It is advisable for house loan seekers to obtain a credit report, before applying for a jumbo loan, such as a home loan. The report, which provides a person’s credit score, can be retrieved from any one of the four credit bureaus operating in the country. A score b/w 750 and 900 is considered superb. However, the score below 675 may need to improve the credit score before applying for a house loan.
A good credit score can help you get a credit at a more attractive rate of interest. A good credit score can lessen your interest burden by lakhs of rupees, during a loan tenure of 15-20 years.
When it comes to enhancing your credit score, first check for any error in your lender’s record books. While you may have returned a loan, the bank’s records may still be showing some credit prominent against your name. Rectifying such mistakes will improve your credit score.
Disagreements b/w a lender and a borrower may also be the cause of a poor credit score. Resolving such disputes, paying the balance and closing the loan account can heighten your score.
The most vital thing for a good credit score is to make all the payments on time. If you have missed a particular amount, make amends right away by paying up.
Consolidating your credit will also help. You may have taken five personal loans. Combining all these loans, into a single one, will look sounder on your records, by indicating that you are not excessively credit-hungry.
Also, when it comes to credit card checks, many borrowers pay up only the minimum amount & revolve the rest of their credit card loan. Revolving rest of their credit card loan is a not a good practice, as the rate of interest on credit card advances is very high. If you have been doing so, substitute the credit card loan with a personal loan, which will draw down your interest charges & allow you to meet your dues.
In case you have a delinquent loan against your name, and you can’t reply right away; the remedy to this situation is the only time. If you have a high proportion of unsecured loans, vis-à-vis secured loans; you should try to alter the mix over a period.
Another behavioral change that you must make is to avoid shopping for loans excessively. In trying to bag the best possible deal, do not apply or make inquiries at 15-20 banks. Each time you make a question, it gets registered upon your name and indicates that you are credit-hungry.
If a person is too hungry for credit, it reflects poorly on his credit score.
Suppose that your credit card provides you with a credit limit up to Rs 2 lakh, don’t use up the entire border as this is also noted as a sign of credit hunger.
Despite your best efforts, if you ain’t able to achieve a good credit score on your own, then, there are professional agencies that you can turn to. These agencies can help you to solve the right mix of secured and unsecured loans. They tell you about the correct number of credit cards you should own, given your financial status. They also inform you about the max percentage of credit on your credit card, beyond which you should not go.
See Also: Real estate basics