Home loans are an excellent way to fund the purchase of a property, especially now when property prices are higher than ever and it is almost impossible for buyers to pay the entire cost of a home in one go. Majority of homebuyers opt for a home loan. However, not everyone gets approved for a home loan. Lenders do not want to lend money to high-risk borrowers who may default on loan repayment. To weed out such borrowers, lenders set forth a strict eligibility check. Only those who meet their lender’s qualifying criteria for home loan get approved for a loan. Lenders gauge a borrower’s creditworthiness against various parameters, such as their age, income, etc. However, the most important of all qualifying factors is the borrower’s credit score. The credit score is a three-digit number between 300 and 900 that reflects a borrower’s ability to repay a loan on time. Borrowers with a good CIBIL score, i.e anything between 750 and 900 are considered highly creditworthy borrowers and they get the best loan deals, others need to improve cibil score for home loan. So, what happens to those whose CIBIL score is below 750. Well, their loan application either gets rejected or they find themselves repaying a loan on high interest rates and other unfavorable loan terms and conditions. In this article, we look at 5 sureshot ways to increase one’s CIBIL score.

–  A borrower’s repayment history plays a key role in determining their CIBIL score. It makes up 35% of a borrower’s CIBIL score. If you want to improve your CIBIL score, the first thing you must do is starting paying all credit card bills and EMIs on time. These days, borrowers can authorize their banks to auto pay all bills. If you are someone who tends to forget dates or if you have too many loans and due dates to keep track of, set up auto-payments. This will save you from penalties as well as keep your CIBIL score from going down. 

–  A borrower’s credit utilization ratio makes up close to 30% of their CIBIL score. Borrowers who exhaust their credit cards or those who pay only the minimum amount due are seen as borrowers highly dependent on credit by lenders. This causes the CIBIL score of such borrowers to drop. Those wanting to improve their CIBIL score must maintain their credit utilization ratio under 30%. Further, they should also try to clear the entire amount due and not just the minimum amount the credit card company requires to repay.

– A hard enquiry is an enquiry that a lender makes about a borrower to assess their creditworthiness. Too many hard enquiries portray a borrower to be credit hungry, which in turn, causes their CIBIL score to drop. So, if you want to increase your CIBIL score, apply for a credit card or loan only when you need it. Just because a credit card company is offering a great offer does not mean you should instantly apply for it.

– Borrowers who have a healthy mix of secured and unsecured loans are seen as more reliable borrowers as the lender knows they can handle all kinds of debt. To improve your CIBIL score, make sure you have both secured as well as unsecured loans.

– Lastly, CIBIL score does not only go down when the borrower is doing something wrong. Sometimes it also goes down due to the mistake of the lender. Lenders sometimes mistakenly pass on wrong information to credit rating agencies which causes a borrower’s CIBIL score to go down. Borrowers must therefore check their CIBIL report regularly and make sure there are no errors in it. If they see an error that’s causing their CIBIL score to go down, they must report it immediately. 

A borrower’s CIBIL score is very important when applying for credit. Therefore, all borrowers must try their best to maintain as high a credit score as possible.

Also Have a look at: 7 Sure Shot Ways to Improve Your CIBIL Score