Improve Your Cibil Score For Hassle-free Home Loan


A home loan plays a vital role in the purchase of a home in India. To ensure the right Home loan for one’s need, one must research to avail hassle free home loan offers in detail. However, banks and NBFCs in India consider your CIBIL score or CIBIL score before approving an application for a home loan.

Owning a house is every family’s dream and a home loan can be a facilitator to make your dream come true. But there are a variety of factors that play an important role in ensuring your application is approved for home loan – the most important being your CIBIL Score. The CIBIL score, also known as the Credit Information Bureau (India) Limited Score or CIBIL score, is a score assigned to a person based on their credit history. You can maintain a good CIBIL score by paying your dues on time and avoiding any late-payment fee. What is a good CIBIL Score? Above 750: Excellent credit 700 to 750: Good credit 600 to 700: Average credit Below 600: Low credit Most loan applications are rejected due to a poor CIBIL score as this score can single-handedly make or break the deal. Read on for a few useful tips on how to increase your CIBIL score for hassle free home loan and invest in the house of your dreams: Pay your dues on time As redundant as it may sound, paying your dues on time and staying wary of late-payment fees is the key to an excellent CIBIL score. It is a good idea to automate your payments, so the dues are paid even before you begin your monthly expenses. Check your outstanding credits Since your CIBIL score represents the uniformity in which you have been paying your outstanding dues, it only makes sense to check if you have any pending credits to address. Observe the pattern in which you have been making payments and try regularising it to improve your score for home loan.

Build enough credit history If you haven’t taken a loan in the past or used a credit card, there are chances that you would have very less credit track record – in that case it is recommended to apply for a credit card and use it judiciously with timely payment. This would allow you to build a good credit history. If your score is low, it is probably because you haven’t been making your payments on time. Now that you have narrowed down to the root of the problem, make sure you settle your dues regularly and watch your score improve over a period of time. Educate yourself on the type of loan taken Primarily, all loans fall into two broad categories – secured loans and unsecured loans. Secured loans are high-end loans like home loans or car loans which, when paid on time, contribute to a solid CIBIL score. On the other hand, unsecured loans, are the loans which do not need any collateral, like personal loans or credit cards. The more unsecured loans you have outstanding, the lower your CIBIL score. Use your credit card wisely: Monitor your credit card usage very closely as it can easily have a negative impact on your CIBIL score. Make sure you spend within the credit limit provided.

A CIBIL score is indicative of trustworthiness, in terms of loan eligibility. A home loan is a secured loan, which is long-term and usually of a large amount (covering approximately 80% of the property value). Thus, CIBIL score plays a vital part in ensuring a successful loan approval.

What is a CIBIL score or CIBIL?

CIBIL is the acronym for Credit Information Bureau (India) Limited. TransUnion CIBIL Limited is a long-standing company in India that maintains a record of the loans and credit cards availed by individual from Banks or Non-Banking Financial Companies (NBFC) in India.

A CIBIL score or CIBIL score is a 3-digit number falling anywhere between 300 to 900. Usually, a CIBIL score of 700 and above makes it easy to get a quick approval on an application and a favorable home loan interest rates in India. This number is derived based on your credit history that comprises loans taken in the past and the payment of the same. For instance, if a borrower has taken loans, or has credit card dues of which he/she has settled the outstanding without delay or default, he/she is likely to have a high CIBIL score.

In short, a high CIBIL score indicates high levels of trustworthiness of the applicant, making he/she an attractive borrower. On the other hand, a low CIBIL score is likely to reduce your chances of a home loan approval.

But how is the CIBIL score calculated?
Its calculation is based on:

  • Payment history
  • Level of debt
  • Credit age
  • Mix of credit
  • Enquiries

Lenders such as banks and NBFCs use the CIBIL score to value the potential risk posed by every customer. It is used to determine the eligibility to avail loans and credit limits.
Who provides CIBIL score?
It is provided by the credit bureaus, which are CIBIL(the most popular & the oldest bureau in India), Equifax, Experian and Crif Highmark.
Your dream of taking a bike loan or any other loan depends on the CIBIL score irrespective of the amount of savings with you. Therefore, it is important to know your Score.

How to Improve your CIBIL score before applying for a Home loan?

Here are a few tips on financial planning that can help you improve your CIBIL score considerably to be the perfect candidate for a home loan,

Evaluate your credit report –

Evaluating your credit report occasionally is a great way of keeping track of any delayed payments or defaults in one’s credit report. These can be fixed by contacting your bank.

Timely Payment of Debts –

A good CIBIL score for home loan requires mandatory payment of EMIs on time. In case you delay payments of EMIs due to a shortage of funds, then you should ask the lending institution to help restructure the EMI payment for higher flexibility.

Timely Credit Card Bill Payment –

Payment of outstanding credit card bills is seen as a responsible act by lenders. However, lending institutions consider it as an irresponsible behaviour when a cardholder uses the credit card to its maximum limit every month. Hence, you must use the credit card carefully with your usage and make it a point to pay the entire amount on time.

Avoid Unsecured Loans –

Availing unsecured loans are fine, but multitudes of debts such as personal loans or credit cards make a borrower appear as an unfavourable candidate for home loans. On the other hand, secured loans like car loans, loan against property can add to the CIBIL score for home loan of an individual. However, one should borrow cautiously and make timely payments of the debts for a high credit rating.

Ensure Join Applicant Credibility –

Joint applicants for a Home Loan are also vetted for their pattern of payment of debts. This is likely to affect your CIBIL score for home loan, hence, you must ensure your co-applicant is also paying his/her dues in a timely fashion.

Avoid Loan ‘settlements’ –

Many time banks and NBFCs offer borrowers the choice of paying off their credit card dues or outstanding loan amount by paying lesser than the original amount as a settlement to avoid default. However, although a short-term monetary benefit, such activities are recorded as a part of your credit history and may be a cause for disapproval of one’s home loan application.

A CIBIL score of 700 and above is sufficient to sail you through your home Loan application. Thus, all you need to do is make your payments on time and give ensure comprehensive financial planning to climb up the CIBIL score ladder.

What Determines a CIBIL score

First, let’s discuss CIBIL scores and how they are determined. Banks and NBFC’s use a statistical formula to review the data in your files and compare it to credit performance of consumers with similar profiles. A credit scoring system awards points for each factor. The total of your points determines your CIBIL score and gives lenders a prediction of how you may repay your loan.

CIBIL scores seek to answer five questions for lenders.

Do you pay your EMI’s on time? – Borrowers who don’t pay their EMI’s on time are not considered to be reliable borrowers by lenders. Having an account sent to a collections agency, declaring defaulters, or making late payments will negatively impact your CIBIL score.

What is your outstanding debt? – A conservative use of credit is generally preferred by lenders, so credit agencies compare your outstanding debts to your credit limits. If you are too close to your limit, it will likely have a negative impact on your CIBIL score.

How long is your credit history? – A short credit history doesn’t always give an accurate portrait of what the client is like as a borrower, so it can have a negative impact on your score. However, on time payments and low balances can offset this because they help establish your reliability.

Have you applied for new credit recently? – If you apply for several new accounts in a short period of time, it suggests that you might not be thinking about your long-term financial situation. Because it makes a borrower look unpredictable, this can lower a CIBIL score.

How many and what types of credit accounts do you have? – Having too many credit lines open at once can have a negative effect on your CIBIL score, but did you know that this applies to the type of credit as well? Make sure that your credit lines are not only manageable but that they are not all credit cards or installment loans as this can reduce your score.

Credit Dos and Don’ts

Getting and maintaining good credit is a long-term and invested process. Review the table below for a recap of basic credit dos and don’ts. Are you making all of the right moves to improve your credit?

Common DOs

Common DON’Ts

Make payments on time

Close accounts before applying for a loan

Monitor your CIBIL score

Close your oldest credit cards

Keep some credit lines open

Open multiple cards at the same time

Close store cards

Pay below your minimums on credit cards

Open a credit card if you don’t already have one

Transfer a balance to an account with a lower limit

Limit credit card use

Neglect any kind of EMI’s

Set up automatic alerts for credit cards


Set up automatic payments

Make late payments



At Millennium Credit Solutions, we believe that life is easier with excellent credit.
We have a dedicated staff devoted to assisting you with your future financial needs.
We provide advice and information on how to best manage your current credit to maximize the impact to your qualifying ability.



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