Your CBIL credit score is the most important factor for getting a Home Loan. Essentially, a CBIL score reflects your creditworthiness. And by reference to your credit score, the banks, and financial institute decide whether you will be capable of repaying the loan. The CBIL credit score is a three-digit number between 300-900. More the credit score higher are the chances of getting the home loan.
Moreover, with a higher credit score, you get lower annual interest rates, an easy loan approval process, and so on. Here are some of the key advantages of improving your Home Loan Credit Score-
1. Lower Interest Rates:
The Home Loan Guides tell you that having lower interest rates can save a significant amount of money. So, the best way to find all the possibilities is to get lower interest rates. A higher credit score can help you to get a lower interest rate. If the applicant has a higher credit score, there are possibilities that he can get the home loan at much lower interest rates depending on the category of the credit score he falls in.
2. Easy Approval Process:
Having a higher credit score ensures the ease of getting the home loan approvals and hence timely disbursement of the home loan.
3. Pre-Approved Home Loans:
There are more chances of getting the Pre-approval of the home loans if you have a higher credit score. Lower interest rates and easy approval for home loans are some of the key advantages of pre-approved loans.
4. Higher Home Loan Amounts:
You can apply for a higher home loan amount if you have a strong credit score. On the other hand, applicants with lower credit scores have to compromise on the total Loan amount assigned to them.
5. Longer Loan Tenure:
Having a higher credit score allows you to get a longer home loan tenure. This ultimately results in lower EMIs and a longer duration of Home Loans. However, a Longer Loan tenure also means that you have to pay higher net interest payable.
Now as you have understood why having a Higher Credit Score is beneficial, let’s understand how you can improve your credit score for getting the Home Loan.
1. Maintain a Good Track Record
For a better credit score, you should repay your loan EMIs on time. The timely payment of the Home Loan has a significant impact on the overall credit score. Because the timely payments of the previous debts give assurance to the banks and the financial institutions about the repayment of the home loans. So, keep paying your debts and EMIs on time and it ultimately helps you with increasing your Home Loan.
2. Keep Low Credit Utilization Ratio:
The credit utilization ratio has a major impact on the overall credit score. This credit utilization ratio is calculated on the basis of the net availability of the credit and the total spends. These two parameters define the dependability of the applicant on the overall credit available. If you have higher credit and spend comparatively less than the credit utilization ratio remains low. The credit utilization ratio of 30% indicates the higher creditworthiness of the applicant.
3. Emphasize On Increasing The Credit Limit:
Increasing the Credit Limit allows you to reduce the Credit Utilization Ratio. Having the Lower Credit Ratio impacts positively on the credit score. You can ask banks or financial institutions to increase the credit limit for getting the benefit of a higher credit score.
4. Avoid Multiple Loan Enquiries:
Making multiple inquiries impacts negatively on the credit score. This is because too many applications are considered hard inquiries and have an adverse impact on the credit score. To avoid this ensure that you do complete research and make the application at the right place.
5. Keep Checking The Record:
Checking the credit score report is necessary. There might be errors or some administrative faults that could impact the credit score and may impact the home loan process. Therefore, keep checking the credit score records and take the necessary decisions accordingly.
Improving the Credit score gives the benefits such as lower interest rates, easy approval of the home loan, higher home loan amounts, pre-approved home loans, longer home loan tenure, and so on. The credit score can be improved constructively by following home loan guides. This includes- Maintaining a Good Track Record, Keeping Low Credit Utilization Ratio, Increasing Credit limits, Avoiding Multiple Loan Enquiries, and Checking The Record.