Improve your credit score before you apply for a Home Loan

It is easier to obtain a loan if you have a good credit score, not only this but with a good interest rate.

A score that ranges between 750 to 900 is considered excellent, whereas if the score is below 675 then it would be required to improve on the credit score. It is always better for home loan seekers to get a credit report before thinking about a home loan. The credit score can be obtained from the four credit bureaus- CIBIL, Experian, Equifax and Crif High Mark.

Mr. Sujit Kumar, a Delhi NCR- based lawyer says that a good credit score can help in gaining loans at an attractive interest. This way it can lower the interests by lakhs of rupees during loan tenure of 15- 20 years.

credit-score

Immediate Steps to be Taken:

The first step involves in checking for any errors in the lender’s books of records. Though the loan may have been repaid, the records may still show some credit outstanding. Any disagreements between the lender and the borrower should also be resolved to improve the credit score.

One of the things to be taken into account for is that all the dues must be paid on time. Even if it means paying up a missed payment. Consolidating all the loans into one single loan will make it look neat on the records.

During the time of the credit card bills, the borrowers follow the practice of paying up only the minimum amount, letting the rest be a part of the credit card loan. This will increase the rate of interest of the credit loan, where you will have to replace the credit loan with a personal loan and which will not look good for the records.

Long-term steps to be taken:

For instance, if you have a loan against your name, and you do not have the capability to repay the loan, this situation can be resolved only over a period. One should try to alter the mix over time.

In case you are trying to get the best possible deal, do not have the habit of making 15- 20 inquiries, because each inquiry will be registered against your name, which will again create a bad impact.

If you have a credit limit of up to Rs 2 lakh, do not use the entire credit which will make you look hungry for credit.

Few agencies such as “Credit Sudhaar” will help you get the right mix of secured and unsecured loans. You will always be informed about the right number of credit you should own and the maximum percentage of credit beyond which you should not utilize.

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