Your CIBIL score is not just a number, it is a powerful tool that will help you get access to faster and cheaper credit.
A home is much more than just walls and a roof. Buying a home is probably one of the most important emotional and financial decisions you’ll ever make. Whether it is to start your new family, or plan your retirement get-away, we all wish to move a step closer to buying our dream house. To share a perspective on how this festive season impacts the buying decisions of Indians, over the last 1 year, amongst borrowers who monitor their own CIBIL Score, 58% were first-time home buyers. In 2021, amongst the self-monitoring* borrowers, about 45% were below the age of 35 and around 82% of the home loan borrowers had a CIBIL score of above 720.
Looking at these numbers, we can see that with higher disposable incomes, availability of easy credit choices and offers, a home purchase appears as an attractive proposition for many Indians. Additionally many banks are rewarding good credit behavior and have announced home loan rates starting at 6.5% across loan slabs and for all customers having higher credit scores of 750 or above. These rates are a part of the festive scheme for several public and private banks.
Your CIBIL Score and Report is a reflection of your credit behavior and a positive credit profile plays a role in getting access to loans. For home loan seekers looking to build their credit health and improving their CIBIL score, here are a few things to do:
1. Evaluate your CIBIL Report and pay close attention to the details:
This is probably the easiest and most important step for any home loan seeker. Monitoring your CIBIL Score and Report regularly ensures accurate information and thereby helps maintain a healthy credit profile. Checking your report also enables you to protect yourself from identity theft by tracking changes in your report.
2. Maintain a healthy credit record:
Paying all credit dues on time, every single time can go a long way in showcasing a responsible behavior and creating a positive credit profile. This will eventually help in increasing your credit score and thereby gives you an easier and faster access to home loan at better rates.
3. Be credit wise and monitor credit inquiries:
Research and plan before you apply for a home loan. Avoid applying for home loans from multiple banks/lending institutions at the same time. It is advisable not to appear credit hungry. Hence, make credit/loan inquiries smartly.
4. Utilize credit cautiously:
While a bank or lender will decide the limits on a credit card, it is recommended to keep the credit utilization to less than 30% of that limit. Keep a close watch on the credit utilization ratio. Check all details with regards to your credit card utilization before you apply for a home loan.
5. Managing co-signed/guaranteed loan accounts:
Any missed payments on a co-signed/guaranteed loan account can impact your credit score and profile too. Monitoring these accounts regularly ensures your credit score is not affected by someone else’s negligence.
In essence, your CIBIL score is not just a number. It is a powerful tool that will help you get access to faster and cheaper credit. A positive credit profile and a strong CIBIL Score is the first and a crucial step towards your journey to financial independence.
(By Sujata Ahlawat, Vice President and Head-DTC Interactive, TransUnion CIBIL)
*Consumers who check their own CIBIL Score