Can you get a mortgage with a low CIBIL score? These are 4 ways to get a house loan
CIBIL score (Credit Information Bureau (India) Limited) is an important factor considered by lenders when evaluating an individual’s creditworthiness for various financial products, including for house loan.
A low CIBIL score usually indicates a higher credit risk for lenders, which can make it more challenging to secure a mortgage.
Ashish Kumar, 36, missed a number of credit card payments last year, which severally impacted his credit score. With a poor score, he is now finding it hard to raise a house loan. Although he has been given critical feedback on his application, he is still hopeful.
However, it’s not impossible to get a mortgage with a low CIBIL score, but it may come with certain limitations and conditions.
Rate of interest: Ashish may be told to get a loan at a higher rate of interest. Lenders may give loan to the ones like Ashish with low CIBIL scores at a higher rate of interest when compared to those with better credit scores. This is because they perceive individuals with lower scores as higher-risk borrowers.
Upfront payment: Lenders generally require a higher down payment from applicants with low CIBIL scores. This is a way for lenders to mitigate the risk associated with lending to individuals who have a history of late payments or defaults.
Guarantor: Some lenders may permit applicants with low CIBIL scores to secure a mortgage by having a co-signer or guarantor with a higher credit score. This guarantor, in this case, will be equally responsible for the loan repayment.
NBFCs: There are some non-banking financial companies (NBFCs) that are relatively speaking more flexible in their credit score requirements when compared to commercial banks.
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