Almost everyone who intends to buy a home has gone through the process of or at least considered getting a home loan. Different banks offer them at different rates, and the value depends on the individual’s credit score. A bad credit score can seriously impact your home loan. It’s not enough to dream about luxury flats in Chennai. In this article, we show you how to improve your credit score.
Let’s first cover the basics of what a credit score is. A credit score or indicator is a value that determines the credit worthiness of an individual or firm at any given point of time. Their credit files are analysed thoroughly by experts and they are assigned a calculated credit score. The banks use this credit score to determine the limit or value of the loan they are eligible for. A CIBIL score of 700 and above is generally considered a good credit score. Therefore, it is important to check and if needed improve your credit score before applying for a home loan.
Here are some of the techniques you can use to boost your credit score.
Clear Credit card debts
Pay off any unpaid credit card debts that you owe the bank. It is always better to pay your credit card bills on time and in full. This has a significant impact on your credit score. Do not allow any unpaid balance to accumulate. Inconsistency in paying bills, or a lot of accumulated credit card debt would hinder your home loan process, whether it be with banks or other legal lenders.
Pay EMIs and bills on time
There would be other existing EMIs and recurring bills. It is important that you keep paying them on time. There must be no compromise on this. Any outstanding or late payments will harm your credit score. Make sure that there is no outstanding amount for at least a period of 6 months before you apply for the home loan.
Close unused loans
If you have other smaller loans that you have taken. It could be a personal loan or a car loan. Closing them lessens the risk of exposure to unused loan accounts. Timely EMI and loan closure will get you closer to your coveted home loan.
Possession of liquid assets
The lenders look kindly upon individuals who possess a lot of liquid assets. The assets ensure that the person is good to pay back the loan. The assets can include stocks, life insurance policies, bonds, etc. They are also a testimony to the financial stability of the individual applying for the loan.
Steady employment status
Loans in general are processed easily when the applicant has a steady and sufficient income. This assures them of a steady flow of funds that would help pay back the loan on time, every month. This is in fact one of the eligibility factors for most lenders to qualify the applicants for any loan.
Pick one lender
People might think applying with different banks and lenders increase their chances of getting a loan. This is not true. This creates the impression of financial instability and your credit score drops as all the applications reflect on it.
These are very important points if you want to build a good credit score. These are also general guidelines on maintaining your credit score as well as improving your eligibility for a hefty home loan.
Lifestyle Housing is a developer of luxury apartments in Chennai. Our 3 BHK flats for sale in Chennai are located in prestigious residential areas and equipped with premium amenities. Our real estate experts not only guide you to the perfect home but guide you to the right financing channels to buy it.