The CIBIL score is important as it affects a person’s ability to avail of a loan easily as well as the terms and conditions on which they are offered the loan. The CIBIL score is a three-digit number between 750 and 900 that reflects a person’s creditworthiness and repayment capacity. The CIBIL score tells a lender how difficult or easy it will be for a home loan borrower to repay their loan, how likely it is that they would default on loan repayment and what the risk involved for the lender in lending money to the borrower. Let us now try to understand how the CIBIL score affects home loan interest rates by understanding various CIBIL score ranges and what they mean.

1. CIBIL Score Range: Excellent 

If your CIBIL score ranges from 750 to 900, you have an excellent credit score. In other words, you are someone who has always repaid your loan EMIs and credit card bills on time. Your credit utilization ratio is low and you are not excessively dependent on credit. You have a serious attitude towards credit and therefore, can be trusted with money. Lenders will not see much risk in lending you money and therefore, you will get approved for a loan quickly. Further, all lenders would want to have you as a client and therefore, they will try to win you over by offering you the best or the lowest interest rates. Thus, borrowers who have an excellent credit score get offered the lowest home loan interest rates.

2. CIBIL Score Range: Good 

If your CIBIL score ranges from 700 to 749, you have a good CIBIL score. Barring maybe one or two times, you have almost always paid your loan EMIs and credit card bills on time. You use your credit card judiciously but your credit utilization ratio may be slightly higher than it should be. If you apply for a loan, you will get approved for it but your lender will most certainly not offer you the lowest home loan interest rate they have to offer. You will repay your loan at a slightly higher rate of interest. 

3. CIBIL Score Range: Average

If your CIBIL score ranges from 600 to 699, your CIBIL score is average. Loan approval won’t come easy for you as lenders will see a lot of risk in lending you money. You will be approved for a loan only if you add a co-borrower or a guarantor with an excellent credit score or if you buy insurance. Further, even if you get approved for a loan, you will be charged a high rate of interest. 

4. CIBIL Score Range: Poor 

If your CIBIL score is below 599, know that it will be very difficult for you to get approved for a loan. Even if you get approved for one, your lender will charge you a very high rate of interest. In conclusion, borrowers who wish to avail of a home loan or any loan on low-interest rates must maintain an excellent CIBIL score. They must also check their CIBIL score at least 6 months before applying for a loan so that if their CIBIL score is not as good as it should be, they can take corrective measures and push it into the excellent range before they initiate the loan application process. This will most certainly help them a ail of a loan at low interest rates as well as enjoy a higher loan sanction.