Homeownership is one of the top life goals for the majority of Indians. A home is not just an asset that is sure to bring great returns in the future but it also brings along with itself a sense of stability and security. Further, over the last few years, with demand exceeding supply, landlords have become quite unpredictable. They increase rent as and when they like. Thus, these days especially, buying a home makes more sense than renting one out. 

If you are planning to buy a home, in all likelihood, you will need to apply for home loan. Homes have become quite expensive and buying one requires most homebuyers to seek financial assistance in the form of home loans. Home loans allow homebuyers to afford their dream home and then pay for it over the years in the form of easy-to-pay EMIs. Thus, home loans make the process of buying a home entirely convenient. Home loans also come with home loan tax benefits which home loan borrowers can make use of and save a significant amount of money each year. 

The demand for home loans has increased manifold over the last few years and with this increasing demand has also increased lenders’ scrutiny. Today, getting approved for a home loan is not as easy as it was 10 years ago. Every lender has elaborate home loan eligibility requirements and only those who meet these requirements get approved for a loan. An important facet of home loan eligibility is an individual’s CIBIL score. 

What is the CIBIL score and what is the ideal CIBIL score for home loans in India? TransUnion CIBIL is the oldest and the most popular credit information agency in India. It collects information about credit users and studies it carefully to analyze their spending habits, dependency on and attitude towards credit and repayment capacity. Based on its assessment, TransUnion CIBIL assigns a CIBIL score to borrowers. The CIBIL score is a three-digit number between 300 and 900 with 900 being the highest CIBIL score an individual can have and 300 being the lowest. Individuals who use credit wisely, are not excessively dependent on credit and have high repayment capacity have an excellent credit score.

A CIBIL score between 750 and 900 is considered excellent. A CIBIL score between 700 and 750 is considered good. The closer an individual’s CIBIL score is to 900, the better. If you have an excellent CIBIL score, not only will you be approved for a home loan quickly but you will also be able to ask for loan terms and conditions that work best for you. If your score falls within the good cibil score range, approval will come easy but you may not have very high negotiating power with respect to the loan terms and conditions. In other words, you may feel compelled to accept whatever loan terms and conditions a lender is offering you. 

The ideal CIBIL score for home loans in India is 750 or above but you may be able to avail yourself of a home loan with a CIBIL score of 700 also. However, if your CIBIL score is below 700, getting approved for a home loan will become difficult. An individual’s CIBIL score is not absolute and it is possible to improve one’s CIBIL score if it is not already excellent. Paying one’s loan EMIs on time, being not too dependent on credit, maintaining a low credit utilization ratio and a healthy mix of secured and unsecured loans can help borrowers improve their CIBIL score over time.