Know Your Credit Score Before Applying for Home Loan: CIBIL

The Credit Information Bureau of India Ltd (CIBIL) urged borrowers to get their credit scores before applying for home loans with banks and financial institutions. It said that, borrowers with a credit score of 750 and above have a higher chance of getting loan.

According to CIBIL data, 88% of home loan borrowers in 2011 had a credit score of 750 and above. Also, about 75% of new accounts opened in 2011 had sanctioned amounts between Rs.5 lakh and Rs.50 lakh. This means there is a huge demand for higher value loans, indicating rise in property prices and higher borrowing affordability.

CIBIL data shows that, in 2011, 48% of total home loans that are sanctioned in the metro cities had a ticket size of more than Rs.20 lakh. Moreover, there is an increase in percentage of loans from 7% in 2007 to 12% in 2011 for loans less than Rs.50 lakhs.

According to CIBIL TransUnion score, 23% of new home loan borrowers in 2008 had a credit score of 800 and above and 62% of borrowers in 2011 had a credit score of 800 and above. This indicates that, CIBIL TransUnion score acts as a risk assessment tool for banks for sanctioning loans. Today, all banks and financial institutions have started accessing CIBIL reports and CIBIL scores before sanctioning a loan.

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