How to Improve Credit Score before Applying for a Home Loan - Home Loan Stories

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How to improve your credit score for a home loan 1440 x 400

13 AUGUST, 2019

Your credit score is a three-digit number that describes your likelihood to repay incurred debts. When you apply for any loan, financial organisations consider your credit score as one of the main criteria to approve the loan. Typically, individuals with credit score above 700 find it easy to get a home loan;
Understanding the process of getting a home loan is crucial in order to get your application sanctioned. There are three key factors that influence the entire loan approval process

Stable financial status
Ability to do down-payment
Good credit history

Before applying for a home loan, it is crucial for applicants to prepare their credit history for the process. So, if you want your home loan to be approved quickly, take a look at your credit reports as well and strive to increase your credit score. Read on to understand what you can do to improve your credit score.

Delinquent account
A delinquent account is that account (ex: Credit card, personal loan, car loan etc) of an individual on which they have failed to make payments before the due date. If you have any such pending payments, pay it right away, to prevent it negatively affecting your chances of getting an approval for your home loan application.

Timely payments
When home loan lenders find you punctual in your payments, the chances of getting approval on home loan application increases. Moreover, financial institutes offer competitive interest rates to individuals who are punctual about paying bills.

Debt-to-income ratio
Lower loan-to-income ratio always works in your favour, as it reflects your ability to repay the loan. Thus, try to keep it as low as possible.

New debts
Your credit score does get affected when you obtain any type of loan, say a personal loan. Thus, finance experts advise that individuals who are in the process of getting a home loan should not apply for any other types of loans. Moreover, applying for any kind of loan at the same time, makes the home loan lenders wary about an individual’s financial stability. As a result, chances of getting home loan might get affected.

You can calculate your eligibility with the help of a home loan eligibility calculator to better understand how to manage your budget. By implementing and taking the above points into consideration, you can

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Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

How to Improve your Credit Score for a Home Loan

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