How to improve your CIBIL Score to qualify for a Home Loan

Are you looking to boost your CIBIL Score to enhance your chances of securing a home loan? A strong credit score is crucial when applying for a loan, as it demonstrates your creditworthiness to lenders.

By understanding how to improve your CIBIL Score, you can position yourself favorably for loan approval. From managing your credit utilization to making timely payments, there are several strategies you can employ to elevate your score.

Here, you can look into the effective techniques to help you qualify for that dream home loan by enhancing your CIBIL Score.

What is considered a good CIBIL Score?

TransUnion CIBIL is one of four credit bureaus that generate credit score reports in India. CIBIL scores range from 300 to 900. The closer the score gets to 900, the better it is considered. A score of 300 to 549 is considered bad, whereas 550 to 700 is considered good. Scores in either category can be improved.

Tips to Improve Your CIBIL Score to Qualify for a Home Loan

Set Reminders or Standing Instructions

If you fail to make your loan EMI payments on time, then your credit score will be negatively impacted. When it comes to repaying your loan EMIs or credit card balances, you must be aware and punctual.

If you miss or delay in your EMI repayments, you will not only have to pay fines, but your credit score may also suffer significantly.

The two best approaches to avoid payment delays are by setting reminders to repay on time or adding Standing Instructions to your bank account from which a specified sum shall be withdrawn at regular intervals.

Pay all Credit Cards Dues on Time

Strategically plan to pay off your credit card amounts by the due date. Non-payment of dues substantially impacts your CIBIL score, and repeated defaults can easily lower your credit score below 600.

If you miss the due date, it will appear in your credit report under the Days Past Due section of your CIBIL. If you cannot make the whole payment by the due date, you should at least try to pay the minimum amount required so that the card issuer does not report the nonpayment of all dues to the bureau.

Even though the remaining unpaid amount will begin to accrue interest for the billing cycle, you will be given an additional cycle to pay your bills.

Check for Errors

You may have a fantastic credit history, but there are a variety of unexpected faults that might lower your credit score. These inaccuracies may include inaccurate personal information, erroneous account details, mismatched overdue or paid-off amounts, duplicate accounts, incorrect Days Past Due or collateral details, etc.

For example, you may have fully paid off your loan and canceled the account, but it remains active due to an administrative error on the lender's end.

It may substantially damage your credit score. Similarly, you must monitor for additional problems and unusual activity.

Avail Secured Credit Card

Settled credit accounts and late payments can severely reduce one's credit score. No lender would want to provide such candidates with a credit card or loan. You must rebuild your credit score to increase your creditworthiness before applying for the credit product.

You might apply for a secured credit card with a fixed deposit in such instances. The credit score is not examined while approving the secured credit card application.

Once given, you can improve your credit score by being vigilant and paying your bills on time. Your credit score may not immediately increase, but it can be beneficial in the long run.

Final Words

Improving your CIBIL score is essential for qualifying for a home loan. By following the above mentioned strategies diligently, you can enhance your creditworthiness and increase your chances of securing a home loan with favorable terms.