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It is important to maintain a high credit score if you are planning to apply for a home loan. One of the first things the banks will check after receiving your home loan application is your credit score. It gives lenders a peek at your ability to pay back the debt. If you have a high credit score, you can be eligible to get preferential pricing for interest rates.
Thus, borrowers must apply for a loan or a credit card only when they need it. Applying unnecessarily for new credit cards must be avoided. Whether it is your credit card bill or the EMI of your car loan, always pay your bills on time. A potential borrower's credit score is one of the first things that lenders analyse while deciding on a loan application.
What can you do if your CIBIL score is low?
Also, learn the five most important things to do before applying for a home loan. The CIBIL Score is a score awarded to you by the Credit Information Bureau Limited , one of the country’s most reputed credit bureaus. Your CIBIL score summarizes various aspects of your credit health and history – all points lenders factor in before sanctioning a high loan sum at a low interest rate.
Information is provided to CIBIL on a monthly basis based on which CIBIL prepares a credit information report and credit score for each individual and commercial organization. Banks refer an applicant’s history to determine whether a home loan should be approved or not. Credit scores help banks disburse loans more efficiently by avoiding taking on risky customers thereby reducing defaults. As a result, applying for a business loan with a poor credit score is extremely tough. This will avoid loan application rejections and unnecessary hard inquiries, which cause your credit score to drop a few points each time a new lender checks your credit history. A credit score is one of the most important factors that define a user’s creditworthiness, and it is always taken into account by banks, financial institutions, and lenders.
Things To Avoid After Applying for a Home Loan
Having a score of 750 and above implies that you have an ideal credit score for a home loan. It lets you get a loan easily and gives you negotiating power. This means you can access a competitive home loan interest rate and even get ample housing finance. Always try to make all your payments on time and pay the entire due amount. Because part-payments will be considered as overdue in your credit report.
If you are consistently late in paying your credit card dues or are maxing out your credit limit, your credit score can be negatively impacted. If you are applying for a collateral-free business loan, having a credit score of 700 or more is ideal. If you are applying for a secured business loan, your loan application may be approved with a lower credit score, say between 600 and 700 too. A high CIBIL score gives you the option to choose and pick lenders as you are eligible for home loans. Also, shorten the documentation process because a high score assures lenders that you can repay the loan. In addition, you are also eligible for lower home loan interest rates.
How to check credit score offered by CIBIL?
To be eligible for a home loan, applicants must submit the following documents. The documents may differ from lender to lender, but they are the standard documents used to verify home loan eligibility. Because credit score showcases the creditworthiness of the user, it becomes the most important factor considered for home loans. So, if you are struggling to figure out the ideal credit score for a home loan, continue reading the blog.
In this case, your lenders get cautious while processing your loan application for a home loan. Your credit score is a significant factor determining your eligibility for a personal loan since it is a collateral-free loan. The minimum CIBIL score for a personal loan is between 720 and 750.
Finance for Professionals
Since it is an economical solution, you may want to transfer your existing home loan to Bajaj Finserv. A score of 700 and above is desirable, as the chances of home loan approval are highest with favorable terms. This helps to spread out the risk, and for lenders, it becomes easier to approve the loan. Before processing your home loan application, a bank will obtain your credit score and repayment history from CIBIL. A credit score is a three-digit numerical representation of your credit history.
Fill up the form asking for details like birth year, address proof, past loan history, and relevant data. Many of us have a habit of forgetting the due dates, for this, you could select the auto-debit facility. This way you won’t miss the date and payments will be made on time. When you are planning to get a loan for buying a house or a car, you should plan to maintain a powerful CIBIL score.
In earlier days, the banks and other lenders need to make a partly subjective internal assessment and used to do a background check to sanction your loan process. But now using credit score/CIBIL score and a credit report history, it has become easier for the lenders to access accurate, data-based credit information of the applicant. If you apply frequently for a loan or if you go for multiple enquires, then also your credit score goes down. Because this increases credit risk and minimizes your overall credit rating.
This is why it is better to have a good credit score instead of risking rejection from a potential lender, which may lower your credit score further. You should never miss your monthly EMIs nor should you delay your credit card monthly bill payments. To make this process better, setting up monthly reminders for your payments is a good idea, to begin with. CIBIL score is a three-digit number that indicates your creditworthiness based on your past credit behavior.
Just share your details and check out your pre-approved offer to avail the financing you need. To both qualify for a loan and get it on competitive terms, your credit score is a number you can’t ignore. A credit score above 750 reflects good financial health and increases your chances of getting an affordable sanction on flexible terms. After the payment, five questions are asked related to credit history. At least three questions must be answered correctly to prove your identity with CIBIL. After filling the form, choose the mode of payment to get the credit report.
If you have a good CIBIL score for a home loan, eligibility terms become simpler, and your application gets approved quickly. Lower scores imply risk, and lenders may have to tweak the loan offering accordingly. For example, a loan offered for a credit score of around 600 may mean that you have to settle for a lower principal amount, say up to only 40% of your asset’s value.
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