By Noorah

Buying a home is a big milestone, but if your CIBIL score is on the lower side, the journey can feel confusing or even discouraging. At Butter Money, we believe homeownership should be within reach for everyone, not just those with a perfect credit profile.
This guide breaks down exactly how you can still get a home loan, even with a low CIBIL score.

Who This Guide Is For?

This guide is perfect for you if:

• Your CIBIL score is below 700

• You faced past delays, defaults, or loan closures

• You’re a first-time homebuyer feeling unsure about where to start

• You want clear, transparent steps to improve your chances

**Your goal by the end of this guide:
**Secure your home loan despite a low CIBIL score by understanding every strategy.

Before You Begin: What You’ll Need

You don’t need fancy paperwork, but keep these handy:

• Your latest CIBIL report

• Your income documents (salary slips/ITRs)

• Details of any existing loans

• Basic property information (if already selected)

That’s it!  Let’s get started.

Step 1: Check Your Exact CIBIL Score (and What’s Pulling It Down)

Before applying anywhere, download your updated CIBIL report from any RBI-approved bureau.

Look for:

Common issues in CIBIL report	Impact on Score
Late payments or defaults	Lowers score significantly
High credit card utilization	Contributes to a lower score
Reporting errors	Can unfairly reduce score
Written-off or settled loans	Negative effect

Butter Money Tip: Even a tiny error, like a wrong mobile number linked to another person’s loan, can reduce your score. Always raise a dispute before applying.

Step 2: Highlight Your Income Stability

Lenders don’t only look at your CIBIL score.
They also check:

1. Your monthly income

2. Job stability

3. Savings patterns

4. Existing EMI load

How to strengthen this step:

• Keep your bank statements clean for 6 months

• Reduce unnecessary outgoing payments

• Show proof of steady income (Form 16/ITRs)

Strong income can often balance out a weaker score.

Step 3: Choose the Right Type of Lender

Different lenders treat low scores differently.

Lender Type	Score Requirement	Notes
Banks	700+	Strict credit checking
NBFC	500-600	Flexible & customized solutions
Housing Finance Companies	Varies, focus on income	Easy for first timers and undeserved borrowers

Butter Money Tip: We match you instantly with lenders who accept your profile, so you don’t face repeated rejections or score drops.

Step 4: Increase Your Down Payment

Lenders feel more confident when you show commitment through a higher down payment.

If possible, increase your contribution to:

• 20–30% instead of the usual 10–15%

This reduces the lender’s risk and improves your approval chances even with a low score.

Step 5: Add a Strong Co-Applicant

A co-applicant can instantly turn your loan in your favour.

Best co-applicants:

• Parents

• Spouse

• Sibling

• Someone with a strong credit score & stable income

Their creditworthiness can offset your lower score.

Step 6: Clear or Settle Small Pending Dues

Even one overdue credit card bill of ₹1,000 can pull down your score and block your loan.

Clear the following:

• Credit card minimum dues

• Small loan EMIs

• Overdue BNPL (PayLater) accounts

Once paid, wait 30–45 days for your bureau to update your score.

Step 7: Avoid Multiple Loan Applications

Each application triggers a “hard enquiry”, lowering your score further.

Instead:

• Use one platform (like Butter Money) that checks eligibility without lowering CIBIL
  Eligibility Check | Butter Money

• Apply only after pre-approval. This protects your score.

Step 8: Provide Additional Documents to Build Trust

Lenders appreciate transparency. You can submit:

1. 12 months bank statements

2. Form 26AS

3. Employment proof

4. Cash flow statements (for self-employed customers)

The more clarity you provide, the smoother your approval.

Step 9: Opt for a Secured Loan Format (If Needed)

Some lenders may offer:

• Loan Against Property (LAP) as a bridge solution

• After 12–18 months of good repayment, you can refinance into a lower-interest home loan

This is a smart stepping stone when CIBIL is very low.

Step 10: Improve Your Score While Your Application Is in Progress

Credit scores update every 30 days. Small actions can boost it quickly:

• Keep credit card usage below 30%

• Pay every EMI before the due date

• Don’t close old accounts

• Don’t take new loans

Conclusion: Home Ownership Is Still Within Reach

A low CIBIL score may slow you down, but it doesn’t have to stop you.
With the right strategy, honest guidance, and transparent support, you can still secure the home loan you need, and Butter Money is here to guide you through every step.

Troubleshooting & FAQs

Q. Can I get a home loan with a 600 CIBIL score?

Yes, with the right lender (mainly NBFCs/HFCs) and a stronger down payment or co-applicant.

Q. Will settling old loans help?

Yes, but settlements are marked as “Settled”, not “Closed”.
Try to convert the settlement to a “Closed Account” after paying any balance.

Q. Will Butter Money reject me if my score is low?

No. We guide you through the best route, lenders, documentation, and score improvement, until you’re loan-ready.