Secured loans, such as home loans and loans against property, customarily involve substantial loan amounts and consequentially, it becomes imperative that the loan applicant creates a credit profile that guarantees beneficial loan terms, such as low home loan interest rates. The interest rate secured on a loan greatly impacts the loan applicant’s monthly payouts towards the loan as well as the final cost of borrowing funds. An important aspect of credit profiles is the CIBIL score. 

Each credit user is assigned a credit rating by authorized credit information agencies. Different credit information agencies give a different term or name to the credit score they assign to credit users. The CIBIL score is what TransUnion CIBIL calls the credit score it assigns to credit users. The CIBIL score moves within the range of 300 to 900. 900 is the best CIBIL score anyone can have. 

So, what is a good CIBIL score? A CIBIL score above 700 guarantees loan approval and a score above 750 blesses the loan applicant with immense negotiating power and the ability to secure the loan on the most favourable terms and conditions, including low home loan interest rates, high loan sanctions that allow borrowers to secure a loan sanction that allows them to comfortably afford their dream home and a loan tenor that makes loan repayment comfortable and easy. 

The Importance of a Good CIBIL Score 

If you are planning to take a home loan or a loan against property is on the cards, you must make sure to have a good CIBIL score. Here’s how a good CIBIL score helps in the home loan process as well as other spheres of life.

1. Favourable Loan Terms and Conditions: People with high CIBIL scores are credit users who have demonstrated the ability to handle credit easily, responsibly and without defaulting. Consequently, lenders have no reason to doubt the repayment capacity of these individuals. So, people with high CIBIL scores are offered loans at the best possible loan terms and conditions. They also have high negotiating power and can request more favourable loan terms and conditions. 

2. Buying Insurance Becomes Cheaper: These days, many lenders ask home loan applicants to buy insurance to ensure a hassle-free home loan journey, even during a period of financial crisis. A good credit score allows loan applicants to buy insurance at low prices and enjoy affordable premiums. 

3. People with Good Credit Scores Find it Easier to Get Access to the Best Rentals: These days, many landlords check the loan applicant’s credit score to see whether they can be trusted to pay their rent every month. Having a good credit score makes you come across as someone reliable and trustworthy and therefore, a good credit score can help you get access to the best rentals. 

4. It can also help you win good job offers

Whether you are planning to take a home loan or are looking for another rental, a good CIBIL score can make your life much easier. However, if you check CIBIL online and figure out that you fall short of the ideal CIBIL score, do not panic. The next section of this article discusses what you can do to improve your credit score. 

Easy Tips on How to Improve Credit Scores 

Do not have a good credit score but want to take a home loan? Don’t worry, here are some easy tips that will help you build your credit rating in no time. However, know that building a good CIBIL score takes time. The change won’t be visible overnight. So, be patient. 

1. Credit users who pay loan EMIs and credit card bills on time have an excellent credit score for the repayment history is important. So, to build a good credit score, build a strong repayment history. 

2. Credit information agencies keenly study how you use your credit cards. People who use their credit cards smartly and responsibly have better credit scores. All credit users must build the habit of clearing the entire amount due on their credit cards at the end of each month. Not doing so leads to one’s debt going up. The credit utilization ratio is the percentage of one’s credit card limit that is currently being used. Credit users must never have a high credit utilization ratio as it indicates irresponsible credit behaviour and excessive dependency on credit. 

3. The age of your credit history is important too. The older your credit history, the higher will be your credit score. So, never make the mistake of closing old loan accounts and credit cards. 

4. Borrowers who have a healthy mix of both secured and unsecured loans have a higher CIBIL score as these people have a well-demonstrated ability to handle all kinds of debt. All credit users must aim to have a healthy mix of all credit types. 

5. Lastly, it is very important that you do not be excessively dependent on credit. People who are excessively dependent on credit, apply for too many loans at the same time, even after getting rejected by lenders, and have a low CIBIL score. 

Final Words 

Your CIBIL score is of utmost importance. It depicts your ability to handle all kinds of debt. It is also reflective of your attitude towards debt and your attitude towards its repayment. Having a good credit score proves helpful in several ways. So, maintain a good CIBIL score at all costs.