Your credit score to determine how much home loan EMI you need to pay

With a view to decrease the rate of default on loans and combat the ever increasing problem of rising Non Performing Assets (NPA's), the banks are set to adopt a stringent mechanism in granting loans and well as the interest payments they receive on the loans granted.

The interest that one would pay on their homes loans will soon be linked to their credit rating, or the discipline one maintains in repaying their existing loans. Your EMI's would be based your credit score. If you have a high credit score, you will have to pay less EMI, and the other way around.  

The bank will initially rely on credit scores of Credit Information Bureau of India (CIBIL) wherein those with scores above 760 points will be charged 8.35%. Other banks are likely to take a hint from BoB's latest initiative. 

A Credit Score or the CIBIL Score is a three-digit numeric summary of your credit history. The score is derived using the credit history found in the CIR. A CIR is an individual's credit payment history across loan types and credit institutions over a period of time.

in financial terms, the credit worthiness of an individual is determined on the principle of the 5 C's namely, the character, capacity,capital collateral and condition. 

Bank of Baroda, which announced lowest rates on home loans on Monday, will be the first bank to link interest rates on home loans to credit scores of borrowers.