Whatever be your lifestyle or income level owning a property is always a dream. Well, you may say a necessity. However, we all know that with the rise in price in every sector; meeting regular expenses and still afford a home it is almost impossible without a loan. So, planning to apply for a home loan? It is important that you keep the few prerequisites in your mind. These are important to ensure that there is no rejection or delay in the process. Primarily any institution will focus on your good credit score (rating) before taking the loan request further.
In fact, the tough competition between financial institutions has made the process of getting a home loan much easier. To the surprise, in most of the cases, the borrowers do not have to visit the institution in-person.
Good Credit Score: Wondering what it is?
Credit Information Bureau of India Limited will issue a score for every individual based on his repayment history. The more is the score more is the chances of getting a loan. This score helps the lender in deciding on whether to authorize the application.
Various factors are taken into consideration in deciding the Cibil score. To mention a few loan repayment history, credit card payment history, credit enquires if any. Furthermore, it is essential that we have a clear understanding of how you can reward yourself by having a good CIBIL score.
Good Credit Score: Benefits
- Faster loan sanctioning
- Can negotiate for a good loan amount
- Can bargain for lower interest rates
- Chances of processing fee waiver
Now you must be looking forward to knowing how CIBIL Score is computed? Most importantly, what may affect your credit score; right? Let’s consider the factors that impinge your score.
Things that affect credit score:
- Missing any EMI
- Having more of Unsecured credit
- Extensive utilization of Credit card
- Applying for various loans in one go
Therefore, this makes us to realize the value of Cibil rating and its importance in getting any further loans. Now, at times your loan application gets rejected because of bad credit. Wondering what exactly bad credit is? Besides, how to deal with it?
What is Bad Credit?
The bad credit is the concept, which means if the credit history of an individual is not impressive or he had defaulted loans in the past or he has guaranteed someone else and the person has not made the payments it will be considered as bad credit.
Impact of Bad Credit:
Another key point, is understanding its impact. The loans for bad credit customers will be very challenging as none of the financial institutions agree to approve their loan application. Furthermore, a customer with bad credit score has zero chances of getting home loans from a reputed bank or NBFC.
Lenders at times consider loans for bad credit if customer is ready to take few steps:
- Payoff all the debts that are outstanding first
- If the spouse has a good credit score then apply for loan as join property loan
- Defaults of any loans to be settled after arranging with institution and should acquire NOC (No Objection Certificate)
- And keeping a track of Cibil score regularly after repaying the loans
Well, though following these temporarily resolves your problem however, if we look at other side the disadvantages of this are:
- High interest rate because of the customer ‘s history
- The other charges including the processing fee also will be high with no chance of negotiation
Therefore, the customers with bad credit must risk all this to get a loan or other option is to wait for the credit scores to increase by the payment status and then apply for a loan.
Good Credit Score: Tips To Maintain
Avoid handling multiple loans at same time. Most importantly, be careful and disciplined in paying EMIs within the set date. Not to mention; delay or miss in 1 EMI will have adverse effects on getting new loans.
Conclusion
The major difference between good and bad scores is the decision-making factor. A customer with a good score has options and those with bad scores, the decision making will be with the institution. Hence, it is always good to maintain and plan the finances accordingly to have a good credit score. Grab the best deal!
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