Want a ₹1 crore home loan? Here's the credit score you must have

You need to have a strong credit profile and a high credit score to qualify for a home loan of ₹1 crore. Financial institutions heavily rely on credit scores to understand and assess an applicant's repayment potential, creditworthiness and financial capacity. These factors cumulatively influence loan approval, interest rates and associated terms and conditions.

According to Kundan Shahi, Co-founder, Zavo, “A credit score of 750 or above is considered good for a ₹1 crore home loan. It improves your chances of approval and helps secure better interest rates. But it’s not the only factor; lenders also assess your income, job stability, existing debts, and down payment capacity. Lower scores don’t disqualify you, but they may lead to higher interest rates or tougher eligibility checks.”

What is the ideal credit score for a ₹1 crore home loan?

Most Indian lenders generally consider a credit score of 750 or above as excellent. Home loan applicants within this range have a higher possibility of receiving loan approvals with reasonable interest rates and conditions.

For example, ICICI Bank and Bajaj Finserv regard scores above 750 as ideal for home loan eligibility. Now, scores between 700 to 749 are considered good, still applicants having these scores can face slightly higher interest rates.

Further, all scores below the 700 mark can result in serious challenges in loan approvals or result in less favourable terms and conditions. Sometimes they may even face rejections.

Impact of credit score on loan terms

A higher credit score increases the likelihood of swift loan approval. Not only this, a higher score also affects the interest rate offered. For example, an applicant with a score of over 750 might be able to secure an interest rate of around 8.5%.

On the other hand, someone with a score between 550 to 649 could face rates up to 9.65%. This difference can immensely impact the total repayment amount of the entire loan duration.

Eligibility criteria beyond credit score

Given credit score is an important factor, still lenders do consider other factors:

• Income: Minimum monthly income of ₹1,20,000 is often required for a ₹1 crore loan.
• Age: Applicants should be at least 18 years old.
• Loan tenure conclusion: The loan tenure must conclude before the applicant turns 70.
• Employment stability: Long employment or business history enhances loan eligibility.

Note: The factors discussed above are illustrative in nature. For complete details of applicable interest rates, basic eligibility etc., on an individual basis, consider reaching out to the official website of your specific lender and discuss your problems with the designated customer service team.

Enhancing your credit score

To boost and improve your credit score you should diligently follow:

• Timely payments: Do ensure that all EMIs and credit card dues are paid promptly.
• Credit utilisation: Maintain a credit utilisation ratio of less than 30%.
• Credit report checks: Regularly check your credit report for inaccuracies and get it corrected.
• Limit new credit applications: Refrain from multiple loan or credit card applications in a short period of time.

Conclusion

Therefore, by following the above discussed steps and ensuring timely payments you can give yourself the best possible chance to secure a ₹1 crore home loan on favourable interest rates backed by a strong credit report and a high credit score.

Further, if you are faced with doubts and problems with securing a ₹1 crore home loan, then you should consider discussing the issue with a certified financial advisor before submitting your home loan application. This will help you in making an informed decision.

Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.