TransUnion CIBIL is one of the four credit information agencies authorized by the Reserve Bank of India to collect information on credit users in India. TransUnion CIBIL then analyzes this data to understand the creditworthiness of each credit user and based on their assessment, they assign a score between 300 to 900 that accurately reflects the trust that any financial institution can put in a specific credit user. This score is called the CIBIL score and is one of the most reliable metrics for lenders to assess the risk of doing business with a specific loan applicant. Different CIBIL score range mean different things. In this article, we analyze the different CIBILs for home loan ranges and study what they mean for home loan approval.
CIBIL Score Ranges: What Each Range Means
NA/ NH
NA refers to Not Applicable and NH refers to No History. Individuals who have no credit history are assigned this credit score by TransUnion CIBIL. If your CIBIL score falls within this range, your lender will assess your creditworthiness and repayment capacity based on other available information about you, such as your income, debt-to-income ratio or FOIR, LTV ratio opted by you, etc. In any case, if your CIBIL score rating is NA/NH, you must avail yourself of a credit card or a small loan, use the money judiciously and repay credit timely to build a strong CIBIL score.
300 to 599
If your CIBIL score falls within this range, chances are you have defaulted on loan repayment in the past or missed too many EMIs. Your CIBIL score could also be low because you are neck deep in debt and are already devoting a significant portion of your income towards debt repayment. In any case, with such a CIBIL score, lenders have every reason to doubt your repayment capacity and therefore, getting approved for a loan with a CIBIL score in this range is almost impossible. You can consider adding a co-borrower or loan guarantor. However, even then, it is highly unlikely that any lender will entertain your request for a home loan.
600 to 699
A CIBIL score in this range is not ideal. It clearly states that the borrower cannot be trusted with timely repayment of home loan EMIs. Therefore, when individuals with CIBIL scores in this range apply for housing finance or any other type of loan, lenders generally ask loan applicants to either add a co-borrower or a loan guarantor to minimize the risk. Some lenders even ask loan applicants to buy home loan insurance. More importantly, individuals with CIBIL scores in this range have nought negotiating power. Lenders charge high home loan interest rates, sanction a home loan amount lower than what was requested and the loan applicant simply has to agree to these terms and conditions.
700 to 749
This is not the ideal CIBIL for home loan. However, a CIBIL score in this range is considered a good CIBIL score. With such a credit rating, loan approval comes quickly and almost instantly. More importantly, lenders are not asked to add co-borrowers or find loan guarantors. They do not have very high negotiating power but with such a CIBIL score, securing housing finance on good loan terms and conditions becomes easy.
750 to 900
A credit rating in the range of 750 to 900 is considered excellent. This is the deal CIBIL for home loans. If your credit score falls within this range, your lender will show keenness to have you onboard and entice you with the most lucrative loan terms and conditions. After all, you are an ideal credit user. Through your credit history, you have proved that you can be trusted with timely repayment of loan EMIs and debt repayment in general. Therefore, you have high negotiating power and you can easily negotiate with your lender for the loan terms and conditions that are beneficial to you.
Final Word
Having a good CIBIL score is important. It not only helps with getting approved for a loan but also secures the loan on the most lucrative loan terms and conditions. If your CIBIL score calculation delivers results below 750, consider delaying applying for a loan. Instead, start working on improving your CIBIL score first. Further, these days, credit users can check their CIBIL score using a PAN Card for free. Therefore, credit users must keep checking their CIBIL score from time to time so that they can take corrective action as soon as they see a small dip in their score.
