How a strong CIBIL score can help mortgage borrowers this holiday season
A house is more than walls and a roof. Buying a home is probably one of the most important emotional and financial decisions you’ll ever make. Whether it’s starting your new family or planning your retirement, we all want to take that one step closer to buying the home of our dreams. To share a perspective on the impact of this holiday season on Indian buying decisions, over the past year, among borrowers who monitor their own CIBIL score, 58% were first-time buyers. In 2021, among self-checking borrowers *, around 45% were under 35 years old and around 82% of mortgage borrowers had a CIBIL score above 720.
Looking at these numbers, we can see that with higher disposable incomes, the availability of choice and easy credit offers, buying a home appears to be an attractive proposition for many Indians. In addition, many banks reward good credit behavior and have announced mortgage rates starting at 6.5% for all loan tranches and for all customers with credit scores of 750 or more. These rates are part of the festive system of several public and private banks.
Your CIBIL score and report is a reflection of your credit behavior, and a positive credit profile plays a role in accessing loans. For mortgage applicants who wish to strengthen their credit health and improve their CIBIL score, here are some steps to follow:
1. Evaluate your CIBIL report and pay close attention to details:
This is probably the easiest and most important step for any home loan seeker. Regular monitoring of your CIBIL score and report ensures accurate information and thus helps maintain a healthy credit profile. Verifying your report also helps you protect yourself against identity theft by tracking changes to your report.
2. Maintain a healthy credit history:
Paying all credit dues on time every time can go a long way in demonstrating responsible behavior and creating a positive credit profile. This will eventually help you increase your credit score and thus give you easier and faster access to a home loan at better rates.
3. Be careful with credit and watch for credit applications:
Do your research and plan before applying for a home loan. Avoid applying for home loans from multiple banks / lending institutions at the same time. You are advised not to appear greedy for credit. Therefore, apply for credit / loan intelligently.
4. Use credit with caution:
While a bank or lender will decide on a credit card’s limits, it is recommended that you keep credit usage below 30% of that limit. Keep a close eye on the rate of use of credit. Check all the details about the use of your credit card before applying for a home loan.
5. Management of co-signed / guaranteed loan accounts:
Any missed payments on a co-signed / secured loan account can also impact your credit rating and profile. Regular monitoring of these accounts ensures that your credit score is not affected by someone else’s negligence.
In essence, your CIBIL score is not just a number. It’s a powerful tool that will help you access faster, cheaper credit. A positive credit profile and a strong CIBIL score is the first and critical step on your journey to financial independence.
(By Sujata Ahlawat, Vice President and Head of DTC Interactive, TransUnion CIBIL)
* Consumers who check their own CIBIL score