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Role of CIBIL Score in Home Loan Interest Rates

Posted April 26, 2018 by Anamika Verma to Finance 0 0
This post was written by a EasyFinance.com Community member. The views expressed below may not reflect the views of EasyFinance.com.

The interest rate plays an important role while acquiring any new loan. Everyone wishes to get the loan at the lower interest rate, for which having a high CIBIL Score is important. To get a lower Home Loan interest rates in India, you need to maintain a good CIBIL Score.

The desire for the low-interest rate is mainly to reduce the monthly instalment burden. Every loan consists of two-part, one as the principal, and other as the interest; for a higher interest rate is you will have to pay higher EMIs on your loan.

To get the best Home Loan interest rates, it is important to maintain your Credit Score or the CIBIL Score. Basically, a Credit Score is the summary of your entire credit history represented in numbers. Your Credit history can be checked by your Credit report that includes the following information:

  • Record of the loan you have taken in the past.
  • Record of the loan repayment and credit card bills.
  • Your current credit cards details.

How CIBIL Score Affects the Home Loan Interest Rate in India?

Before processing your application for a Home Loan in India, the lenders will check your Credit Score. After checking the CIBIL Score, the lenders will determine whether you are the right applicant for offering the Home Loan. The Credit Score helps the lenders in deciding on approving the loan to the applicant and reduce the chances of offering loan to risky and default customers.

To get the best Home Loan offer in India, the applicant should have a high Credit Score as it will help them in getting lower interest rates from the lenders. The applicant with a high score can easily bargain with the lender for reducing the interest rate based on his Credit Score.

You must keep it as a note that the Credit Score and the Home Loan interest rate in India follow an inverse relationship. If your Credit Score is high, you will be able to get the low and the best Home Loan interest rates. But, if you don’t have a good Credit Score, you will be certainly charged a higher interest rate by the lenders.

How to Improve your CIBIL Score for Getting the Best Home Loans in India?

If your Credit Score is not appropriate for getting the best Home Loans in India, you can rebuild your Credit Score by monitoring it and altering your financial disciplines.

Here are few ways by which you can improve your CIBIL Score:

  • Make sure that you pay all your dues on time. Avoid making part-payments as it will be considered as overdue on your credit report.
  • Always monitor and rectify errors (if any), to maintain your Credit Score and also keep a check on your credit history on a periodic basis.
  • Avoid using the entire credit limit on your credit card. Always monitor your credit utilization and try to pay your outstanding balances on time.
  • To get a good Credit Score, you should keep monitoring your accounts on a regular basis and check for any outstanding balance that needs to be paid.

To get the best Home Loan interest rate in India, people use the bargaining technique to get lower interest rate from the lenders. They make use of a Home Loan interest calculator to get a prior idea about the interest that a lender can charge from them, and later they bargain for a lower interest rate based on their high Credit Score.

The Bottom Line

Now that you know how CIBIL Score plays a vital role in offering you the best Home Loan rates, you must maintain your Credit Score high. A Credit Score of 700 and above is considered as a good Credit Score by the lenders for offering you a Home Loan.

About Anamika Verma: Anamika Verma writes various types of tutorial related to finance and has a vast experience as a financial advisor. Her expertise on financial issues is well sought after and she is known for her in-depth knowledge topics such as loan, fund. house finance. She has written more than 1000 blogs on topics related to house, home, home improvement and many more. A post-graduate in finance management , Anamika loves to travel or cook in her free time.

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