Nobody Reveals THESE Hacks to Get a Home Loan Without Cibil Score: A Complete Beginners’ Guide

Home loan without cibil score? Thank God you didn’t think it was an impossible thing like many others and enquired about it. Let me help you. Now, it’s possible to get a home loan in the US with a credit score as low as 580. Keep reading…………..

Understanding FICO and Credit Scores

You are getting married in 1 year. You need your own place. But you’re a rookie in your office only. Certainly, you haven’t saved enough. Oh! And your cibil is below 600.

Can you relate? Well, if you can, this article is for you. What you need is a home loan without cibil score. Securing a home loan is a financial landmark of some weightage.

But things may go wrong when you don’t have the ideal credit score and a patchy credit history. However, all hopes are not sunk for those with low or no credit scores.

FinanceTeam is here to excavate your lending landscape and find the right options to help you. Hop on. Read the article to the end!

What is a CIBIL Score?

Your CIBIL or credit score isn’t any number. This 3-digit number ranges from 300 to 900. All US banks and credit unions hold the credit score as the utmost yardstick to judge your creditworthiness.

For example, the Bank of America grants home loans to people with a credit score of 600 at least. But at least you will get a favorable interest rate of your haver score of 670. Let’s break down credit scores, to understand why it is such an important component.

Definition and Importance of Credit Scores

The credit score is a marking you get against how well you manage credit. That includes everything from the number of credit cards you have to how much credit you spend. Credit score also depends on your loan repayment habits.

If you have a clean credit/loan repayment history for the last 5 years, you supposedly have a credit score of more than 700. With that, more than 70% of banks and almost all credit unions in the US will offer you a home loan package.

Factors That Affect Your CIBIL Score

When you get your first loan or credit card, you start with an ideal credit score 850. But it is your responsibility to maintain that score with good credit behavior. On that note, let’s discuss the factors that affect your credit score:

1. Your Repayment History

If you have defaulted EMIs on your credit card, your credit score will fall sharply. For a 7-day delay in repayment, the effect is minimal. For 7 to 30 days of delay, you may suffer a drop of 50 to 100 points.

2. Credit Utilization ratio

It refers to how much of your credit limit you use every time. Ideally, you must not spend more than 30% of your net credit, combining all loans, credit cards, and credit lines.

3. Credit Utilization

Let me tell you the impact of credit utilization in relation to getting more opportunities for loan. A more extended credit history has a positive effect on your credit score.

4. Kind of Credit

If you want a high credit score, you must have a good mix of secured and unsecured loans. Don’t depend on multiple credit cards. Instead, go with bad credit mortgage loans, personal loans, etc.

How CIBIL Scores Impact Home Loan Eligibility

The Role of Credit Scores in Loan Approval

Let’s say you expect a loan value of more than $5 million at a favorable interest rate. For that, you need a credit score of 670 to 800. Those having a score above 800 are good to go for any offer.

Why Lenders Prefer High Credit Scores

Lenders expect people with good credit scores to be responsible during repayment. Again, one of the prime reasons for a low credit score is irregular repayment or EMI default. So, it becomes hard to trust people with low credit scores.

Challenges of Getting a Home Loan with a Low CIBIL Score

Getting a home loan without cibil score is as tricky as it sounds. Let’s explore the challenge in detail in this section.

Common Problems Faced by Borrowers

Borrowers with a low credit score face many issues. Firstly, it may lead to outright rejection of the loan application. Even if you get an offer, high interest rates would apply. At the same time, you will face rigorous loan terms.

Higher Interest Rates

If Your FICO score is 699 or below, you must bear a home loan interest rate of 7.37%. For those will less than a 679 FICO score, a rate of 7.5% would apply. However, the rate would be more than 8% if your credit score is less than 659. Generally, the highest it goes is 8.56%.

Difficulty in Approval from Traditional Lenders

Traditional lenders won’t consider your application if your credit score does not meet their standards. For example, Citibank needs a credit score 750 to make a minimum offer. Similarly, a popular lender, Discover Bank, requires a minimum cibil score for a home loan, i.e. 660. However, they will offer a reasonable interest rate to those with a credit score of 750 or above.

Myths About Low Credit Scores

Are you aware of common myths? Firstly, I often hear that a bad credit score is permanent, but it is not. I also hear that bad credit home loans are seldom available.

If these are all myths, then what’s the accurate picture? Let’s find out.

Can You Still Get a Home Loan?

You can still get a home loan. Several credit unions give loan offers against low or no credit scores. For example, veterans United Home loans will be offered generously, even if you have a credit score of 620. However, there’s a catch: nobody will tell you in advance.

These non-traditional lenders check your payment history for the first 12 months. They will also check the current repayment obligations you have. If the record seems favorable, you get an acceptable offer.

Debunking Common Misconceptions

One common misconception is that people without credit don’t get a loan. But that’s a big myth again. You can get a home loan, even if you borrow for the first time. However, these conditions would apply:

1. Apply for FHA loans if you have a stable income
2. Get a guarantor or a cop-signor with a credit score above 750

Strategies to Get a Home Loan with a Low or No CIBIL Score

Now you know the drill to get a home loan offer, even if your credit score is far from ideal. Let’s sum up the strategies you may follow:

Approach Lenders Who Consider Alternative Criteria

The alternative criteria they’ll check for are your past 12 months of spending history and repayment obligations. Here is a list of lenders I prefer:

1. Rocket Mortgage (credit score needed: 620)

2. Penfed (credit score needed: 620)

3. New American (credit score needed: 620)

Non-Banking Financial Companies (NBFCs)

NBFCs are companies that deal in finance essentially. However, they are limited to operating in schemes like loans, currency exchange, and money market lending. Often, they handle merger responsibilities too. However, not all NBFCs handle corporate finance.

Some real-world NBFCs that you may try are:

• Brokers
• Hedge funds
• Small finance companies
• Loan apps

Cooperative Banks and Specialized Lenders

Cooperative banks like The Dime Community Bank, the DuuTrac Community Credit Union, or the National Cooperative Bank offer home loans under nominal terms and conditions.

Sure, you need a minimum score of 580. Some of them may demand more. However, what’s more important is that you should be free of any ongoing payment liabilities (EMIs every month).

Often, experts say that specialized lenders offer home loans to people with imperfect credit scores. However, my experience was not the same. I approached the BailOut Loan app that belongs to Bull Venture Capitalists. Maybe many of you have come across their app on the i-Store.

I know what you’re wondering. Yes! I had credit issues once. I went through a mess. Took refinancing options. Thanks to my acquaintance, I know when to refinance home loan. However, I was determined and followed unique strategies like the snowballing debt-clearing technique.

What worked for me may also give you some insights. Anyway, that’s a different story. However, taking the cue, let me tell you that the BailOut app and other similar specialized lenders generally quote an interest rate above 9% for home loan with bad credit.

I’d tell you that’s an additional burden you would be onboarding if you go for such options. Home loans for bad credit can charge you a fortune.

Opt for a Joint Loan

Have you considered a joint personal loan or home loan? It’s simple. Imagine you have a credit score of 580. I think you will barely get a loan offer from someone with that score in the US. But that’s possible when you have a co-signor with a credit score of 750 to 800.

But there are disadvantages of co applicant in home loan you must be wary of.

Benefits of Joint Loan Applications

1. More than one person shares the EMIs
2. You may get a bigger loan

Make a Higher Down Payment

The higher down payments reduce your LTV ratio. It is the Loan Amount against Total Property Value. Consequently, the applicable interest rate is also lower than usual.

How Larger Down Payments Reduce Risk for Lenders

The lender knows your financial back-up is stable when you pay a significant upfront sum. It also shows that you have high capital strength. Hence lenders assume that such a client would possibly not miss an EMI or default their loans.

Tips to Save for a Bigger Down Payment

You can:

1. Start planning Early
2. Reduce all Outstanding debts before applying for home loans
3. Cut other ancillary expenses

Building Credibility Despite a Low CIBIL Score

Banks and credit unions often check other parameters if your credit score is low. For example, you might not have any outstanding dues, but your repayment history was not smooth. In that case, the lenders may do these:

• Use Alternative Financial Documents
• Demand Income Proof and Employment Stability
• Claim Your Existing Assets as Security

Improve Your Creditworthiness

To improve your creditworthiness, you need to amend your poor FICO score. You can do that by clearing outstanding debt, for starters. Often, personal techniques like budgeting and consultation with experts may help. You might apply for a digital personal loan as well.

Use the amount to clear off pending dues. Then, apply for your home loan. You may post any home loan issues in the comment section. I’d be more than glad to help out.

Tips to Improve Your CIBIL Score Before Applying

• Pay Off Existing Debts
• Timely Payments Improve Credit Scores
• Use the Debt Snowball Method
• Avoid Multiple Loan Applications
• Avoid Frequent Loan Inquiries that affect Credit Scores
• Waiting at least 30 days Between Applications
• Monitor Your Credit Report every month of bi-monthly
• Using Free Credit Score Monitoring Tools is an incredible hack

Conclusion

I’d never say that a home loan without a cibil score is impossible to pull off. But you need the proper measures and some corrective measures for that.

Keep the tips I shared in mind. Remember, non-traditional banks and credit unions offer low cibil score home loan too.