TransUnion CIBIL is the oldest and the most trusted credit information bureau in India. It holds records of over 600 million credit users and 32 million businesses. Consequently, TransUnion CIBIL is one of the most trusted names among lenders in India. When a loan applicant applies for a home loan in this country, most lenders approach TransUnion CIBIL to enquire about the loan applicant’s credit score.
The CIBIL score is a numerical representation of one’s creditworthiness and repayment capacity. It ranges between 300 and 900 and the closer one is to 900, the better their CIBIL score and chances of being able to avail of a home loan on the best possible loan terms and conditions. In this article, we discuss different CIBIL score ranges and what they mean for home loan approval.
Different CIBIL Score Ranges and What They Indicate About Credit Users
750 to 900
This is the ideal CIBIL score for a home loan. With such a CIBIL score, lenders have little reason to doubt the loan applicant’s repayment capacity and therefore, the loan applicant has high negotiating power concerning the terms and conditions they get on their loan.
People who apply for housing finance with such a CIBIL score not only get approved for a loan almost immediately but are also able to ask their lender to sanction a loan amount that they need, at a rate of interest that they find desirable and for a loan tenor that allows them to repay their loan comfortably.
If you are planning to apply for a home loan, check your CIBIL score at least a few days before initiating the loan application process and make sure your CIBIL score is at least 750 or higher. This makes it possible for the loan borrower to access the funds at the best possible loan terms and conditions and consequently, repay the loan comfortably too.
700 to 749
Such a CIBIL score is not ideal. However, it is not bad either. Such a score usually belongs to people who have made some small credit-related mistakes in the past but by and large, can be trusted with timely repayment of loan EMIs.
Therefore, when such people apply for a home loan, loan approval comes almost instantly. However, lenders do not show great willingness to negotiate with the loan applicant regarding the terms and conditions of the loan. The good thing is that pushing one’s credit score from 700 to 750 does not take much time.
So, if your CIBIL score is in this range, start improving your CIBIL score and then apply for a loan.
600 to 699 (Average)
If your CIBIL score lies within this range, you have made some credit-related mistakes in the past. This low CIBIL score could be because you did not pay your loan EMIs on time or it could also be due to a very high credit utilization ratio or excessive dependency on credit. A credit score in this range can also be attributed to only one type of loan in your loan kitty.
In either case, an average CIBIL score isn’t always good news. Lenders have reasons to doubt your repayment capacity and therefore, loan approval won’t come easily. More importantly, you won’t be able to avail yourself of the loan on the most beneficial terms and conditions.
People with CIBIL scores in this range are generally asked to either add a co-borrower or a loan guarantor to reduce the risk for the lender. In the absence of a mortgage insurance or loan borrower, loan approval becomes difficult.
Below 599
If your CIBIL score is below 599, lenders have many reasons to doubt your repayment capacity and creditworthiness. Therefore, people with such CIBIL scores find it quite challenging to get approved for loans, especially high-value loans, such as home loans.
In fact, for such people, loan approval remains an issue even if they buy insurance or add a loan guarantor or co-borrower. If your CIBIL score lies within this range, you must work on improving your CIBIL score first and then apply for a loan.
Ideally, improving the CIBIL score in this case will take at least a few months. So, keep some buffer time, be patient and do not stop being financially smart even if you don’t see any concrete changes for some time.
Final Words
Understanding different CIBIL score ranges and how they affect home loan approval allows loan borrowers to understand their negotiating power and what they can ask for. It also gives them an idea of how much work will they need to put in to secure an affordable home loan.
