5 hacks to improve CIBIL Score to Buy a House

Credit score is a magic number. If you have a good credit score such as 750 points or above, you have a power of acquiring desired loan whenever you want. On the other hand, with a bad score you either need to pay huge interest component or get a co-signor by your side to avail the credit.

 

Thus it is very important to plan your expenses and credit requirements. Particularly, for the long terms loans such home loan you should plan how to draw a credit. For example: if you check out home loan interest rate offered by any of the bank, say, ICICI home loan interest rate, you would find that interest rate varies a lot as per the credit score. So, you should always have a good score to get a credit deal of your choice.

 

However, if in case your home loan application is rejected you should not lose heart rather you must try to learn how to boost your credit score. For, you can always work upon a bad score and improve it to a decent level and get the loan application approved.

 

Let’s explore 5 hacks to improve CIBIL Score to get a home loan at ease.

 

  1. To err is human, so is to rectify. When you are fighting the odds of low score, it is practical to review your credit information report and check for errors and disputes. A slight discrepancy could be a major factor of low score. Particularly check for errors such as loan overdue or errors in personal details.

    Sometimes balance of your account is incorrect in your report due to a missed credit information update from the bank and it damages the score. So if you come across “due account balance” where it should be closed, do raise a dispute to CIBIL and get the correction made as soon as possible. If your application was rejected because of your name in cibil defaulter list or missed payment, it would certainly be accepted after the red flag is removed.

 

Similarly check out for other errors on the report and ensure these are not the reasons for low score. The CIBIL dispute resolution would take approximately 30 days to get the desired changes made.

  1. In case error is not an issue for low score, you need to look for other reasons to improve the score. You need to make a proper repayment plan. Here are some tips-
  2. Have a strict financial discipline. Cut down expenses and follow a strict budget. Until you reduce your expenses and save more than before, you would not be able to spare enough to pay out.
  3. Try to pay out maximum number of loans and continue with fewer debt. It would be a smart move if you could release the costliest debt, the ones with higher interest rate first.
  4. If a credit card bill is too fat to clear on a one go, it would be better to look out for avenues to close the outstanding. You can even consider selling out some assets for clearing the bills. However do not cancel the card and keep your card utilization up to 20 per cent as this would help you build good history.
  5. Always pay your dues on time; even better, if you could pay before time every month.

 

  1. Sometimes it is not easy to improve score in a few months. Herein, it would be wise to co-apply with a person who has a good score. Co applying with parent or spouse is a very good option indeed.
  2. This is one option not many would consider, however I would suggest that you should be willing to pay higher down-payment when you want a home loan. With higher down payment, amount of loan decreases and risk of loan declines too. Home loan is a long run loan so you can use floating interest to cap the interest benefit in future as well. The choice is all yours.
  3. If popular banks are not willing to lend you the desired loan, you should consider smaller banks, such as regional banks, co-operatives or family banks. Sometimes you might find a deal of your choice with a smaller bank. So never ignore such options. However this would require you to do some research and prepare a list of available credit options.

Whatever method you employ to apply for a home loan, the recourse for the application approval would always be your score. So always build the score before applying for mortgage or home loan.

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