Does your CIBIL score affect your Home Loan Application?

Definitely, your CIBIL score affects your home loan application both positively and negatively, as it defines your creditworthiness and repayment capacity. It is considered as one of the most important criteria in defining your home loan eligibility. Your low CIBIL score can become a hurdle in availing home loans from leading financial institutions. Therefore, it is recommended to regularly check credit score for errors and resolve them at the earliest. Also, try to improve your CIBIL score, if it's below 650. If your CIBIL score is already 750 or above then stay rest assured that your home loan application shall get approved, if you clear the other eligibility criteria as defined by the lender.

Home loan is a premium long-term investment in which the loan tenure may exceed up to 30 years. Lenders do check your CIBIL report and follow rigorous eligibility criteria to make sure that there are no loan defaults by the applicants. Consumers with high Credit score are majorly preferred by leading banks/NBFCs, as the chances of default are nearly nil to minimum. Besides CIBIL score, lending institutions mainly check your income, residential status, employment position and history, employer’s stability, existing credit products, some details of the property for which you are applying for loan, etc.. Usually, lenders expect a good CIBIL score of 750 for them to consider you as a credit responsible borrower.

Low CIBIL score is not the end of the road, as it is one of the factors and not the only factor considered by lenders. If you own a residential or commercial property under your name and have a high-income source being self-employed or with a trusted employer or renowned company, then also you may qualify for a home loan with some banks and NBFCs as home loan is a secured loan and your property will be put as a collateral with the lender. In this case, the interest shall be on a higher side but you will have your dream home.

Home Loan Eligibility

Before applying for a home loan, it is always beneficial to check your eligibility, defined by the desired lender, as it guides you right and makes you aware of the limitation to work on. The home loan eligibility criteria differs for salaried professionals and self-employed professionals and shall vary as per lender to lender. Financial institutions like Housing Finance Companies (HFCs) private and public sector banks, NBFCs, Cooperative Banks, Regional Rural Banks, Small Finance Banks and various other lenders evaluate your home loan eligibility based on your age, CIBIL score, income, employment and financial stability, and much more.

Home Loan Eligibility Calculator

Home loan eligibility calculator is an online tool that helps to calculate eligibility for salaried and self-employed individuals. Your eligibility is calculated on various factors, such as your CIBIL score, monthly income, current age, fixed monthly financial obligations, credit history, location of the property in question, etc. It is mainly used as a self-planning assessment tool to take an overview of your creditworthiness and repayment capacity by the lenders. Before applying for a home loan, make sure to check your eligibility by visiting the official website of each lending bank or NBFC.

Reasons for Home Loan Application Rejection

To avoid home loan application rejection, try not to follow the below mentioned reasons, as these are the key factors that lead to your loan denial:

• Low CIBIL score
• Unstable Employment
• Incomplete Documentation
• Low loan to income ratio
• Property not under lender’s approved list of properties
• Any previous loan application rejection
• Being a guarantor to a defaulter
• Not filing ITR
• Not having No Dues Certificate (NOC) from previous lenders 

Useful Thoughts:

If you have succeeded in maintaining a good CIBIL score of 750 and above by effectively managing your past and existing credit products, you tend to fall under the low-risk segment of borrowers. It further helps the lenders to classify into a category of preferred borrower. Considering this scenario, the banks/NBFCs shall offer you home loan at comparatively low interest rates or even concessional interest rates with added benefits, if you have an existing strong relationship with the bank. However, if you have a low CIBIL score that ranges between 500-650, then it shall be difficult for you to get loan approval. Lenders shall categorize you as a high-risk borrower with maximum chances of default. Thus, try building and improving your CIBIL score at the earliest because to improve your chances of home loan application approval.