Tips to Boost Your Credit Score before Applying for a Home Loan

A good credit score can significantly improve your chances of obtaining a big money loan to acquire the home you have always desired. Credit scores are values that are ascertained after analyzing an individual’s credit files and are used to determine whether a person is credit worthy or not. Banks are quick to deny loans if their criteria for giving loans are not up to the mark. Therefore it is imperative that credit scores should be improved before applying for a home loan.

Tips to Boost Your Credit Score before Applying for a Home Loan

Tips to Boost Your Credit Score before Applying for a Home Loan

Different banks and financial institutes have set different limits for loans on these scores. But if your CIBIL score is above 700, then you are a legitimate candidate for securing a loan from these banks and institution. In recent times banks and financial houses solely rely on how good or bad your credit score is before giving a loan. Scrutinizing your credit report from time to time, say on a monthly basis is a good way to know your negative pointers and ways to boost your credit score. So it is imperative to maintain a high credit score on a consistent basis.

  • Paying your credit card bills and EMIs on time can go a long way in improving your credit scores. Timely payments increase your credit worthiness and help the banks sway in your favor.

  • Stop applying for another new loan, like a car loan.

  • Get the mistakes in your credit report rectified, it could be an oversight done by the bank.

  • Improve payment history; see that you have not been delinquent in the past six months at least. If any of your cards or loans in the past has been settled, then you should make the complete payment.

  • Make timely payments and close unused accounts. Close any loan accounts you no longer use. In deciding on the loan amount you are eligible for, lenders can take into account not only the due amounts but also the credit limit available to you.

  • Space out applications. Every time you apply for a loan the lender checks your credit score. When it does so it leaves behind what is known as a credit application search footprint on your credit score. Each time this happens your score takes a small dip. So space out your application so as not to give signals of financial stress.

  • Use credit limits judiciously and build up a track record. Start building a record by responsible credit usage through credit cards, personal loans etc.

  • Use the right credit mix. Besides building a healthy track record of credit usage it is important to have a judicious mix of unsecured and secured loans.

At present most lenders use a credit score to decide whether to grant a home loan or not. If your score is good your loan gets processed faster. Having a low score can translate into higher rate of interest. So maintaining a good score is imperative.

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