A CIBIL score represents your creditworthiness and plays a crucial role in helping you get a loan at favorable terms. It is a three-digit number ranging between 300 and 900, reflecting your borrowing behavior. The higher the score, the better the chances of getting a loan. The lower the score, the higher the chances that your application will not be approved. If you want to unlock the true potential of your property, you may apply for a Loan Against Property. This blog tells you the minimum CIBIL score required to get a Loan Against Property, the importance of the CIBIL score, and how to improve it. Read on!
What is the Minimum CIBIL Score Required for a Loan Against Property?
Different lenders set different minimum CIBIL score criteria that borrowers must fulfil to secure a Loan Against Property. However, 750 is considered the minimum CIBIL score required to get a Loan Against Property from a renowned lending institution.
Why Does CIBIL Score Matter?
You must have heard “First Impression is the Last Impression”; that’s what your CIBIL score does. It leaves a lasting impact on the lender’s mind about your creditworthiness. Here are some more reasons why having a good CIBIL score for a Loan Against Property matters a lot:
- Higher Funds: Several Lending institutions offer high Loan Against Property amounts with a high CIBIL score and vice versa.
- Impacts on Lender’s Confidence: Your CIBIL score can either make or break the lender’s confidence regarding your creditworthiness and loan repayment capability. A high CIBIL score boosts the lender’s confidence in you. On the other hand, a low credit score can bring down the lender’s confidence.
- Affects the Interest Rates: You can secure a Loan against Property at competitive interest rates with a good CIBIL score. This helps reduce the overall cost of borrowing, meaning you do not need to make high-interest payments for your Loan Against Property.
- Repayment Tenure: A CIBIL score also impacts the loan repayment tenure you will get. With a high CIBIL score, you can secure a Loan Against Property with an extended repayment tenure. In contrast, you may face difficulties securing the loan at a flexible repayment tenure if you have a low credit score.
Hence, you should maintain a CIBIL score of 750 or above and take the necessary steps to improve the same if required.
ALSO READ :- Top 10 Benefits of Loan Against Property in India…!
Factors Affecting Your CIBIL Score Negatively
The following are some factors that are responsible for your poor or bad CIBIL score:
- CIBIL Report Errors: If your CIBIL report contains any errors and inaccuracies, it can drop your CIBIL score.
- History of Credit Repayment: Your credit repayment history shows how consistently you make timely payments. If you miss your EMIs, it will negatively impact your CIBIL score.
- Credit Utilization Ratio: If you are a credit card user, a high credit utilization ratio negatively affects the health of your CIBIL score. If your credit utilization ratio exceeds 30%, your CIBIL score drops.
- Credit Mix: Credit mix shows the number of debt accounts you can manage; it may include Personal Loans, Business Loan, Property Mortgage Loans, credit card debt, etc. This shows your ability to manage multiple debts to lenders. Having a low credit mix does not bring down your CIBIL score directly but can increase or improve the same if you have a high credit mix.
How Does a Bad CIBIL Score Impact a Loan Against Property?
With a bad or low CIBIL score, securing a Loan Against Property on favorable terms becomes difficult. Apart from this, you may face the following difficulties with a bad CIBIL score:
- Difficult to Secure a High Amount: You may not be able to secure a high amount with a bad CIBIL score. The reason is lenders find it risky to provide you with high funds without a good credit score.
- High-Interest Rates: Your low credit score prevents you from securing funds at favorable interest rates, and you end up paying high interest.
- Shorter Pay-back Period: Lenders may not trust offering you funds for a longer repayment period. So, securing a Loan Against Property with a flexible or extended repayment tenure also becomes difficult for you with a bad CIBIL score.
Ways to Improve Your CIBIL Score
The following are some ways which can help you improve your CIBIL score:
- Review Credit Report: Obtain a copy of your credit report and look for errors or inaccuracies and get them corrected. This improves your CIBIL score.
- Diversify Your Credit Mix: Have a good blend of secured and unsecured loans like Personal Loans, Property Mortgage Loan, etc. This positively impacts your CIBIL score for Loan Against Property.
- Make Timely Payments: You can improve your CIBIL score by repaying your loans on time.
- Pay off Previous Debts: Always make timely payments, as paying off all your debt obligations on time reflects your creditworthiness and improves your CIBIL score.
- Keep Your Credit Utilization Ratio Low: You should keep your credit utilization ratio below 30% to increase your CIBIL score. Your low credit utilization ratio shows your ability to repay the debt by reflecting your income much higher than your debt.
To Conclude
Having a good or healthy CIBIL score is essential to secure a Loan Against Property with favorable terms and conditions. A 750 or above CIBIL score increases the lender’s trust in you and presents you as a responsible borrower. Besides this, it reflects your ability to repay the debt and your creditworthiness. In a nutshell, your healthy credit score helps you to secure a Loan Against Property or LAP at better interest rates and flexible repayment tenure easily.
