How Can I Get a Home Loan with a Low CIBIL Score?

A Home Loan is when one borrows money from a lending institution to buy or construct a house. The repayment process consists of interest the full amount plus interest, which is supposed to be paid through Equated Monthly Instalments (EMIs) in the given tenure. Generally, reputed lending institutions offer up to 30 years of the loan tenure.

But before you plan anything, you should check your credit score. CIBIL scores are used in the processing of home loan applications. It is one of the most crucial aspects of the procedure that determines the acceptance or denial of your application. While most lenders ask for a good credit score, a few institutions like Fullerton Grihashakti offer a Low CIBIL Score Home Loan.

What exactly is a CIBIL Score?

The Credit Information Bureau (India) Ltd, better known as CIBIL, is the major provider of individual credit reports and ratings. CIBIL receives personal financial data from India’s main banks and other financial institutions, including loan and credit card information.

What is the CIBIL Score?

• After evaluating an individual’s complete credit information, the Credit Information Bureau generates a CIBIL score.

• In addition, the company offers credit report services to banks and other NBFCs (non-banking financial companies).

• A CIBIL score is a three-digit number between 300 and 900 that assesses a person’s creditworthiness.

• A higher CIBIL score implies a good credit history and responsible repayment practices.

• CIBIL scores are calculated utilising at least 6 months of a person’s historical financial data.

 What is a “Low CIBIL Score?”

There is no universally accepted definition of a low CIBIL score.

• A score of less than 600 is generally regarded as poor for the approval of a Home Loan, but it varies depending on the lender.

• Lenders prefer a CIBIL score of 700-750 to approve a home loan. Various lending institutions may have their minimum score requirement, although most Indian institutions want at least 700.

• A person with a CIBIL score of 700-750 or more is considered the least risky for a home loan.

• Individuals with credit scores ranging from 650 to 700 are considered moderately risky. They may be eligible for a Home Loan with one or more conditions, such as a lower loan amount, higher interest rates, increased documentation, and higher processing fees and other charges.

Low CIBIL Score Home Loan

If you are concerned about acquiring a loan with lower credit, many lenders provide house loans to candidates with a CIBIL score of 650 or lower.

• To solve this issue, lenders may create several home loan programs for individuals with a CIBIL score of 650 or lower. Some lenders offer very feasible ways for applicants with a low CIBIL score. Certain financial institutions, such as Fullerton Grihashakti home loan, offer loans based on different CIBIL scores.

• The applicants may receive house loans with simply Aadhaar and PAN cards and an account with a minimum balance. The applicant is not even required to provide an ITR.

• Having said that, while a low CIBIL score is usually a deterrent for many lenders, there are certain ways to get a low CIBIL score house loan. Raising a low CIBIL score to an acceptable level (about 600-650) is one of the most popular ways of obtaining a home loan.

There are several methods for doing this, including: 

• Raise a Credit Repair Request: A Credit Repair Request can be made on the CIBIL website if the score has been lowered due to genuine reasons such as technical errors while debiting the EMI amount, non-receipt of credit card statement within sufficient time before the due date, EMI holidays/moratorium period not considered, and so on.

• Authorise another card: You can quickly improve your credit score by becoming an authorised user on another card. Become authorised to someone who repays on time and has a good credit score. This way, your credit limit and credit score increase quickly and easily.

• Take a look at your Credit Mix: Different types of credit accounts held by you are referred to as a credit mix. These include your loans and credit cards. If your credit mix is higher, the chances of you availing a home loan also increase. In case it is low, you can always consider applying for a new type of credit to increase your credit limit instantly. 

Conclusion

Even though CIBIL is one of the most critical elements evaluated when sanctioning a home loan, some loans like Fullerton Grihashakti home loans may ignore a little discrepancy in the needed CIBIL score parameter.

For example, the applicant has a CIBIL score between 620 and 630. In these cases, a low CIBIL Score Home Loan can be attained. It should be reiterated that approvals under such conditions are entirely at the discretion of the Bank and are not guaranteed. These might be different among lenders.