Monday, April 22, 2019

Planning to borrow home loan? Pay attention to your CIBIL Score.

Author: Sachin Gupta | Find me on Twitter

Ok, you have identified the residential property you wish to buy. Now comes the financing part of it. A residential property may cost you 50 Lacs or more. You may have arranged for the down payment cost of approximately 10 Lacs and are now looking to borrow the home loan for remainder of the property cost.

Borrowing home loan means you will be paying EMIs for several years. Therefore, one must be responsible and confident to service the debt over a period of time. Before sanctioning such a huge amount to an individual borrower, the banks carry out comprehensive due diligence that includes checking your credit history, bank statements, income statements, job or business continuity.

CIBIL score is one such parameter that banks and financial institutions look into before sanctioning loan. What is CIBIL score? Credit Information Bureau (India) Limited (CIBIL) is India’s first Credit Information Company (CIC) founded in August 2000. CIBIL collects and maintains records of an individual’s payments pertaining to loans and credit cards. These records are submitted to CIBIL by member banks and credit institutions, on a monthly basis. This information is then used to create Credit Information Reports (CIR) and credit scores which are provided to credit institutions in order to help evaluate and approve loan applications. (Definition Source: Wikipedia)

One can check the CIBIL score here


How can you maintain good CIBIL score?

Well, in order to maintain good CIBIL score, you must pay attention to the following factors:

  • Repayment:
First thing first, what is your repayment track record? In other words, are you paying your installments on previous loans or credit cards regularly within the stipulated timeline? If yes, then your CIBIL score is going to be good. Your ability to repay previous debt has 35% weight-age in calculation of the CIBIL Score. Therefore, make sure that you stick to due dates of servicing your EMIs.

  • Credit Utilization:
Credit utilization is the ratio of the
Balance amount that you owe to your lenders / Total of your credit card limits

Therefore, if your balance amount that you owe to lenders is high then it signals riskiness. The increase in balance amount indicates increase in repayment burden and may negatively impact your CIBIL score. Credit utilization has 30% weight-age in calculation your CIBIL score. Therefore to score high CIBIL score, keep your outstanding balance to banks and financial institutions as low as possible.

  • History of Debt servicing capacity:
Are you paying EMIs and credit installments successfully for several years? If yes, then this will have a positive impact on your CIBIL scores. Banks and financial institutions prefer applicants who have taken loans earlier and have serviced the debt regularly. It sends the signal that the individual has a long history of securing debt and has been responsible in his/her repayments. This has a weight-age of 15% in calculation of CIBIL score.

  • New Credit
If you have applied for too many loans or credit cards in recent times, then it has a negative impact on your CIBIL score. Banks and financial institutions will see this increased activity of loan applications as risky because your debt burden has increased and it may affect your repayment capacity. Therefore, be prudent with your loan applications. Unless, your income has increased substantially, do not apply for too many loans or credit cards at the same time or within a short interval of time. In other words, space out your loan applications prudently. This has a weight-age of 10% in calculation of CIBIL score.

  • Credit mix
Many a times, we have noticed that people have a great propensity to apply for unsecured loans. As the name suggests, unsecured loans are not secured by any mortgage or guarantee. If you have mostly availed unsecured loans (such as personal loans) or credit cards, then it will bring down your CIBIL score. Always have a mix of both secured loans and unsecured loans. Secured loans are car loan, home loan, etc. This has a weight-age of 10% in calculation of CIBIL score.


Now that, you have a thorough understanding of CIBIL scores and its impact on your loan availing ability, we hope that you will be disciplined in your finances.




Have any Questions?

24 comments:

  1. Hi this is a Pretty Good blog on Indian real estate. This article helped me understand the realty industry better. I would also like to tell that all post on this blog have been helpful in my learning experience.
    I too have Some Information for you Hope you will like it and it might also help you in writing further blog posts, if you are interested in property then go with Oh My God Noida

    ReplyDelete
  2. In my point of view this information is best for those who is seeking for home in ideal location of Nodia.
    ATS Allure Noida

    ReplyDelete
  3. CIBIL score is very important and people should give attention to improve it. Home loans have been very convenient thing for people who have good score but not for those people who have bad credit. Thank you for sharing the information.

    Regards,
    Apoorva

    ReplyDelete
  4. Hi , thanks for sharing your information.The insights are really helpful and informative. If anyone want to buy PARTY WEAR and SALWARS, this will be the rightplace for you.
    Party Wear Tops Online Shopping
    Salwar Online Shopping

    ReplyDelete

  5. Thank you for sharing this information.Do you need a loan.We are Legitimate and guarantee loan lender. We are a company with financial assistance. We loan funds out to individuals in need of financial assistance, that have a low interest personal loans to build a carrier.

    ReplyDelete
  6. Thanks For Sharing This Nice Information.
    Boulevard by Bramhacorp Builders provides the ongoing construction project in pune with Premium office spaces now for sale!

    ReplyDelete
  7. BramhaCorp Develop the best Projects in Kalyani Nagar , get your Best 2 BHK & 3 bhk Apartments in kalyani nagar Pune within your budget with best Amenities.

    ReplyDelete
  8. Thanks for sharing the informative post. This is very useful to buy a dream house in Chennai.
    Builders in Chennai
    Properties in Chennai

    ReplyDelete
  9. Thanks for all your information.Website is very nice and informative content. Ready to Occupy Flats in Chennai

    ReplyDelete
  10. Thank you very much for your great information. It really makes me happy and I am satisfied with the arrangement of your post. You are really a talented person I have ever seen. I will keep following you forever. If you have time you can check this site and give me suggestion.
    grandgatewayhotels

    ReplyDelete
  11. Hii Sachin Gupta, Thanks for Information. The Information is Really helpful for my business.Usefull points to maintaining good CIBIL score.

    We are also working on the same business. Kindly go through It. REAL ESTATE

    ReplyDelete
  12. Reliobrix Consulting is a main and conspicuous real estate consultants in Delhi, established in 2013 and operating from Noida. Reliobrix Consultancy provides numerous ranges of consultancy services in real estate business, especially in housing & residential projects. Reliobrix is a highly reputed firm & with its well experienced professionals it understands the core need of its customers and gives suggestion as per the requirement and budget.


    PANCHSHEEL HYNISH
    Shri Radha Sky Park in Noida Extension
    shri radha sky garden
    AMAATRA HOMES
    ARIHANT ABODE
    ACE ASPIRE

    ReplyDelete

  13. Dubaiproperty.site is an online real estate advisor that functions on the fundamentals of trust, transparency and expertise. As a digital marketplace with an exhaustive range of property listings.
    Dubai Properties
    Property for sale in Dubai
    Dubai Houses
    Buy Property in Dubai
    Flat for sale in Dubai
    Apartments for sale in Dubai Marina
    Real Estate Companies in Dubai
    Dubai Hills Estate
    Buy Flats in Dubai

    ReplyDelete
  14. Much obliged to you for sharing this information.Do you need a loan.We are Legitimate and ensure credit moneylender. We are an organization with budgetary help. We credit assets out to people needing money related help, that have a low premium individual advances to assemble a transporter. sobha hartland dubai

    ReplyDelete
  15. This is an informative blog which has a detailed description of the the top builders in bhopal is among the best builders in bhopal who has the property in every direction of Bhopal Their rates are also than others and the quality is remarkable.

    ReplyDelete
  16. Nice Blog! Keep Sharing This Kind of useful Information.I would like to know more information about Plot in Haridwar, because it is very Useful Blog Thanks for sharing...

    ReplyDelete
  17. Invest with 200$ and get a returns of 5,000$ within seven business working days.
    Why wasting your precious time online looking for a loan? When there is an opportunity for you to invest with 200$ and get a returns of 5,000$ within seven business working days. Contact us now for more information if interested on how you can earn big with just little amount. This is all about investing into Crude Oil and Gas Business.

    Email: investmoneyoilgas@gmail.com

    ReplyDelete