You must know about 'credit scores' if you've been reading up on the home loan application process. It simply means your creditworthiness. This particular credit rating revolves around your existing credit history. So, if you're wondering, 'What kind of credit score do I need to get a loan for a house?'...read on.
Well, everything. Lenders approve and reject home loan applications based on your credit score. Often dubbed as the CIBIL score, your credit score can range from 300-900. While there's no minimum CIBIL score requirement for a home loan, anything over 800 is considered a good CIBIL score for a home loan.
Your credit score doesn't just track previous loans but also your credit card usage. In a nutshell, it shows the lender how you manage borrowed funds and repayment timelines. The emphasis on credit score is simple: a good score signals responsible repayment behaviour and a reliable borrowing history. However, a bad one cautions the lender against defaulting possibilities.
Moreover, lenders correlate your income eligibility with your outstanding loan burden. Multiple EMIs and credit dues mean that your income is already stretched. For lenders, it's a red flag because you might not meet the additional EMI deadlines. However, if you've maintained a good credit mix, paid your EMIs and credit card dues on time, and have no history of defaulting, you would be seen as a good candidate for a loan.
Fun fact: While the terms 'credit score' and 'CIBIL score' are often used interchangeably, CIBIL is just one of India's four authorised credit bureaus.
While we've now understood what kind of credit score you need to get a loan for a house, the story continues. Your credit score affects your loan application in many ways:
Now that you know what a good CIBIL score is for a home loan, you should check yours before applying to curb any possibilities of rejection. As the adage goes: Better Safe Than Sorry. Oh, and in case you didn't know — you can review your credit score in seconds on Fi Money's AI Analyser tool. Moreover, if you have a good credit score, you can also benefit from pre-approved instant loans of up to Rs. 5 Lakh. You can get an instant loan directly to your Savings Account through the Fi Money app. This process is 100% paperless, and the loans are provided at competitive interest rates — where each user remains in control with complete visibility of all details.
Learn more about the benefits of having a good credit score here: https://www.youtube.com/shorts/MDLAObGu4vI
For a home loan, you can claim up to Rs. 2 Lakhs on interest payments and up to Rs. 1.5 Lakhs on the principal repayments. You can claim these tax reliefs under Sections 24 and 80 C, respectively. For joint home loans, these figures apply individually to both applicants.
Yes. If you're a first-time home buyer, you can claim an add-on deduction of Rs. 50,000 under Section 80 EE or up to Rs. 1.5 Lakhs under Section 80 EEA. However, both these sections have limits on the property value and loan sanction dates. Apart from these reductions, you can also enjoy tax deductions under Sections 80 C and 24.
The minimum score you could have is 620, a score below this most probably won't be accepted for a loan.
While it might be difficult for a CIBIL defaulter to get a home loan, in rare cases its possible if the defaulter has a good income presently. The loan in this case will be sanctioned with a higher interest rate than usual.
Yes, your CIBIL score is an important factor that lenders consider when determining your home loan eligibility and the interest rate you are offered. It reflects your creditworthiness and ability to repay the loan on time. A higher CIBIL score can increase your chances of getting approved for a home loan and could help you secure better loan terms.
CIBIL score is required for home loan to assess the creditworthiness of the borrower and determine the risk involved in lending money.
