Does Home Loan Increase CIBIL Score?
Published: Mar 20, 2023
The CIBIL score, or credit score, of an individual is a rating given to them by the Credit Information Bureau (India) Ltd. This score represents one’s credit history and shows the creditworthiness of a person. A good CIBIL score indicates that you have been a responsible borrower in the past and paid all the debt on time. In India, almost every lending institution uses this rating to determine whether an applicant is eligible to avail a loan or not.
If you are planning to purchase a house and want to avail a home loan to arrange the required funds, you need a decent CIBIL score for that. This score ranges from 300 to 900, and the closer your score is to the upper limit, the higher your chances of getting the loan sanctioned are. There are several banks and NBFCs offering home loans in India, and the minimum score requirements can vary depending from one financial entity to another. However, the general consensus is that one must have a CIBIL score between 700 and 750 to avail a loan from any of the top companies offering home loans in India.
Now the main question comes – can availing a home loan improve your CIBIL score?
The answer to this is yes. A home loan or any other type of secured loan can actually help an individual improve his or her CIBIL score. The only thing that matters is that he or she makes all of the payments on time without a single miss.
Other Ways to Improve Your CIBIL Score
Let’s discuss a few other actionable tips that can help you improve your credit or CIBIL score:
Pay Your Debts Responsibly
Making late payments for ongoing loans can be a major reason behind an individual’s poor credit score. To maintain a decent score, it is important to pay all the EMIs on time. This will not only help avoid late fees or any other kind of penalty charges but also improve the credit score over time.
Maintain Old Credit Cards
Maintaining old credit cards can help lengthen the credit history. If all the monthly bills have been paid on time, they can go a long way in improving the overall credit score.
Don’t Go Overboard with Credit Limit
The credit utilization ratio (used limit: total available limit) has a major impact on an individual’s credit score. Frequently exceeding the allotted credit limit is never a good idea. It can have a negative impact on the credit score. So, it is important to be a little bit mindful while using credit cards.
Check Your Credit Report Thoroughly
In certain cases, there can be some mistakes in your credit report that affect your CIBIL score. Generally, it happens due to some miscommunication or oversight. So, it is important to check your credit statement thoroughly and get such mistakes rectified immediately if there are any.
Choose Different Forms of Credit
The best way to improve credit scores is to maintain a mix of various types of loans. To meet your financial requirements, one should go for different forms of credit, such as a personal loan, an auto loan, etc.
Are you looking for a home loan to purchase your dream home? Capri Loans is one of the best NBFCs for home loans in India, offering quick and hassle-free finance. You can explore our wide range of options to find a plan that matches your specific requirements.