The home loan availing process requires multiple clearances from the bank for the approval of loans. Out of that, the credit score of an individual plays a key important role in the approval of loans. Almost all of the financial lenders check the credit score of the borrower applicants before proceeding ahead with the disbursement of loans. The loans can be availed as the fixed interest rates basis or else the floating interest rate basis by the applicant. It is always better to avail the loans on floating interest rates as the repo rate of RBI is continuously falling similarly the interest rates of the bank as well are also on a decline. A good credit score helps an individual avail of a loan easily from the bank without any hurdles in the approval of loans. Also maintaining a good bank balance is necessary for the approval of loans. Maintaining a sufficient bank balance shows that the home loan applicant is financially stable. And also the bank gets confidence that the borrower can repay the loans installments without any hurdles even if the borrower faces some financial problems or like late salary credits. etc.

The bank expects a minimum CIBIL score of 700 points before the approval of loans. If the credit score is below 700 points then in that case the bank may sometimes reject the loan application or else may charge higher interest rates to the borrower. Maintaining a good balance can lead to security with the bank that the home loan applicant is having a sufficient amount of money to sustain for the long term, even in case of job losses or any other financial issues. The bank may charge lower interest rates to applicants with a high credit score. Banks are keen on extending loans to the lenders as the banks are also keen on increasing their business of disbursement portfolio of loans. But the bank needs quality customers who repay the credits on time. If the home loan applicant is found to be a defaulter of credits then in that case almost none of the bank or NBFC may approve the loans as the lender does not wishes to extend the loans to the defaulters nor wants to lose their own money by giving loans to defaulters. The bank has the authority to seal the assets of the borrowers in case of default of the loans and also has the right to charge a penalty in case of a delay in repayment of loans beyond the due date.

Following Are The Benefits Of Good Cibil Ratings And Maintaining A Good Bank Balance:

Easy Availability of Credits:

As the market for home loans is fiercely competitive the banks are keen on increasing the portfolio of loans. Thus the banks are keen on extending loans to customers who have a good credit score. Having a good credit score helps in putting a positive impression on the bank that the borrower is amongst the honest ones and thus loans should be extended to such borrowers by the lender. Having a score of a minimum of 700 points out of 1000 points is considered a good score for which loans can be approved easily.

Maintaining A Good Bank Balance Helps To Judge The Applicant Properly:

Maintaining a good bank balance helps in understanding the tendency of the applicant before the approval of loans. The customer who maintains a sufficient bank balance can help understand that the borrower can repay loans every month even in case of financial difficulties being faced by the borrower. Also, the borrower when has a lesser tendency to spend money can be considered more financially stable who can repay the loans installments easily.

Avail Loans at Lower Interest Rates:

In the case of good credit, score banks are keen to offer loans to the customers at lower interest rates as the banks do not want to lose valuable customers for the disbursement of loans. Thus the bank can provide a benefit of lower interest rates to the ones having good CIBIL scores. Home loans start at interest rates as low as 6.50% per annum.

Avail Higher Amount of Loans Easily:

The bank approves a maximum of 80% of the property value as loans to the borrowers. Thus the banks approve loans of the maximum project value as the risk of extending the loans to the honest customers is less and the chances of the loans turning into bad debt are also less. Thus the banks may easily approve loans of higher value to the borrower in case of good CIBIL score and also the ones who maintain hefty bank balance.

There are multiple benefits of maintaining a good CIBIL score and also of maintaining a hefty bank balance. The banks are keen on extending loans to honest customers and the ones who are financially stable. The banks can provide higher credits to honest customers as the risk involved is low with the extension of loans to the right customers.