BoI offers home loans at cheaper rates to good credit score holders

New Delhi: Bank of India will offer preferential pricing rates to borrowers with good credit scores for home loans of Rs 30 lakh and above, the state-run lender said.

Customers with CIBIL score of 760 and above will be offered loan at the minimum home loan interest rate or the marginal cost of lending rate (MCLR) for an year, the bank said in a statement.

MCLR is the minimum interest rate of a bank below which it cannot lend. Those with a score of 759 and less, the rate of interest for loans of Rs 30 lakh and above will come at MCLR plus 0.10 basis points for a year.

One basis points is 100th of a percentage point. Bank of India said borrowers availing home loans of over Rs 30 lakh will be benefited from the reduced rate of interest.

A consumer's CIBIL score is a three-digit numeric summary of the credit information report (CIR) — summarising the past credit behaviour and repayment history — and ranges from 300 to 900.

The higher the score, the better are the chances of loan approval. Most banks check a consumer's CIBIL score and report before approving a loan.

"Consumers with a good credit discipline should be rewarded, as it helps propagate the importance and need to maintain a good financial history. Our preferential pricing model aims to reward high-scoring home-loan aspirants with competitive ROI, thereby helping them making their dream home a reality," Bank of India said in a statement.

Credit information company TransUnion CIBIL's Head of Direct to Consumers Interactive Hrushikesh Mehta said: "Bank of India's CIBIL score-based incentive helps further highlight the need to monitor and build a positive credit profile through good credit habits."