Today, in order to avail of any loan whether it is secured or unsecured, you need a good credit score. Maintaining a good credit history is important for everyone. This helps in getting a good interest rate and possible waivers on many fees and penalties from the lender. This also applies in the case of a home loan.
Taking a home loan in India is a long term relationship for the borrower with the lender. If the person has a bad credit score, he/she might either not get a loan or might have to accept the loan at a higher rate of interest. This means there is a possibility of rejection to get a loan or paying higher EMI’s. In order to ensure this doesn’t happen, allow me to explain using 4 simple steps on how you can come out of this situation and get your home loan approved quickly;
Check your credit score – You need to understand your current credit score. Hence apply for a credit report and know your score. This helps you to understand your current condition and help you in planning to improve your score for future benefits.
This will be the first step in getting the best deal on Home loans.
Improve your credit score – After you make a plan, be disciplined and follow it. This will ensure that the credit score is improving within the planned tenure. You can opt for a credit card and a personal loan for help. Pay the bills and EMI’s on time without any default. Over a period of 6-12 months, this will help you increase your credit score.
Check for different lenders – There are many lenders in the market apart from the Banks like NBFC’s that provide you loans with average or bad credit scores. You need to understand that the rate of interest would be higher than other lenders but there is a possibility of getting a loan.
Correct documentation – Once you finalize on a lender and agree with all the terms and conditions mentioned in the loan application, keep all the necessary documents like income, personal details, property documents, etc ready to ensure the loan process goes through in a smooth way.
The importance of maintaining a good financial profile is needed for every person.
This can help you save money and get a loan approved quickly at a lower rate. Please ensure you read the terms and conditions in the loan agreement. Only after understanding them, sign it.
Can I get 100% home loan?
No, you cannot get a 100% home loan since the RBI passed a mandate. But you can get anywhere between 80-90% of the property’s value as the home loan amount. So all you need to do is save up to 20% of the property’s value!
Can I get a mortgage with a poor credit score?
No. If your credit score is below 650 it is difficult to get your loan application approved. If your CIBIL score is low then all you have to do is pay your dues on time and be a responsible citizen. Over time, your credit score will increase.
What kind of credit score do you need to buy a house?
In a country like India, any score above 750 is considered to be good to buy a house. If it’s low, then you might get the home loan at the highest interest rates. A higher credit score (above 800) will give you the lowest interest rates!
Here are my past posts for the A to Z Challenge