When it comes to the world of loans and credits in India, the importance of the CIBIL Score is for everyone to see. The higher is your CIBIL or Credit Score in India; the higher is your chance to get a loan approval at a lower rate of interest rate.
Especially for unsecured loans such as personal loans and more, the value of the CIBIL Score is much more. It is because you don’t need to keep anything as the collateral to get the loan. Anything above 750+ out of 900 is considered an ideal CIBIL Score for any type of loan approval super fast.
However, in the case of a secured loan such as home loans, mortgage loans and loan against property application, you need to pledge something. Hence, when you keep something as collateral for such loans, even a lower CIBIL Score is considered.
Nonetheless, for having a lower Credit Score, you may have to handle a higher mortgage loan interest rate. As a result, it may lead to a payment of higher EMIs that may affect your monthly expenses for long.
Will your loan against property application be approved with a lower score?
For a loan against property application approval, your Credit Score also comes into the picture. It may help you have a lower rate of interest. Yes, it is understandable that when you pledge your property for a loan, what is the value of the CIBIL Score?
It is given that since the loan against property is a secured loan which means you will enjoy a lower interest rate. But, that does not mean that your CIBIL Score should be lower.
Yes, you may get the loan approval because you are pledging your property for the loan even when you don’t have a robust CIBIL Score. Nonetheless, the mortgage loan interest rate may be a bit higher due to a lower Credit Score.
Paying a higher loan against property interest rate may pose a problem for you in the payment of the EMIs. The loan against property is a long-term loan facility (going up to 18-20 years), and you may find it tough to manage other things in life.
Hence, the value of having a strong Credit Score is evident in letting you repay even a secured loan without affecting your budget for long.
What affects the Credit Score for a higher or lower score?
You may have a bad or higher Credit Score due to the following situations:
- Paying all existing loan EMIs and credit card outstanding on time and by due dates can easily boost your Credit Score
- You should have a mix of secured and unsecured loans to get a boost in your CIBIL Score
- Avoid having too many liabilities and avoid closing credit cards suddenly
- Opting for a longer tenor may help you up your score as long as you don’t miss on the payment due dates and pay all in a timely manner
- Avoid applying for too many loan applications at a time. Every time you do that, a hard enquiry gets recorded which affects your CIBIL Score negatively
- Soft enquiries are made by you to check your Credit Score. It is fine for you to check it once a year and it won’t affect the score
- Having a Credit Score in the range of 550 or low may lower your chances of loan approval. Even if the loan application gets approved, you should be ready to manage a higher interest rate
You are now aware of how the CIBIL Score can affect the loan against property application and others. You can follow the discussed tips and boost your score to get a loan approval at a lower rate.
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