How to Improve your Credit Score for a Home Loan
Checking out flats for sale in Kerala to buy? Going for a home loan? Review your credit score first! Your chances of obtaining a home loan heavily depends on your credit score! Credit scores are values that are fixed after analysing an individual’s credit files and are used to determine whether a person is credit-worthy or not. If credit scores do not meet the prescribed limits, banks may deny loans. Therefore, it is highly important that the credit score is improved before applying for a home loan.
Generally, if your CIBIL score is above 700, you are in a good position to be considered eligible for a loan by most established banks and financial institutions.
How to improve your Credit Score for a Home Loan?
Here’s an overview by Luxury Kerala Flats, the best portal for buying, selling & renting apartments in Kerala.
Clear the balances on credit cards
Huge balances on credit cards adversely affect credit scores. Clearing these amounts can have a positive impact on your credit score and increase your chances of getting home loans in future. Check your credit report from time to time, like, on a monthly basis.
Paying your EMIs on time
Timely payments of EMIs can also go a long way in improving your credit score. It helps to ascertain your credit worthiness and can make a major difference in influencing banks in your favour.
Ensure to close loans you no longer use
Only the loans which reflect timely payments should be kept open. Lessening the risk of exposure to unused loan accounts, improves your eligibility with regards to the loan amount decided by the bank.
Liquid assets improve credit score
If you have liquid assets that can be verified by a lender like stocks, bonds, life insurance policies etc. certainly, it will improve your credit score. This showcases the financial stability of the applicant.
Good employment status
When it comes to granting home loans, banks tend to favour an applicant with a few years of steady and consistent employment. It shows a steady inflow of funds or an improvement in salary over a course of time.
Applying with different lenders hampers the credit score
Applying for loans at a variety of different banks all at once gives lenders an impression of financial instability. This can severely affect your chances of obtaining a big loan. Instead, you can space out your loan applications over a broader time period. When a lender checks your credit score, a credit application search ‘footprint’ is left behind on your score. This results in a negative impact on your credit score.
Paying off an outstanding collection amount
Paying off a collection amount is definitely recommended to improve your credit score. However, make sure not to have any outstanding dues over a period of at least six months prior to applying for a home loan.