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How to get a home loan with a low CIBIL score – Forbes Advisor INDIA

CIBIL is a credit score calculated and provided by Credit Information Bureau (India) Limited (CIBIL), one of the most popular credit information companies licensed by the Reserve Bank of India. Usually referred to as a person’s debt statement, a CIBIL score closer to 900 is considered “healthy” while one closer to 300 is considered “low”.

Buying a home is a strategic, financial and emotional decision for most people. However, financing such a colossal investment entirely through savings and investments is a difficult task, and thus availing a home loan becomes necessary for people looking to buy a home. Approval of a home loan by a bank or financial institution largely depends on your creditworthiness, reflected by the CIBIL score.

If you have an average CIBIL score, here are the top nine tips to help you get sanctioned on a home loan:

1. Understand the process

Your credit score is not the same as your credit report. Although the two are related, they are not interchangeable. Credit score is based on several factors that determine your ability to repay loans, while credit report is a record of all lines of credit used and repayment history showing whether loans have been repaid in full and on time.

Credit scores range from 300 to 900, with anything above 750 being considered “very good”. A score above 650 is generally considered sufficient to secure financing from most lenders, but each lender may have their own eligibility criteria. Several websites and applications, free or paid, offer potential borrowers the opportunity to check their credit score.

2. Include a co-applicant

If your credit score and income are less than ideal, you can apply for the loan with someone by adding a co-applicant to the loan application. A co-applicant with a better credit score than yours and a stable source of income may not only increase the likelihood of your application being accepted, but may also secure a lower interest rate because the lender is assured of your creditworthiness and your repayment capacity.

Applicants may include parents or spouses as co-applicants. However, for this, the co-applicant’s contact details and financial documents must also be submitted to continue the application process.

3. Get a secured loan to boost your score

A secured personal loan is a great option if you need to improve your credit score to qualify for a mortgage. A secured loan is a loan in which you put up collateral, such as an asset or property, as security for the loan. Secured loans are generally less expensive than unsecured personal loans and also easier to obtain. Having and repaying a secured loan assures lenders of your ability to repay due to the presence of collateral, and also creates a credit history of timely repayments.

Apply for loans from several financial institutions, but not too many loans in quick succession

If a lender rejects the loan application due to a low score, it is always possible to contact another financial institution to inquire about the same home loan. However, it should be noted that applying for multiple loans in quick succession can negatively impact the CIBIL score.

Lenders tend to avoid “credit-hungry” behavior because excess debt can hamper a person’s ability to make necessary and timely repayments. As a general rule, a new loan application should only be requested after a six-month interval. It is recommended to inquire with different banks or financial institutions, but it is not advisable to create many demands with different banks in quick succession.

4. Maintain your credit card payments

You may be able to improve your credit score by paying at least the minimum payment on your credit cards before the due date. The attempt should be to make the full payment each month, as credit card debt can be expensive in the long run. Otherwise, you should at least try to pay more than the minimum amount so that you can reduce your debt faster.

Paying off more debt will also help lower interest costs over time and lower monthly payments on all of your loans. Credit card transactions are critical to maintaining a high CIBIL score, and one should try to keep usage up to 30% of the card limit to ensure a good CIBIL score.

5. Apply for a loan from an existing lender

Since your lender is confident about your ability to repay and has made an initial credit assessment based on your cash receipts, purchases, savings and other bank details, it is often advisable to apply for the loan from from the existing lender. This reduces the total turnaround time for document assessment. It also gives borrowers the opportunity to benefit from a long-term relationship with the financial institution, as lenders also prefer to grant loans to existing customers based on their easily accessible credit and repayment history.

6. Offer a higher down payment

If you are looking to buy a property worth INR 10 lakhs and can afford a high down payment of INR 4 lakhs, the bank or financial institution is trusting your ability to repay the loan and the overall likelihood that the loan application to be approved increases. You should decide on the source from which the down payment is made, preferably a savings account, as this could help offset a low CIBIL score.

7. Check your credit score

You can get your dream home even with a low CIBIL score, if you have the right approach. One of the ways to increase your chances of getting a loan application is to review your credit rating and understand the reasons for the lower rating.

Potential borrowers should get their credit reports and check for errors, as a few errors can mean the difference between rejection and approval. Make sure the information on your report is correct before applying for loans.

8. Give it time

The good news about getting a mortgage is that because it’s a long-term loan, most lenders will approve if you meet their basic criteria, such as having a source of income. regular. So if you’re worried about being turned down for a loan because of a flawed credit history, you don’t need to be. Just keep improving your credit score over time and try again later when the credit report is better.

9. Know that there are always exceptions

You can also get a home loan with a low credit score. A score over 750 is considered “very good” for getting a home loan, but this number is not a rule of thumb and loan sanctions may also be based on lender-specific internal metrics. Therefore, the key aspect is that you should keep looking for alternatives from different financial institutions that offer home loans at different interest rate and terms for borrowers with low credit score and then choose the one. which suits you best.

Having enough cash on hand or the ability to pay off your debt quickly also helps because it shows lenders that they won’t be stuck with non-payments if things don’t work out for the life of the loan.

Your credit score has a huge impact on your financial situation. It is essential to assess whether a lender will grant you credit. Housing finance companies, for example, extend credit even to borrowers with lower credit scores because that is their area of ​​expertise and they have better credit research and reporting capabilities. Lending institutions generally charge higher interest rates on loans to borrowers with lower scores to compensate for the higher risk element of the loan.

Borrowers with poor credit can also apply for a reduced repayment period or a co-applicant. When the applicant’s total income and credit rating are good enough, this reassures the financial institution of the borrower’s ability to repay the principal and interest amount of the loan.


You must understand that a financial institution takes on a significant risk by offering a home loan, as there are risks of default. To judge the applicant’s repayment capabilities and creditworthiness, the calculation of the CIBIL score is a popular credit assessment and underwriting tool. However, a low CIBIL score is not the end of the world for a candidate.

Your credit score is a single number that has the potential to cost or save you a lot of money throughout your life. You can get lower interest rates if you have a good credit rating, which means you’ll pay less for the credit facility you take out.

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