A credit score is a three-digit number ranging from 300 to 900 that denotes your creditworthiness. In other words, it is an indicator of your ability to repay the loan on time. The credit bureaus evaluate important factors such as credit utilisation ratio and credit repayment history and assign the credit score for every individual.
While different lenders have a different benchmark credit score requirements for approving home loan applications, scores in the range of 700-750 are regarded as fairly good.
A higher score that is closer to 900 means you stand a better chance of getting your loan approved. You can also expect to enjoy other benefits such as faster loan application processing, better pricing such as lower interest rates and discounted processing fee and a larger loan amount.
A credit bureau is an organisation that collects and analyses an individual’s and business entity’s financial data and their repayment, including loans, credit cards, overdraft, etc. Credit bureaus use this data to create a credit score for individuals and businesses.
For lenders, credit bureaus act as a reliable source for collecting information on a customer’s credit history and repayment capacity.
The most prominent credit bureaus in India are: CIBIL (Credit Information Bureau India Limited), Equifax, Highmark, and Experian.
When you apply for a home loan and have a high credit score, i.e., more than 750, you can expect the lender to reward you with special benefits like:
Other benefits: Because of your high credibility and good repayment history, the lender may offer a home loan at a lower interest rate as well as a discounted processing fees and other charges.