Home loans are secured loans with an extended repayment tenor. Consequently, their interest rates are lower than unsecured loans. However, some individuals may still find interest rates for home loans to be financially draining especially over the substantial repayment period.
Borrowers can consider working on their CIBIL score to avail a low home loan interest rate. CIBIL score or credit score is a measure of a borrower’s creditworthiness. It is calculated based on an individual’s credit history.
A low CIBIL score suggests to your lender that you may prove to be a risky borrower. It leads the lenders to charge you a high-interest rate on loans. On the other hand, a high CIBIL score of 750 and above suggest to them that you are a creditworthy individual.
Consequently, such a healthy CIBIL score will enable you to negotiate with your lender and hope you avail low home loan interest rates.
Also Read: A Guide to Teach You How to Deal With Home Loan Rates in India
If you have a low CIBIL score, go through the steps mentioned below to improve your score –
- Timely payments – Late payments of credit card bills or loan EMIs hurt your credit score. Accordingly, you should pay off your bills and loan EMIs on time. Additionally, you should also pay off your outstanding debts as per the repayment schedule to increase the credit score over time.
- Balance your credit – You should opt for a balanced mixture of both secured and unsecured loans. Having multiple unsecured credits may compel a lender to consider you as a credit-hungry and risky individual to lend funds for secured credit, especially a home loan.
A high CIBIL score also helps in getting your home loan approved quickly. Apart from high CIBIL score, you can also take other measures to lower your home loan interest rates like maintaining a low debt-to-income ratio, applying with a co-applicant, preferably a female co-applicant, etc.
Additional Read: Things To Know About Fixed and Floating Home Loan Rates
