To get loans at State Bank of India at its best interest rate, borrowers will have to familiarise themselves with SBI CIBIL score. CIBIL stands for Credit Information Bureau (India) Limited. In fact, you cannot overlook SBI CIBIL score check, if you want to ensure that your SBI home loans application is not rejected. The extent to which the reduced rates will apply, however, be decided by the bank, based on a candidate’s CIBIL score.
See also: Learn about CRAR ratio
SBI CIBIL score: What is it?
SBI CIBIL score is the criterion based on which the public lender processes your loan request. To conduct SBI CIBIL score check, you have to first understand what a CIBIL score is.
TransUnion CIBIL, more commonly known as CIBIL, is among the four credit information companies in India that keep a record of an individual’s credit history. Based on this credit history, which has all the information about all past and ongoing transactions and credit cards, banks in India, including State Bank of India (SBI), grant home loans to borrowers.
Since India’s largest lender SBI is currently offering loans at an annual interest of 6.70%, it is possibly the best time to avail of a loan from the public-run bank. As your CIBIL report will play a crucial role in deciding whether or not SBI will approve your home loan application, it becomes pertinent to know everything about the SBI home loan CIBIL score you need to have, to get the SBI home loan. We will also explain how a good credit score impacts your home loan repayment.
See also: What is the importance of a credit score or CIBIL score, in getting a home loan?
What is the minimum CIBIL score need for SBI home loan?
SBI does not offer home loans to borrowers with a credit score of less than 550.
How CIBIL score affects SBI home loan interest rates?
Practically all banks in the country offer their lowest interest on home loans to applicants with a credit score of over 750. The same is true of SBI too. While any one can apply for home loans at SBI, it is at the lender’s discretion to approve the home loan. It is also entirely up to the bank to offer you its lowest interest rate, depending on what SBI terms as your ‘risk score’.
In case the applicant has a credit score lower than this, they will have to pay a much higher interest on the home loan. Also, it would be entirely up to the bank to fix this rate for you.
To track the latest news about SBI home loans, click here.
However, be advised that SBI seldom specifies the exact CIBIL score range for loan approvals. It is also quite important to understand that your credit score is not the only thing based on which SBI home loan is sanctioned. Since there are various other factors involved, including your income, the type of occupation and your personal eligibility, etc., SBI may or may not offer you the best rate on loan despite a good credit score.
See also: All about types of mortgage
How to check your SBI CIBIL score?
You can check your SBI home loan CIBIL score before applying for SBI home loan, to have a better clarity about which way your application would go and whether you would be able to get the best rate on your home loan. This CIBIL report is typically offered for free of cost.
To do this, you can use the official portal of SBI and know your score by following some simple steps.
Step 1: Visit the site, https://homeloans.sbi/getcibil.
Step 2: Now fill in the details the page asks for. First comes your personal information, including name, gender and date of birth.
Step 3: Fill in the address details.
Step 4: Provide your identity and contact details.
Step 5: Once you have filled in all the details, just check the box asking you to accept the terms and conditions, before you hit the submit button.
Step 6: Representatives from SBI may get in touch with you to ask for additional information if need be. Following this, they will mail you a free SBI home loan CIBIL report.
See also: All about RBI home loan interest rate
What are the factors that decide your SBI CIBIL score?
Credit bureaus, including CIBIL, assign you a rating based on your repayment history (all loans like credit card dues, home loan, car loan and education loan are included here), existing loan and credit utilisation, types of loan and tenure and the number of credit inquiries. Now, there are several factors that can adversely affect your CIBIL credit rating. These include:
- Misuse of your credit limit
- Late payments of loans
- Higher percentage of credit cards or other loans
- Too many credit-related inquiries
See also: What is legal and technical verification of property in home loan?
Impact of different CIBIL score ranges
Understanding how various CIBIL score ranges impact loan eligibility and interest rates is essential for borrowers.
Credit score below 550
- Eligibility: Loan applications are typically rejected as this score indicates poor creditworthiness.
- Interest rates: Not applicable, as loans are rarely approved for this range.
- Advice: Improve your credit score by repaying debts on time and lowering credit utilisation.
Credit score between 550-649
- Eligibility: Loans may be approved but under stricter terms. SBI may classify applicants in this range as high-risk borrowers.
- Interest rates: Generally higher, starting around 9.40% or more.
- Advice: Consider securing a co-applicant with a better credit score or providing additional collateral to improve approval chances.
Credit score between 650-749
- Eligibility: Loans are usually approved, as this score reflects moderate creditworthiness.
- Interest rates: Competitive rates, but not the lowest. SBI might offer rates between 9% and 9.40% depending on income and other factors.
- Advice: Maintain steady income proof and reduce outstanding debts to negotiate better terms.
Credit score 750-799
- Eligibility: Strong approval chances, as this score reflects good credit behavior.
- Interest rates: Lower rates, often around 9% or slightly less.
- Advice: Keep credit utilization below 30% and avoid applying for multiple loans to maintain or improve this score.
Credit score 800 and above
- Eligibility: Almost guaranteed approval, as this score signifies excellent credit health.
- Interest rates: Best rates offered by SBI, starting at 8.90%.
- Advice: Regularly monitor your score and ensure timely payments to retain this favourable position.
What is the reason for a low CIBIL score?
Some of the leading reasons behind low CIBIL score include:
- Poor repayment track record
- Multiple queries for loan
- Errors in your CIBIL report
- Regular high credit utilisation ratio
- High exposure to unsecured loans
- No exposure to credit
The impact of credit scores on loan-to-value (LTV) ratios
The loan-to-value (LTV) ratio is a critical metric that lenders use to assess the risk associated with a mortgage loan. It represents the proportion of the loan amount to the property’s appraised value. A borrower’s credit score significantly influences the acceptable LTV ratio, impacting loan approval and terms.
Influence of credit score on LTV ratio
- High credit scores: Borrowers with solid credit scores are perceived as lower risk. Lenders may offer higher LTV ratios, allowing for smaller down payments. For instance, conventional loans often permit LTV ratios up to 80%, but borrowers with excellent credit may access programs with LTVs up to 97%.
- Low credit scores: Borrowers with lower credit scores are viewed as riskier. Lenders typically require lower LTV ratios, necessitating larger down payments to mitigate potential losses. This means that individuals with poor credit may need to provide a more substantial down payment to achieve a favourable LTV ratio.
Implications for borrowers
- Interest rates: A lower LTV ratio and a high credit score can lead to more favourable interest rates. Conversely, higher LTV ratios and lower credit scores may increase interest rates due to increased lender risk.
- Private mortgage insurance (PMI): Borrowers with high LTV ratios may be required to purchase PMI, especially if their credit scores are not exemplary. This insurance protects the lender in case of default and adds to the overall cost of the loan.
Strategies to improve the LTV ratio
- Enhance credit score: Improving your credit score can make you eligible for higher LTV ratios and better loan terms. This involves timely payments, reducing outstanding debts, and correcting any errors in your credit report.
- Increase down payment: Providing a larger down payment reduces the LTV ratio, which can offset the impact of a lower credit score and potentially lead to more favourable loan conditions.
Alternate credit scores
SBI, while primarily relying on TransUnion CIBIL to evaluate home loan applications, also considers credit scores from other authorised credit bureaus such as Experian, Equifax, and CRIF Highmark. These scores are equally recognised under the Credit Information Companies (Regulation) Act, 2005, and can influence your home loan eligibility.
How alternate credit scores work
Alternate credit scores are calculated using factors similar to CIBIL scores, such as repayment history, credit utilisation, and the type and duration of credit. While the scoring models might vary slightly between bureaus, the underlying data is consistent. For example, Experian provides scores ranging between 300 and 900, just like CIBIL.
SBI’s consideration of alternate scores
If an applicant’s CIBIL score is low or unavailable, SBI might consider scores from other bureaus. This can benefit borrowers who may have inconsistencies in one bureau’s report but better records in another. However, applicants should ensure all reports are accurate and reflect up-to-date credit activity.
Importance of checking all credit scores
Before applying for an SBI home loan, it’s advisable to check your scores from all major credit bureaus. Discrepancies between reports can occur due to errors or delayed updates. Resolving these issues can strengthen your loan application and improve your chances of securing favourable terms.
Advantages of alternate credit scores
- Backup option: If one credit score is unexpectedly low, an alternate score can provide a better reflection of your creditworthiness.
- Broader approval scope: Borrowers with limited credit history on CIBIL may have a more detailed record on Experian or Equifax, improving their chances of loan approval.
- Balanced evaluation: SBI can form a more comprehensive view of the applicant’s financial behaviour by considering multiple scores.
Using alternate credit scores gives borrowers flexibility and an opportunity to present a stronger case for their home loan application. Ensure all reports are error-free and demonstrate consistent financial responsibility for the best outcome.
How to check your free Experian credit score?
- Go to Experian’s website.
- Click on ‘Free Credit Score’.
- Now, enter your phone number and click on ‘Send OTP’.
- Enter the OTP and click on ‘Verify’.
- Enter your personal details and click on ‘Get Report’.
- You will receive your credit report in your email
How do you correct errors in your CIBIL report?
Ensuring the accuracy of your CIBIL report is crucial, as errors can adversely affect your credit score and hinder your ability to secure loans or credit cards. If you identify inaccuracies in your report, it’s essential to address them promptly. Here’s a step-by-step guide to rectifying errors in your CIBIL report:
1. Obtain your CIBIL report
Access your report: Visit the official CIBIL website or use authorized channels to obtain your latest credit report. You’re entitled to one free report annually.
Review thoroughly: Examine the report for discrepancies in personal information, account details, payment history, and any unfamiliar credit inquiries.
2. Identify and document errors
Common errors:
- Incorrect personal details (e.g., name, address, PAN).
- Accounts that don’t belong to you.
- Inaccurate account statuses (e.g., showing open instead of closed).
- Incorrect payment histories or outstanding balances.
Gather evidence: Collect supporting documents such as payment receipts, bank statements, or closure certificates to substantiate your claims.
3. Raise a dispute with CIBIL
Online dispute resolution:
- Log in to your CIBIL account on the official website.
- Navigate to the ‘Dispute Resolution’ section.
- Fill out the online dispute form, specifying the inaccuracies and providing necessary details.
- Submit the form and note the dispute ID for future reference.
Offline dispute resolution:
Draft a letter detailing the errors, including copies of supporting documents.
Send the letter to:
TransUnion CIBIL Limited
One World Center, Tower 2A, 19th Floor,
Senapati Bapat Marg, Elphinstone Road,
Mumbai – 400013
4. Follow up on the dispute
- Processing time: CIBIL typically takes up to 30 days to investigate disputes.
- Verification: CIBIL will contact the relevant financial institution to verify the disputed information.
- Resolution: If the institution confirms the error, CIBIL will rectify your report and notify you of the changes.
5. Check the updated report
After resolution, obtain a fresh copy of your CIBIL report to ensure the inaccuracies have been corrected.
State Bank of India’s home loan interest rates in 2024
As of November 2024, the State Bank of India (SBI) has adjusted its home loan interest rates, reflecting changes in the financial market and the bank’s lending policies. Here’s a detailed overview:
Current home loan interest rates
SBI offers home loans with interest rates starting from 8.50% per annum. The exact rate applicable to an individual borrower depends on several factors, including the loan amount, tenure, and the borrower’s credit score. Notably, SBI provides a concession of 0.05% on interest rates for women applicants, promoting homeownership among women.
Recent revisions
In November 2024, SBI increased its Marginal Cost of Funds-Based Lending Rates (MCLR) by up to 5 basis points for select tenures. This adjustment affects the lending rates for three-month, six-month, and one-year tenures, with the revised MCLR effective from November 15, 2024.
Interest rate based on credit score
SBI employs a risk-based pricing model, where the borrower’s credit score influences the interest rate. Applicants with higher credit scores are eligible for lower interest rates. For instance, borrowers with a CIBIL score of 800 and above may secure home loans at the lowest interest rates SBI offers. Conversely, those with lower credit scores face higher interest rates.
Processing fees and additional charges
The processing fee for SBI home loans is 0.35% of the loan amount, subject to a minimum of Rs. 2,000 and a maximum of Rs. 10,000, plus applicable taxes. SBI also offers a full waiver of prepayment charges, allowing borrowers to repay their loans ahead of schedule without incurring additional costs.
Comparative perspective
Compared to leading banks, SBI’s home loan interest rates are competitive. For example, HDFC Bank offers home loan interest rates starting from 8.75% per annum, while ICICI Bank’s rates also begin at 8.75% per annum. SBI’s starting rate of 8.50% per annum positions it favourably in the market.
Documents required for SBI home loan
- Duly filled SBI home loan application
- Identity proof (Any one of these: PAN card / passport / driver’s licence/ Voter ID card).
- Address proof (Any one of these: Copy of telephone bill, electricity bill, water bill, piped gas bill or copy of passport, driving licence or Aadhaar card).
- Three passport-size photographs
- Bank account statement
- Original salary certificate from employer
- TDS certificate on Form 16
- PAN card
- Property documents, including sale deed
See also: Learn about RBI complaint email ID and RBI complaint filing process
SBI CIBIL score FAQs
Which are the four credit information bureaus in India?
The four credit bureau companies in India that provide credit information are: 1. TransUnion CIBIL 2. Equifax 3. Experian 4. CRIF Highmark
What is current rate of interest on SBI home loan?
SBI is currently charging 6.7% annual interest on home loans. However, the lowest rate is offered only to borrowers with a good credit score.
What is the range of credit score?
A credit score can range between 300 and 900.
