A CIBIL score is one of the primary things a lender considers before disbursing a home loan. Although several factors affect a loan application, a CIBIL score for home loan is of primordial importance. A high credit score establishes an applicant’s trustworthiness and projects his/her creditworthiness. Additionally, a high credit score of 750+ makes applicants a safe candidate as they are less prone to a credit default.
But, in case applicants have a low CIBIL score, they can improve it immediately with these 4 tips.
4 tips to improve CIBIL score for a home loan immediately
Tip 1: Pay dues within the time
One of the primary ways to improve CIBIL score is by paying due bills on time. Disciplined payment history makes an individual more reliable for a lender than a candidate with questionable repayment history. It is also advisable to set reminders for payments to avoid paying penalty fees or declining credit scores.
Also, candidates are advised to keep old credit cards to record paid credits. These old transactions can help lenders trace a disciplined payment history and fuel the CIBIL score.
Tip 2: Check the credit report regularly
In quite a few cases, the CIBIL might update incorrect records. Thus, it is essential to check the credit report regularly to spot any mistake that needs rectification from time to time. Also, credit bureaus are legally liable to provide the credit report annually. Hence, identifying inconsistencies in the credit report and rectifying them can boost a CIBIL score considerably.
Tip 3: Attune credit limit
A credit score also gets significantly impacted by the credit utilisation ratio. Thus, it is essential to limit credit usage to improve the credit score, as touching the credit limit can negatively impact the CIBIL score of an applicant. So, to improve credit score, customise credit limits with your lender.
Tip 4: Avoid taking too many home loan
To boost credit score, a candidate must avoid taking multiple loans at one time. If an individual cannot pay those debts, it will crash the credit score significantly. So, to prevent it, individuals must repay the initial one to opt for the next one, to avoid dealing with insufficient funds and low CIBIL scores.
To avail of a home loan in Bangalore or anywhere in India, lenders prefer applicants with a credit score of more than 750. This high score also has several perks –
- Individuals with a good credit report can avail several home loan tax benefits. These benefits are available under Section 80C, Section 24, and Section 80 EE.
Under Section 80 C, individuals can claim a maximum amount deductible of Rs.1.5 lakh from the taxable income on principal repayment. Secondly, under Section 24, beneficiaries can avail maximum deductions of Rs.2 lakh on interest payable. But for Section 80 EE, only first-time homebuyers can enjoy an additional benefit of Rs.50, 000 on interest amount payable for every financial year.
- Lenders often disburse a home loan amount faster for those with a high CIBIL score. Thus, this will make availing a home loan less challenging for an applicant.
- A credit of 750 or higher can also fetch a high loan amount. Candidates with a high CIBIL score with other eligibilities combined can avail maximum loan amount of Rs.5 crores.
- Lenders also disburse home loans with an affordable interest rate for candidates with a positive CIBIL score.
- Lastly, individuals can also opt for home loan balance transfer facilities with leading financial institutions by showing their high CIBIL score.
Selected financers also extend pre-approved offers that simplify and expedite loan processing. Such offers are available on a range of financial products, such as loans against property, home loans, etc. You can enter your name and contact number to check your pre-approved loan offer.
Thus, applicants can use the tips mentioned above to boost the CIBIL score for a home loan. Doing so will allow borrowers to avail a home loan with multiple benefits.