With prices of property on the rise, it is fast becoming next to impossible to buy your dream house out of your own pocket - which is where the several financial institutions come in to save the day.
With the help of various home loan options available at hand, any prospective property buyer may now be able to fulfill his or her dream of owning a home that is well and truly, their own. Here is what you need to be doing to make sure that your application for the home loan is accepted the first time around.
What Is A Credit Score?
Credit score—or CIBIL score—is basically a three-digit number—with 300 being the lowest value it can take, and 900 the highest value—that is an indicator of a person’s creditworthiness. Now, creditworthiness in financial terms means how trustworthy and/or regular a person is, in terms of paying their dues.
While applying for home loans (where the loan amount generally tends to begin from whopping 16-17 lakh rupees) it becomes all the more crucial to convince the bank and the loan officer of your intentions of paying back the money you are borrowing from the bank. Generally, a CIBIL score of 700 or above qualifies you to apply for a home loan, and the closer your score is to the maximum, more are the chances of your application being approved.
How Do Lenders Utilize The Credit Score?
CIBIL maintains an entire database of all credit-related activity of all its customers, which is used to calculate their respective credit rating.
- Having a cibil score of 700 or above ensures the bank that you have a history of timely payment, and getting an approval for a home loan application further helps increase your score.
- Higher credit score presents you as a minimum risk investment for the bank, and it is more likely that you receive your loan on better and more attractive terms than usual.
How To Ensure A Higher Credit Score?
The credit score helps the loan officer make the final decision on whether to accept or reject your application. Other tips and tricks one needs to bear in mind while aiming for that above average credit score are given as follows:
Keep track of your payment history, and be on time with all the payments—credit card bills, utility bills and so on—to ensure that nothing comes in the way of you and that 700 or above credit score you are aiming for.
It is always a better idea to get rid of accounts that you do not use on the regular. This is because the bank also takes into account the total credit limit at your disposal while deciding your loan amount.
Be sure to file for home loans at an interval of a couple of months, as applying for home loans close together signals the financial institutions that you are in desperate need of money, which may work against you.