CIBIL Score: What should be the CIBIL score for a cheap loan, know this important thing before going to the bank..

CIBIL Score: Whenever we go to the bank to take a loan, the bank first checks our CIBIL score. A person's financial condition can be estimated by looking at the CIBIL score. If your CIBIL score is good then you will get a loan even at low interest rates, but if your CIBIL score is bad then your loan file may also be rejected. Therefore, it becomes important for you to maintain a healthy credit score. If you have a good credit score, you can avail many benefits. You can take its help to get a cheap loan. Today we will tell you how you can get a cheap loan, as well as how to improve it if your credit score has deteriorated.

Banks give cheap loans on good credit scores. Banks give loans based on CIBIL score. If your CIBIL score is top-notch, then you can get a 0.15-0.25% discount on the loan rate.

CIBIL Score and Home Loan Rate for SBI

CIBIL Score

Normal Rate Discount Concession Rate
800+ 8.90% 0.15%
750-799 9% 0.25%
700-749 9.10% 0.20%

Why is a credit score important?

CIBIL score reveals credit history.

Banks look at the CIBIL score of the loan applicant.

The loan behavior of the applicant is checked.

The credit score contains a blueprint of the existing loan and bill payment.
The range of credit scores is between 300 to 900.

If the score is 700 or more, then banks consider it good.

What is the parameter of credit score?

Very good- 800-850

Very good- 799-740

Good- 739-670

Okay- 699-580

Very bad- 579-300

How does the credit score deteriorate?

Not paying the loan on time.

Taking a loan more than the credit limit

Defaulting the loan

Settling the loan

Becoming a guarantor

What will happen if you have a low CIBIL score?

If the CIBIL score is low, there will be problems. If you have applied for a personal or business loan, you will face difficulty in getting a loan from the bank. Loan approval/rejection depends on the credit score. If the score is low, there are more chances of the loan being rejected. A low score also affects the loan amount.

How to improve the CIBIL score? (How to improve Bad CIBIL Score?)

Do not take more or bigger loans than needed.

Pay EMI on time.

Pay credit card bill.

Keep the credit utilization ratio low.

Avoid taking loans on credit cards.

Do not close the old credit card.

The payment history of old credit cards will come in handy.

Apply for a loan only after checking eligibility.

Check credit score from time to time.

Tips for cheaper home loan rate

Read the loan terms and conditions.

Understand promotional offers well.

Assess your financial situation.

Limit EMI to 30-40% of income.

Be sure to compare loans online.

Find out the additional charge of processing fee.

How to get a cheap loan?

Keep a good credit score.

Keep the loan-to-value ratio low.

You can take a joint home loan.

Joint Home Loan

You can add a co-applicant to a home loan.

Co-applicants should have stable incomes and good credit scores.
Adding a co-applicant increases the chances of loan approval.

Income tax benefits are also available on joint home loans.

Low loan-to-value ratio

A low loan-to-value ratio is good for a loan.

Keep your contribution high for buying a house.

Choosing a low ratio increases the buyer's contribution to the property.

Bank's risk is reduced loan affordability increases.

Fix Obligation to Income Ratio

Banks also look at the customer's FOIR. FOIR means Fix Obligation to Income Ratio, which means how much is your income and what is your capacity to pay the installment. That is, how much loan installment can you pay every month? If your expenses are equal to 50% of your salary, then the loan may be rejected.

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