How a good CIBIL Score helps when applying for a home loan

Among the many aspirations of today’s working class, the one which ranks on top would be a home of their own. However, most of us cannot afford one either due to high real estate prices or lack of surplus cash. A home loan takes you one step closer to your dream destination- a home of your own, to either start a new family, shift to a bigger house or plan your retirement getaway.

What is a Home Loan?

Home Loan is the sum of money borrowed from a bank or a financial institution to purchase or construct a house. It is a secured loan where the property is mortgaged to the lender as a security till the repayment of the loan. The bank or financial institution holds the title or deed of the property till the loan has been paid back with the interest due for it.

What do lenders look for?

Lenders look at several factors while determining your home loan application:

CIBIL Score and Report: It is one of the most important factors when it comes to your loan approval. A high CIBIL Score is an assurance for lenders that you are a responsible borrower with a good track record of making timely repayments.
Employment Status: Apart from a good credit history, lenders check for your steady income and employment status.
Clean Title to the House/Property: Any legal or property issue related to your home/land might deter lenders to decide in your favor. Hence, always take legal advice before finalizing a property.
Location of the House: Sometimes lenders also take into consideration the location of the house before approving your home loan application.

The CIBIL Score plays a critical role in the home loan application process as it helps determine your credit eligibility. After an applicant fills out the application form, the lender first checks the CIBIL Score and Report of the applicant. If the CIBIL Score is low, the lender may not even consider the application further and reject it at that point. If the CIBIL Score is high, the lender will look into the application and consider other details to determine if the applicant is credit-worthy.

The CIBIL Score works as a first impression for the lender, the higher the score, the better are your chances of the loan being reviewed and approved. The decision to lend is solely dependent on the lender and CIBIL does not in any manner decide if the home loan should be sanctioned or not.

A good CIBIL Score opens doors for you.

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Disclaimer: The information posted on this blog (Information) is prepared by TransUnion CIBIL Limited (TU CIBIL). This Information is for generic informational purposes only and is meant for consumer education and awareness about credit scores, credit history and credit reporting. The Information posted on the blog does not constitute credit advice and the user will need to consider the same and take independent informed decisions . No part of this Information may be quoted out of context, distorted ,distributed, published and/ or reproduced in any form and manner whatsoever. Consumers are advised that the Credit Information Reports (CIRs) prepared by TU CIBIL are based on collation of information, substantially, provided by credit institutions who are members with TU CIBIL. TU CIBIL is not responsible and /or liable for errors and/or omissions caused by inaccurate or inadequate information submitted to it by credit institutions. TU CIBIL does not guarantee the adequacy or completeness of the Information and/or its suitability for any specific purpose nor is TU CIBIL responsible for any access or reliance on the Information. TU CIBIL expressly disclaims all such liability. Further, this Information is based on the data available with TU CIBIL at the time of publication and therefore may not be up-to-date.