Credit point and home loan rates: How to maintain high credit rating helps to save lakhs on connection in India | Mint

A credit point is an important indication of your creditworthiness and repayment capacity. It also plays an important role in determining your suitability for home loan and the interest rates that apply to IT banks and financial institutions increasingly relying on an individual’s creditworthiness, repayment and financial integrity to reduce the risks of default or loss of borrowed funds. In this context, your three-digit credit can significantly affect the cost of loans and the EMI on your home loan. As a borrower, it is essential to pay all your credit card accounts and previously used personal loans to ensure that your home loan application is considered more favorable by your lender. The idea is simple: Refund is directly linked to your financial integrity. If you are in line with the refunds and a long history of it, it often lays the basis for the eligible for lower interest rates on home loans. This record will discuss this simple concept in detail. What is a creditworthiness? To reflect your financial behavior and credit history, prominent credit bureaus are in India-like Equifax, Transpunion Cibil, Experian and Crif Highmark-a three-digit score ranging from 300 to 900, this score calculated based on different factors, including loans, credit card use, previous credit history, outstanding debt, and any standard. A higher score is, of course, a positive indication-this indicates responsible financial behavior and you are a low-risk lender. This significantly affects your home loan EMI suitability, as well as your chances of getting premium credit cards and other financial benefits. What is the impact of your credit rating on home loan interest rates? Lenders in India offer different interest rates based on borrowers’ credit values. For example, borrowers with a creditworthiness of 800 or higher are eligible for the lowest home loan interest rates, with a smoother loan processing from 8.1 percent per year of institutions such as Union Bank of India. If your score drops between 700 and 749, the interest rate may rise to 8.85 percent to 9 percent, which significantly increases your monthly EMIs and total repayment amounts. A lower credit rating (below 650) can result in even higher interest rates, sometimes more than 10 percent, along with strict repayment conditions. Therefore, to maintain a high credit rating, you must keep your credit consumption ratio as low as possible. Preferably lower than 30 percent. For example, if you take a £ 50 loan for 25 years at an interest rate of 8.1 percent (creditworthiness: 800), your EMI will be around £ 38,923, with a total interest expenses of £ 66.76 Lakh. In contrast, the EMI rises at a rate of 8.85 percent (creditworthiness: 720) to £ 41,618, and the total interest payable to £ 74.85 lakh. It shows the significant impact, even a minor change in your creditworthiness. Note: Data used here is only used for illustrative purposes. Reach out to the most recent interest rates and appropriate home loan charges, along with other details, to your respective financial institution. These rates are subject to change according to the policy of the bank or financial institution. Why is maintaining high credit rating? A good credit rating not only ensures lower EMIs, but also improves your chances of approval of the home loan and access to pre -approved loans. This can help you to save significantly over the years. Consider the following to maintain or improve your score: Pay in time EMIs and credit card fees. Keep your credit consumption ratio below 30 percent. Avoid various loan inquiries within a short period of time. Avoid application for too many credit cards or loans. Continue to consistently check your creditworthiness for contradictions. Current interest rates for home loans from April 2025 The home loan rates in India ranges from 8.1 percent to more than 12 percent, depending on the lender’s lender and the lender’s credit profile. Banks in the public sector such as Punjab National Bank offer competitive rates from 8.15 percent, while private lenders such as ICICI Bank rates start from 8.75 percent. Note: The interest rates discussed above are for illustrative purposes only. Consider this for the updated and most recent rates that apply to your respective lending institution. If you maintain high credit rating, you can save lakhs on the term of office of your home loan, making it an important aspect of financial planning. Disclaimer: Mint has a fusion with fintechs to provide credit; You must share your information if you apply. These bonds do not affect our editorial content. This article only intends to educate and distribute awareness about credit needs such as loans, credit cards and creditworthiness. Mint does not promote or encourage credit as it has a set of risks such as high interest rates, hidden costs, etc.