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5 Ways In Which A Mortgage Loan Impacts Your CIBIL Score

  • Highlights

  • Availing a high-value loan boosts your credit score

  •  Lowering your credit utilisation ratio improves CIBIL score

  •  Having a mix of secured and unsecured loans is a good thing

  • Mortgage Loans ease repayment and thus amp up the CIBIL score

A mortgage loan or loan against property is a secured loan that you can obtain by pledging any residential or commercial space you own as security. Today, around 23% of all corporate loans are loans taken against properties. Typically, you obtain a percentage of the market value of your property as a loan. Since these loan amounts can run very high, mortgages have huge bearings on your CIBIL score.

They can bolster your credit score or bring it to an all-time low. Considering that your CIBIL score is the defining factor that helps you borrow credit from lenders, you should make every effort to see that it remains healthy. To do this, understand the 5 ways that a mortgage loan impacts your CIBIL score.

A High-Value Loan Gives You A Chance To Boost Your CIBIL Score

Since this loan is backed by a valuable security, a mortgage loan amount can often run into crores. For example, you get financing up to Rs.3.5 crore on a Bajaj Finserv Loan Against Property. Interestingly, the amount of credit you are exposed to contributes to around 25% of your CIBIL score. So, taking a large loan and handling it well is a sure-shot way to boost your score.

Paying Your Debt On Time Makes You Creditworthy

Once you take the loan, you may be wondering minimum CIBIL score required for loan against property. All you have to do is make timely repayments. Your payment history forms 30% of your CIBIL score. Thus, not defaulting on EMIs greatly improves your creditworthiness.

You Can Use A Mortgage Loan To Reduce Your Credit Utilisation Ratio

Your credit utilisation ratio is calculated upon the revolving credit you have basis your income. An example of revolving credit is a credit card, wherein your limit gets renewed when your debt is paid off. CIBIL devotes around 20% of your score to factors that include your credit utilisation ratio. Using a mortgage loan to consolidate debt and free up your credit utilisation is a smart way to improve your credit score quickly.

A Secured Loan Adds Variety To Your Credit History

When computing your credit score, CIBIL not only considers the loan amounts, but the types of loans as well. That is, CIBIL factors a mix of secured and unsecured loans you have in your name to update your score. That’s why taking a mortgage loan will balance the other unsecured debts like a personal loan or credit cards you may already have. Your credit type and repayment tenor forms around 25% of your CIBIL score.

How to check your EMI Network Card balance

A Long Tenor Has A Big Impact On Your Credit Score

Choosing a long tenor not only brings down your EMIs, but also gives you a chance to repay your loan over a long time-frame. This, in turn, will help you firmly establish yourself as a reliable borrower and thereby bolster your CIBIL score. Partnering with Bajaj Finserv lets you repay your Loan Against Property via a tenor of up to 20 years. Paying EMIs for this length of time will not only put your repayment history in good light, but also add valuable points to the 25% reserved for credit type and duration.

One way to make your Loan Against Property repayment more accessible is by availing of Bajaj Finserv’s Flexi Loan feature. It allows you to withdraw from your sanction as per your needs. Moreover, you pay interest only on the amount you utilise from your approved sanction instead of the whole amount. Additionally, you have the option of paying interest-only EMIs in the beginning of the tenor. With your EMI payments reduced, you stand a chance to improve your credit score, which you can view via free CIBIL check once a year.

Finally, when it comes to your CIBIL score, multiple loan applications can hamper the numbers. It shows that you are credit hungry and causes your score to drop by 3 to 4 points every time a lender incites a hard inquiry to your account. If this happens often, your score may drop substantially, and you may have to then settle for a loan for a low CIBIL score that is usually more expensive. In order to side-step this and avoid unnecessary inquiries when getting started with your mortgage loan, check your pre-approved loan offer from Bajaj Finserv first. It gives you instant approval and a chance to apply via a customised deal.

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