Applying for a Home Loan? Here’s How to Improve Your CIBIL score

Before applying for a housing loan, it is important to do your homework correctly. Getting your salary slip, consent from your existing employer, and arranging other property documents in place are a few of them that a loanee has to take care of before applying for a home loan. One of the aspects that some of them forget is checking their credit score. Do you know your CIBIL score could affect your chances of getting a home loan? Better, it can also help you get a home loan at a lower interest rate.

Lenders and housing financing companies evaluate this credit score to decide whether you are eligible for a loan or not. It also helps them evaluate at what interest rate they should give the loan. So, if you are applying for a housing loan, ensure you have a credit score of 700 or above. An exceptional score is one that is 800 or higher. In case you have a low score, it is important you go through the steps below to increase your chances of getting a loan. 

First thing first, check your credit report: Check your credit report regularly. The three primary factors that housing finance companies, such as SBI or others for that matter, will consider when you apply for a home loan are a sbi home loan cibil score, steady income, a down payment, and good credit history. While going through your credit report, check if there are any inaccuracies that are affecting your credit score on a regular basis. If you do happen to find mistakes, fix them by getting in touch with your lender.

Pay all of your credit card and other bills on time: Make sure you haven’t fallen behind on your credit payments for at least the past six months before applying for an SBI home loan CIBIL. Housing finance companies may see this as irresponsible behaviour if you haven’t paid your bills on time or maxed out on your credit card. Therefore, make it a point to pay your credit card bill in full and on time, always.

Make timely repayment

One of the key elements in improving your credit score is your repayment history. Therefore, be sure to pay off your credit card balances and/or EMIs on time so that your credit report is free of any red marks. 

Avoid taking too many unsecured loans.

A conscious borrower only takes out unsecured loans only when absolutely necessary because taking out many personal loans or credit cards can make you seem like an unappealing borrower to a bank. It’s a good idea to stick to a balanced mix when it comes to borrowing because taking out a secured loan, such as a car loan, can increase your credibility for SBI Home loan CIBIL and, in future, can increase your CIBIL score for home loan.

Monitor your co-payments applicant’s

When you are a joint borrower on loan, the repayment history of the other borrower will most probably have an impact on your credit score as well. To avoid getting penalized for their mistakes, make sure your co-applicant pays all of their debts on schedule.

Never “settle” a loan or credit card balance.

Customers may reach an agreement with their bank to “settle” their credit cards or loans for less than the full amount that was initially due. What could first appear as a blessing could ultimately turn out to be a curse because such actions are noted in your credit report and are unlikely to help your case the next time you ask for an SBI Home loan CIBIL. 

Though a CIBIL score of 700 or more is recommended for easy approval of a house loan application, it’s okay if your score is lower. All you have to do is keep track of your bills on time and leave yourself a few months for your credit score to increase.

Reduce your active loan accounts: Your CIBIL score for home loan can be affected depending on how many loan or credit card accounts are open in your name. If you have too many open loan accounts, it sends across a message that you are already paying too many EMIs from your monthly income, which could lower your credit score needed for the SBI home loan CIBIL. On the other hand, having a fewer loan accounts might improve your credit score in the loan run.

Manage your credit utilization ratio: Your current credit utilization ratio impacts heavily on your CIBIL score for home loan. The credit utilization ratio measures how much of your available credit you have used. Your credit score may be impacted negatively by a high credit usage ratio, which suggests a high chance of defaulting. 

Length of your credit history: Your credit history’s amount and duration are taken into account when determining your CIBIL score for home loan. Your CIBIL score will probably be on the lower side if you’re a new borrower with little or no credit history. However, your CIBIL score will increase if you have a lengthy and favourable credit history with a timely repayment schedule.

A number of credit inquiries: When you apply for a new credit card or loan, your lender runs a credit report on you with the CIBIL bureau to determine your creditworthiness. Your CIBIL score may be impacted negatively by making too many credit inquiries. Therefore, if you are going to apply for SBI home loan CIBIL, reduce your number of inquiries. 

At last,

A credit score represents your creditworthiness. A good score represents that you have been responsible for the credit in the past and vice-versa. It is essential that you receive your credit report from one of the four credit bureaus in the nation—CIBIL, Experian, Equifax, and Crif High Mark—which will contain your credit score. Lastly, do not apply for a home loan just like that; do your own research, find out the CIBIL score for home loan from your friends and relatives who have applied for a home loan in the past, compare interest rates, etc.