Credit score directly impacts your financial health, but whether it is impacting positively or negatively can only be identified by checking it atleast once in a month. Getting credit at first is more important rather than understanding about how to avail it. Usually, financial products are not offered to anyone or everyone. Banks and NBFCs do consider certain crucial financial aspects before sanctioning any type of credit line to the applicant(s).
Customers with low credit score face difficulty in getting home loan or any credit line sanctioned, as lenders find such applicants risky. If the customer is not able to fulfill the requirements defined by the respective lender or any financial institution their chances of availing loan diminish further.
CIBIL Score Range’s Categorization:
|Credit Score Range|
Customers who know their credit score have the possibility to increase it gradually with course of time but not knowing your credit score makes you unaware of the financial situations and may hamper your chances to avail any loan or credit card. Before applying for home loan it is highly recommended to know your credit score, well in advance.
Credit score ranges between 300-900 that depicts your creditworthiness and repayment capability. As per CIBIL (Credit Information Bureau (India) Limited), customers with credit score of more than 750 have 79% chances of getting the loan sanctioned. Poor credit score makes it very difficult for the customer to avail home loan, even at higher interest rates.
Let’s further discuss few measures to be taken for availing home loan with low credit score.
- Approach NBFCs: Non-Banking Financial Companies (NBFCs) are the best source if an individual with low credit score plan to take a home loan. However, the home loan interest rate offered by NBFCs is relatively higher as compared to the private banks and other financial institutions. Some of the leading NBFCs include Tata Capital, Bajaj Finance, Cholamandalam Finance, Power Finance, Muthoot Finance, Kotak Mahindra, etc.
- Reach for HFCs: Housing Finance Companies are considered apt for choosing home loan for customers with low credit score, as they do not rely much on the credit score but takes customers’ financial history as the base criteria. Few of the major HFCs include Aditya Birla Housing Finance, Dewan Housing Finance Limited, Capital First Housing Finance, Fasttrack Housing Finance, Indiabulls Housing, Fullerton India Finance, etc.
- Decent Salary: Customers’ good salary is also considered as a helping hand in getting loan with low credit score. If the earning is good enough, then various lenders shall sanction the home loan.
- Spouse’ repayment history or CIBIL score: In case your CIBIL score is low but your spouse maintains a good CIBIL score, then you can seek your spouses’ assistance in getting home loan sanctioned. By making your spouse a joint account holder, you can conveniently get your home loan sanctioned.
Home Loan Interest Rates 2020
|Banks/NBFCs/HFCs||Interest Rates||Processing Fees|
|SBI||7.90% onwards||Nil – Rs. 10,000|
|HDFC Bank||8.00% onwards||Up to 0.5% of loan amount|
|ICICI Bank||8.55% onwards||0.5% – 1.00% of loan amount|
|IDFC Bank||8.90% onwards||Rs 10000|
|IndiaBulls Housing Finance||8.99% onwards||Up to 1% of loan amount|
|LIC Housing Finance||8.10% onwards||For up to 1 Cr – Rs 5000, Above 1 Cr Rs 10,000|
|PNB Housing Finance||9.05% onwards||Up to 1% of loan amount|
|YES BANK||9.35% onwards||0.5% of loan amount or Rs.10,000 whichever is higher (+GST)|
|DHFL||9.75% onwards||Up to 1% of loan amount|
Additional measures to take, if you require home loan with low credit/CIBIL score:
- Repaying loan EMIs or card payment on time
- Improving you CIBIL score
- Avoid applying for any fresh credit
- Converting ‘Settled’ Accounts into ‘Closed’ Accounts
- Avoid closing your older accounts
- Checking inaccuracies in your credit report
Customers with No credit score / First time home buyers
Not everyone uses credit in India, but there are large number of people who wish to avail loan or credit card for the first time. These applicants are classified as ‘New to Credit’ and ‘First time home buyers’. However, there is always a start to everything and it implies that customers with no credit score can also apply for a home loan. In this case, the lender becomes more cautious and performs additional checks in order to be fully convinced before sanctioning a home loan. People with no credit history or low credit score can add a guarantor with good credit score, as by adding him/her the chances of loan approval increases.
Apply for Home Loan Online
At Paisabazaar.com you can check, compare and pick from best available home loan options offered by several lenders at attractive interest rates. You can fill in the loan application form online by visiting paisabazaar.com and start the loan application process within minutes. After submitting your loan application, an expert advisor will call you to further process your application, alongside discussing the related aspects of the home loan process with his/her expertise.