Getting a home loan if you have a low CIBIL score

Becoming a home owner is a dream nurtured by each and every single person. Between living in a rented accommodation and having the financial security of a permanent roof over your head, it is natural that everyone would desire the latter. But with the ever-rising property prices, not everyone can afford to purchase a home form their savings. Most people have to rely on home loans to become home owners.

CIBIL Scores

Lenders typically check a borrower’s repayment capacity before they provide the loan. They assess several criteria before determining the loan amount. One such criterion is the borrower’s credit or CIBIL score. A CIBIL score is simply a three digit numeric summary that gives lenders an insight into a borrower’s credit repayment behaviour. Most lenders look for credit scores exceeding 750 points to provide a loan. That said, some lender provide home loans despite bad credit scores. Here’s how you can get a home loan for low CIBIL score.

Getting a home loan with low CIBIL scores

Here are a few ways in which you can get a home loan despite bad credit scores.

• If your CIBIL score is less than 750 points, lenders may be a bit hesitant to provide you a home loan. It is therefore essential that you clear of most of your debts so as to improve the credit scores in the long run.
• If you have a low credit score but if your spouse has a good credit score; you can apply for a joint home loan. Opting for a joint home loan can increase the chances of your home loan application being approved.
• Another way out for low credit score home loansis to reach a settlement with your bank or financial institution, in case of loan or credit card payment default. You can pay off the settlement amount and get a no objection certificate or NOC after reaching the settlement. Obtaining the NOC makes it easy for you to apply for home loans. But before you apply for the loan, you must check your CIBIL score and ensure that there are no inconsistencies or discrepancies and that your credit score is reflected correctly, which includes details of the settlement reached.
• Another good way of getting bad credit home loans is to approach the bank or financial institution with which you have a working relationship. For instance an NBFC or HFC with which you have taken a loan in the past and repaid it completely. It could also be a bank in which you have a salary account or any other type of savings account in which you are depositing and withdrawing cash regularly. Your customer loyalty can help you get the home loan despite bad credit scores. In case of banks or NBFCs, having a substantial account balance, a fixed or recurring deposit can also help you procure the loan even if your credit rating is low.

Final Word

While it is not impossible to get a home loan despite a low credit score, there are a few things you need to keep in mind. You must remember that opting for home loan for low CIBIL score can result in you receiving a higher rate of interest on the loan. Also, if you default on the EMI repayment, your credit score can be impacted further which might make it difficult for you to get a loan in the future. You must ensure you pay your EMIs on time. Make sure you keep adequate funds in your bank account and opt for the auto-debit facility so that you never miss your monthly EMI payments.