Over the recent past, the demand for home loans has increased significantly. Home loans are a convenient way of buying a home today as they allow borrowers to afford their dream home and pay for it in a comfortable and hassle-free manner in the form of home loan EMIs spread over a tenor that works best for them. Unfortunately, the growing demand for home loans has made lenders wary. Extending a home loan to a borrower who is likely to default on loan repayment is a risk that most lenders are unwilling to take. Therefore, all lenders have very strict home loan eligibility requirements and anyone who does not meet these requirements gets instantly rejected for a loan. 

Home loan eligibility requirements revolve around several different factors, such as age, income, debt-to-income ratio, CIBIL score, etc. The CIBIL score is, in fact, one of the key factors that affect home loan eligibility. Credit information bureaus collect information on credit users and how they use credit and based on this information, they assign a credit score to all credit users. TransUnion CIBIL is the most popular credit information bureau in India and the credit score it assigns borrowers is known as the CIBIL score. The CIBIL score is a three-digit number between 300 and 900 and it is important as it tells a lender whether a credit user can be trusted with timely repayment of loan money or not. 

Before we get to what is the minimum CIBIL score for home loans, let us look at what factors affect a person’s CIBIL score and what does a person’s CIBIL score talk about them. 

A person’s CIBIL score is calculated based on factors, such as repayment history, credit utilization ratio, dependency on credit, the age of their history and the credit mix they have. Borrowers who always pay their loan EMIs on time, are not excessively dependent on credit, use their credit cards cautiously, and have a healthy mix of both secured and unsecured loans have an excellent credit score, i.e., anything between 750 and 900. Borrowers who are serious about timely repayment of loan money and have a responsible attitude towards credit but have missed some credit card bills and EMI due dates in the past due to personal reasons have a good credit score, i.e., anything between 700 and 749. These days, the minimum CIBIL score for home loans is 750. If your CIBIL score exceeds 750, the lender you apply to will know that you can be trusted with timely repayment of loan money and therefore, they will show willingness to negotiate with you. In other words, with a CIBIL score above 750, borrowers can ask for better loan terms and conditions, such as a higher loan sanction, a loan tenor that works best for them, and the lowest home loan interest rate possible. If your CIBIL score is between 700 and 749, though you will get approved for a home loan almost instantly, your lender may not be open to negotiations as you pose some risk of loan default. Lastly, if your CIBIL score is below 699, it is recommended that you improve your CIBIL score first and then apply for a loan for with a CIBIL score below 699, chances of loan approval go down considerably.