The EMI that you would shell out on your home loans will soon be connected to your credit rating or the regulation you sustain in repaying your existing loans. The rate of interest will drop, as your credit score improves and the vice-versa.
As Bank of Baroda (BoB) has declared lowest rates on home loans, it will be the first bank to connect interest rates on home loans to credit scores of customers. Relying on the credit scores of Credit Information Bureau of India (CIBIL), BoB will charge 8.35% to those with scores above 760 points. The other banks are likely to follow from BoB’s latest proposal.
The borrowers of BoB will be charged with 8.85% Home Loan EMI rate, having score in the range of 725 to 759. Whereas, 9.35% will be charged on home loans by BoB, to the borrowers with credit score below 724 points. However, customers having no credit history with CIBIL, will be charge 8.85% on home loans. Officials of an anonymous bank mentioned that it has planned to reward borrowers with improved rating by offering them better rates, no matter what the tenure and the amount is.
While towering banks – State Bank of India and ICICI Bank – offer 8.65% and 8.70% respectively on home loans, BoB is offering borrowers with 8.35%. This turns out BoB, the lowest among all banks in the same. The financial regulation maintained by borrowers in terms of timely repayment of their dues, will be indicated by CIBIL. All the banks will render information about their customer’s loan history to CIBIL. In accordance to this supplied data, credit score of a borrower is decided by the banks.
Bank of Baroda’s one-year marginal cost of funds based lending rate (MCLR), the basic rate at which they lend to the best customers, is fixed at 8.35%. There is no build-up or inflation for the best rated home loan borrowers on its MCLR by the bank. Whereas SBI has a one-year MCLR of 8% with 65 basis point spread for home loans.