Basics about credit score
Credit score is the major factor which is considered by the lenders when you opt for a home loan, the higher your score is the better are your chances of getting a home loan approval.
A Credit score between 350 and 900 represents a borrower’s credit worthiness which means that whether he/she will be able to pay off the loan which is offered to them. However, a high number shows higher creditworthiness, so an individual who has a credit score of 850 will be considered highly eligible to pay off the debts on time, whereas an individual with a credit score of 350 will be likely to miss payments.
It shows in detail the records of past borrowings. In case you missed or made delayed payments of your credit cards or loan EMIs, these are also reflected in your credit report. Therefore, it is advised that before applying for home loan you must get a copy of your credit score, it will prevent you from being unpleasantly amazed and you will have a chance a fix any kind of errors on it
Good credit score for home loan
Home Loan Credit score is one of the key factors that determine your interest rates on a home loan. Additionally, a higher credit score improves a borrower’s chances of getting lower interest rates. Credit score is a three-digit number which ranges from300 to 900 and sums up your credit history. Credit report contains a credit score which decides the creditworthiness of a borrower. Credit report also includes your personal as well as account details which tell a lender about previous debts such as credit cards and loans. Before sanctioning a home loan to you, a Lender will pull your credit report from one of three credit bureaus- CIBIL TransUnion, Equifax or Experian. Using the information contained in your credit report, loan officers will evaluate your eligibility for the loan and the applicable interest rate. At present, there is not clearly defined definition of a good score, as many banks and financial institutions may have different criteria of judging a good score. But according to CIBIL, 90% of home loans are sanctioned to borrowers who have a credit score more than or equal to 700. So, rule of thumb – the closer your credit score is to 900, higher are the chances of getting a home loan approved at low interest rates.
The Bottom line…
Ideally you should check your credit report every year, so as to make sure that you have ample time to course correct if your credit report is not in shape. Regular checking of the report will ensure that you have a good credit score, enough to help you land a good home loan deal. You have a number of ways to check it online, one such option is Paisabazaaar.com. You can visit the website and generate your free credit report. Don’t leave any stone unturned to create the desirable credit report, so that you stand no chance of losing on your interest rates and you avail your home loan in a hassle free manner.
While glancing at your credit report, check for every minute detail like the spelling of your name, your previous addresses, details of the associated accounts and their correct reports along with the ones which are now closed.
After doing this, if you find out any error that might have crept in, dispute them online to get the corrections done. Having a poor credit score that is less than 500 can get you in trouble of getting a home loan with extremely high interest rates and this scenario disturb your financial picture.