Usually, lenders consider a Credit Score of at least 650 or between the range of 650 to 750 to be eligible to apply for a home loan. To avail of a home loan with a low score, you can approach a few selected NBFCs or small finance banks that offer loans without considering your score, as they offer home loans based on your salary, investments, and assets.

The home loan interest rates charged are high if you have a low or poor credit score, and the chances of being approved for a loan are also less.

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Role of Good Credit Score in availing Home Loan at Low Interest Rates

Credit score plays a vital role if you want to avail any kind of loan. The credit score calculation is based on your past credit behaviour, such as repayment track record, dependence on credit, etc. Therefore, it becomes easy for the lender to decide whether to offer a loan or not.

So, if you are applying for a home loan, it is most important that you have a good credit score. If you have a low credit score, the chances of denial of your home loan become much higher.

Always try paying your dues on time: An individual who is using a credit card or has any loan to repay is always recommended to pay all monthly instalments on time to avoid late payment charges and to get an easy home loan at the best interest rates

Review your credit history: It is important to review your credit history at regular intervals to avoid loan rejection from banks. 

Avoid closing the oldest credit card and carrying too much debt: The length of your credit history is the age of your oldest active credit account. The older your account, the more it will help you in getting a home loan; therefore, avoid closing old credit cards.

Therefore, to fulfil your life goal of owning a home, it's always better to keep improving your credit history, which will eventually result in offering you the best home loan.

Tips to Improve CIBIL Score Before Applying for Home Loan

Pay your Dues on Time

Do not miss your current EMI or delay your credit card payment. Set monthly reminders for your payments. With timely payments, your CIBIL Score will improve, presenting you as a responsible borrower.

Keep your Credit Utilization Ratio Low

Check your credit usage to use as little credit as possible. Lower credit utilization for long periods shows that you are capable of handling extra credit. You can also request your bank to increase your credit card limit, which will help you keep your credit utilization ratio low.

Maintain a Healthy Credit Mix

To improve your CIBIL Score for a home loan, you should maintain a healthy credit mix, i.e., the right combination of secured and unsecured loans. Having too many unsecured loans can negatively impact your CIBIL score.

Check your Credit Report Frequently

One important way to improve your CIBIL score is to regularly monitor your credit report. This will eliminate the chances of incorrect information being recorded in the report regarding your payments and other details that may otherwise reduce your score.

Conclusion

A low CIBIL score increases the chances of your loan application being rejected. If rejected, you should avoid applying repeatedly since that could further hurt your score. Instead, you should work towards improving your CIBIL score by paying your existing EMI dues promptly, keeping credit usage to a minimum, and decreasing other debts.