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According to reports, the Compound Annual Growth Rate of the housing loan market in India has grown by 6.5 per cent. The number of active housing loan borrowers as of December 2020 has also seen an increase of 5 per cent.
However, a mandatory thing for borrowers is a CIBIL score, which must be equal to or higher than 750. Here are a few tips that borrwers can check out to maintain a perfect CIBIL score for housing loan.
How to maintain a perfect CIBIL score to avail housing loan?
CIBIL, which is now known as TransUnion Credit Information Bureau (India) Limited, is a company that manages, collates and generates CIBIL scores for individuals. Any borrower can check their CIBIL score by visiting the official websites of financial institutions. Any individual with a credit score of 750 and above can easily avail a loan from a financial institution. However, this score might increase or decrease depending on various factors. Here are a few ways borrowers can maintain their CIBIL score for a housing loan. Repayment of EMI payments on time
Borrowers need to repay all loan types and credit card EMIs on time. This repayment directly affects the CIBIL score of the borrower. One easy way to make repayments on time is to set reminders or align payments to auto-pay mode. If borrowers get into the cycle of repaying their credit card EMIs on time, it reduces the chance of their interest being added up.
- Reviewing CIBIL reports regularly
Another way borrowers can improve and maintain their CIBIL reports is by reviewing them regularly. They can regularly monitor their CIBIL scores and check for discrepancies. If there is an error in the name, or the borrower’s address is not updated, they can raise disputes and get the issue solved.
- Limiting credit utilisation
To maintain their CIBIL score for a housing loan, borrowers can use up to 30% of their credit card limit to maintain the score. However, not using a credit card can adversely affect an individual’s credit score. Lowering credit utilisation ratio would help the borrowers pay off dues and remain financially secure.
- Not exhausting available credit limit
Borrowers should avoid using the full credit limit given to them to maintain their CIBIL score for a housing loan. Utilising the full credit limit can lower their CIBIL score. However, there might be cases where the expense will be more than the credit score. In that case, borrowers can request their financial institutions to increase the credit card limit.
- Keeping old accounts
It is advised for borrowers to maintain their old bank accounts and credit cards. It positively shows the long-term association that the borrower has with the financial institution. Maintaining credit cards would also show the repayment history of the borrower. If a borrower chooses to close a bank account, it might negatively impact the borrower’s credit score.
Borrowers need to maintain a CIBIL score of more than 750 to avail a home loan easily. Keeping a good CIBIL score will also allow lenders to offer borrowers a competitive home loan interest rate. In addition, when lenders see that the borrower has a good repayment history, they will also approve the home loan quickly.
Besides maintaining a good CIBIL score, borrowers need to know the home loan repayment tenor before applying for it. Although opting for a higher repayment tenor would mean shorter EMI, it is not a wise decision. The repayment tenor depends on various factors like age, employment status, CIBIL score etc.
Besides CIBIL score, individuals should also check the documents required for availing a home loan. Proper knowledge of the process and required documents will reduce the time taken to avail one.
Apart from that, individuals can also use a home loan eligibility calculator to know how much loan amount they are eligible for. These eligibility calculators can tell borrowers what amount of loan they can avail based on their age, income, employment status, credit score etc. Besides that, individuals availing a home loan should plan a proper financial budget to meet all ends.
To do so, individuals can calculate home loan EMI using various online tools and calculators. These tools are available on the websites of lending institutions. They can visit the websites and enter the home loan amount in the calculators to see their monthly EMIs. This way, they get an estimate of the EMI they have to pay.
Along with it, the borrowers can check and compare various lending institutions and choose the one with the most affordable interest rates.
Furthermore, several reputed financial institutions offer pre-approved offers to their customers to make the home loan process easy. Both existing and new customers can check their pre-approved offers by entering their names and contact numbers. These pre-approved offers are available on both secured and unsecured products.
Altogether, building a home has become easier for individuals by availing a home loan. To do so, individuals need to meet a few simple eligibility criteria, out of which CIBIL score is one. Individuals can follow the tips given above to maintain their CIBIL score for a housing loan.
Read Also: Know How To Get The Lowest Interest Rate Personal Loan
