CIBIL Score for Loan Against Property

Minimum CIBIL Score Required for Loan Against Property

December 27, 2023 • 654 views

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.

Disclaimer

We take utmost care to provide information based on internal data and reliable sources. However, this article and associated web pages provide generic information for reference purposes only. Readers must make an informed decision by reviewing the products offered and the terms and conditions. Loan Against Property disbursal is at the sole discretion of Poonawalla Fincorp.
*Terms and Conditions apply

poonawalla fincorp team

Poonawalla Fincorp Team

Our team of expert writers and editors are passionate about providing authentic and valuable information on finance. Our aim is to simplify financial and finance-related concepts. We strive to help our readers become more aware and empowered to make informed financial decisions.

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