In any home loan application, the lending bank checks the applicant’s credit score to determine his/her creditworthiness. The bank reaches out to credit bureaus to know the applicant’s credit score. While there is no minimum credit score for home loans in India, a score of 750 or above is considered ideal for easy home loan approvals.
Here, we will discuss the ideal credit score for home loans in 2021 and how borrowers can work towards attaining an ideal credit score.
What is a Credit Report and Credit Score?
A credit report is constructed by one of the credit bureaus like Equifax, TransUnion CIBIL™ (Credit Information Bureau of India Limited), Experian, etc. A credit score is a 3 digit number that could range between 300 and 900. The closer the credit score is to 900, the better it is considered, especially when it comes to home loans.
Banks and lenders check an applicant’s credit score to determine his/her creditworthiness during a home loan application. Borrowers who maintain a minimum credit score of 750 or above are generally considered ideal for loan approvals. Borrowers should avoid making multiple loan applications simultaneously. This is because every application may affect one’s credit score negatively.
A credit report contains all the important information on a borrower which can be used by financial institutions to analyze and offer home loans. Borrowers can check their credit score for free on Credit Mantri as it can help in keeping a tab on their score before applying for a home loan.
How Much Credit Score is Good for Home Loans?
A credit score generally ranges between 300 to 900. A score of 750+ is considered a good CIBIL™ score for home loans. Most lenders and banks prefer borrowers with a score of 750 or above.
Does Credit Score Affect Home Loan Eligibility?
A credit score affects a borrower’s home loan eligibility since banks and lenders use the credit score to determine whether to approve their home loan application or not. If an applicant’s credit score is above 750, there is a high chance of getting a home loan application approved. However, if it is low, for instance, 450, then the chances of home loan approval could be very low. Even if the home loan is approved with a poor credit score, you are more likely to be charged high interest rates.
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