Planning to Buy a House in 2026? Fix Your Credit Score Before You Apply

• Credit scores above 750 unlock lower home loan interest rates

• RBI rate cuts have already eased EMIs for new borrowers

• Even a small rate difference can save lakhs over 20 years

If you are planning to buy a home in 2026, the most important groundwork may have little to do with location, floor plans, or amenities. Instead, financial experts say your credit score could play the biggest role in determining how affordable your home loan will be over the long term.

With interest rates trending downward and expectations of fresh incentives in Budget 2026, borrowers with strong credit profiles are best positioned to benefit. Lenders typically view applicants with a credit score of 750 or above as low-risk, offering them more competitive interest rates and smoother approvals.

Why Credit Score Matters More Than Ever

A credit score reflects how responsibly you have handled past loans and credit cards. According to Adhil Shetty, CEO of BankBazaar, borrowers with higher scores usually qualify for the lowest home loan rates available in the market.

Even borrowers with slightly lower scores can still get loans—but often at higher interest rates. Over a long tenure, that difference adds up significantly.

A spokesperson from PNB Housing Finance explains that while the rate gap may look marginal at first, it can translate into savings of several lakhs over a typical 20-year home loan.

For example, two borrowers with identical incomes and property values may still receive different interest rates solely based on credit history. Someone with a score above 750 may enjoy a rate 50–100 basis points lower than a borrower in the 650–700 range.

Lower Rates Are Already Helping Borrowers

Interest rate conditions are turning favourable. On December 4, 2025, the Reserve Bank of India reduced the repo rate by 25 basis points to 5.25%, following four earlier cuts during the year.

To understand the impact, consider a ₹50 lakh home loan taken for 20 years at 8.50% interest. After the rate cuts, the EMI could drop from around ₹43,000 to ₹39,000, offering meaningful monthly relief. Any additional discount linked to a strong credit score further improves affordability.

How Much EMI Is Financially Safe?

Experts recommend keeping your home loan EMI within 40% of your monthly take-home income. This ensures enough room for daily expenses, savings, and emergencies. Stretching beyond this limit may strain finances, especially if interest rates rise in the future or income fluctuates.

Joint Home Loans: Credit Scores Still Matter Individually

For joint home loans, lenders do not average credit scores. Each applicant’s individual CIBIL score is evaluated. While having one strong applicant improves approval chances, a low score from the co-applicant can still affect the interest rate or sanctioned amount.

Although both incomes are considered for repayment capacity, liabilities remain individual. Financial planners advise both applicants to maintain healthy credit scores to secure the best loan terms.

Practical Steps to Improve Your Credit Score

Improving your credit score does not happen overnight, but consistent habits can make a real difference within months:

• Pay EMIs and credit card bills on time: Even one missed payment can hurt your score.

• Control credit utilisation: Try to keep usage below 30% of your total credit limit.

• Avoid frequent loan applications: Multiple hard inquiries can temporarily reduce your score.

• Maintain a balanced credit mix: A mix of secured and unsecured loans shows financial discipline.

• Check your credit report regularly: Correct errors such as closed loans still showing as active.

As Pramod Kathuria, Founder and CEO of Easiloan, points out, disciplined credit behaviour lowers borrowing costs over time and strengthens overall financial stability.

The Bottom Line

As 2026 approaches, homebuyers are entering a more borrower-friendly rate environment. But the biggest advantage will go to those who prepare early. A strong credit score not only improves approval chances—it can dramatically reduce the total cost of owning a home.

In real estate, location still matters. But when it comes to home loans in 2026, your credit score may matter even more.