CIBIL score easily sets the tone and tenor for home loan eligibility.
About CIBIL Score
The Credit Information Bureau (India) Limited provides credit information data of individuals applying for loans to banks. CIBIL is licensed by the Reserve Bank of India and is one of four such companies which offer credit information to banks and other lending institutions.
The CIBIL score is a three-digit score that gives a numeric list of the applicant’s credit history. The score normally falls between the 300-900 bracket.
CIBIL score is determined based on the home loan applicant’s credit history. It takes into account secured and unsecured loans plus extra debts that the applicant has availed in the past and their general repayment patterns. If they are regular in making payments, the trust or goodwill increases, along with the score.
The applicant can get a summary of his CIBIL score for a home loan and credit score on the official website of CIBIL. It is free the first time, but after that, a small fee will be charged to view the score unless you opt for the available membership program.
This credit report will provide information related to previous loans availed, repayment records, instances of late payment or defaults/records of the number of credit cards, etc.
CIBIL Requirements By Banks
There is nothing called a universal CIBIL score for home loans. Each bank chooses to fix its own CIBIL score requirement. It is the bank’s prerogative.
The home loan applicant should check the prescribed CIBIL score of all the banks before choosing the one that accepts the CIBIL score they have and their ability to repay the home loan.
In general, if you have a credit score above 700 or a score close to 800-900, your application will qualify for quick processing and all the benefits thereof.
Why CIBIL Score For Home Loans?
The CIBIL score is the most important criterion for securing a home loan. For the bank to consider a loan application seriously, the CIBIL score is a crucial factor.
This is because a CIBIL score gives the bank a bird’s eye view of the applicant’s credit history. A steady and good credit history strengthens the applicant’s case.
A lower than average CIBIL score and a discredited credit history is an invitations to the rejection of the application. A CIBIL score in the 350-700 bracket, for example, is not enough for a home loan.
Credit Information Bureau (India) Limited’s core competency is collecting and collating home loan applicants’ repayment history and setting their CIBIL score for home loans. The CIBIL keeps updating the creditworthiness of a home loan beneficiary on a continuous rolling basis, usually month on month.
Banks keep track of the borrowers’ credit records through the tenure of the home loan to ensure that the borrower doesn’t default.