How a Co-Applicant’s CIBIL Score May Impact Your Joint Home Loan Approval?

You can apply for a home loan both as an individual and with a co-applicant. Though it’s not mandatory to have a co-applicant, in instances where your income may not be sufficient or your CIBIL score is lower than average, adding a co-applicant with a strong credit profile may increase your chances of getting a loan, at times on favourable terms.

Who is a Co-Applicant in a Home Loan?

A co-applicant is a person who applies for a home loan along with the primary applicant. The purpose of adding a co-applicant is to strengthen the overall loan application or, if they are also a co-borrower, to share the EMI responsibility. A co-applicant is usually a close family member such as a spouse, parent, or sibling. 

Co-Applicant vs Co-Borrower vs Co-Owner

Before understanding how a co-applicant’s CIBIL score impacts a joint home loan, there are few terms related to joint home loan that are often used interchangeably, but they refer to different roles.

In most cases, a co-applicant is also a co-borrower but being a co-owner depends on how the property is registered. To understand how the EMI may be shared between applicants, you can use our home loan EMI calculator.

Impact of Co-Applicant’s CIBIL Score on Loan Approval

1. If Both Applicants Have Strong CIBIL Scores

Having higher CIBIL scores generally is viewed as lower repayment risk, which increases the chances of approval.

2. Primary Applicant’s CIBIL Score is Low, Co-Applicant’s CIBIL Score is Strong

When the primary applicant has a low CIBIL score, banks may not only rely only on the co-applicant’s strength.

In this situation:

• Approval depends on how low the primary applicant’s score is and the reason for it
• The co-applicant’s profile may support approval, but does not override the primary applicant’s credit history
• Interest rates may be higher, or the eligible loan amount may be reduced
• In some cases, banks may set additional conditions before approval

3. Primary Applicant’s CIBIL Score is Strong, Co-Applicant’s CIBIL Score is Low

Although a co-applicant is usually chosen for a strong credit profile, in some cases they may be added due to ownership requirements or other reasons.

In such situations, 

• The primary applicant’s strong profile may support approval
• The co-applicant’s income may be excluded from eligibility if their credit profile is weak
• Loan terms may be adjusted based on the overall risk assessment

4. Both Applicants Have Low CIBIL Scores

When both applicants have low credit scores, banks see a higher level of risk. Some applicants may choose to improve CIBIL score and reduce existing obligations before applying.
If the application has low CIBIL scores for both applicants, it may be assessed more cautiously.

Disclaimer: Please note that criteria vary from bank to bank based on the bank’s internal policies and other factors. For Ujjivan SFB Home Loan details, you can call our toll free number 1800 208 2121. 

Does Adding a Co-Applicant Help You Qualify for a Higher Loan Amount?

It depends on the co-applicant’s financial profile. Generally, co-applicants with stronger credit profile and higher income base may improve the chance of loan approval.

Can a Person be a Co-Applicant If They Already Have a Home Loan?

Yes, a person can be a co-applicant on another home loan even if they already have an existing home loan. 

What Should You Know If You are a Co-Applicant in a Joint Home Loan?

If you are a co-applicant in a joint home loan, you must know your role and responsibilities clearly.

1. You may be Equally Responsible for Repayment

In most cases, a co-applicant is also a co-borrower, which means full repayment responsibility.

2. Your Credit Profile is Directly Impacted

Any delay or default in EMI payments by the primary borrower will affect your CIBIL score as well.

3. The Loan Appears in Your Credit Report

This can impact your ability to take additional loans in the future.

4. Your Income and Obligations are Considered

Existing EMIs and liabilities may affect the overall loan assessment.

5. Your Role Continues Until the Loan is Closed or Transferred

You remain part of the loan unless there is a formal change in the loan structure or you choose to exit the loan.