With a good credit score, you could always improve your chances of obtaining a home loan to buy the house you have dreamt of. A credit score is a value that is determined after checking the individual’s credit file and helps know whether a person is creditworthy. If the credit score does not meet the prescribed limit, then the bank might quickly deny your loan. Thus it is important to improve your credit score before applying for any home loan. However, every bank and housing finance company has its own limit on these scores. Generally, if your CIBIL score is above 700, then it is considered eligible by many banks. If your credit score is above the given figure, your chances of buying luxury apartments in Chennai might increase. Credit scores are adversely affected by the huge balance on the credit card, and this amount would always have a positive effect on the chances of you acquiring a home loan. There are ways in which you could improve your credit score. Let’s have a look:
Repay Credit Card Dues on Time
Having no outstanding credit bills improves your credit score. Getting into the habit of paying only the basic amount dues as it happens on the credit card statement might help with escaping late payment charges. The minimum amount due is just five per cent of the billing amount on the cycle. This leads to a mountain of debt with tax and interest being added. Paying the dues on time would help in buying flats in Chennai and improve your credit score in the long run.
Limit Credit Utilisation
To avoid damage to your credit score, spend less than 30 per cent of your credit card limit. Whereas not using your credit card at all would affect your credit score adversely. Thus, always try to pay your credit card dues in advance. Also, you could opt for a high credit limit as this would help increase your credit score. Try to limit your loan applications because too many loans affect your credit score. But if you want a loan to purchase an apartment in Adyar, then do it when you have a good credit score.
Too Many Credit Cards
Think before you apply for credit cards. While credit cards are important when you apply for loans, too many credit cards and making a high-value purchase might prove to be counterproductive. When applying for a credit card, it is important to check your credit eligibility. There should be a reasonable gap between the applications made to repay it. It is because when you spend excessive amounts on credit cards, then your credit score is adversely affected.
Check on Credit Report
Keep a check on your credit report to avoid errors and inconsistencies. A borrower is bound to have one free credit report a year. The process of monitoring credit history is simplified with the online marketplace. If there are any errors in your credit report, then they could be reported and rectified. A good credit report would make it easy to get luxury apartments in Chennai.
Increase the Credit Limits
When you increase your credit limit, then you lower your credit utilisation ratio and boost your credit score. Over utilising the credit limit would categorise you as a high-risk borrower. When you are utilising your full credit limit, the credit utilisation ratio increases, increasing the risk of default. Thus, it is advisable to increase your credit limit before any additional spending to manage your credit wisely and keep the credit utilisation low.
Go for Different Types of Credit
It is useful to get credit because a person who does not have any form of credit would always have a low CIBIL score, which makes it difficult to obtain the loans. Thus, include different types of credit in your portfolio as it could be a mix of personal and secured loans.
Old Debt is shown in Report
The credit score reflects the past credit behaviour and on which the lender approves the loan application. When a debt is paid within the given time frame, it increases your creditworthiness, which has a positive impact on your credit score. Thus, keep the records of the good old loan in your credit report for your credit score. Also, the other way to improve your credit score is to keep your good account active.
Never Give Hint of Risk
To buy luxury apartments in Chennai, you should have a good credit score as it could help you with the home loan process. Also, the credit score models are designed to pick up on the early signs of risk and stress in borrowers’ profiles. Thus, if you miss a credit card payment or pay less than the amount due, then it would start showing in your credit profile. This gives a hint of risk.
Be Patient and Persistent
Overnight you won’t see an improvement in the credit score. It requires consistent effort to improve the credit report. Therefore keep monitoring your credit lines and spending patterns and make sure to timely pay your debt. With the help of planning and discipline, you could easily increase the CIBIL score. With time this would improve your credit score and creditworthiness.
To Conclude,
In recent times, banks and other financial institutions solely rely on your credit score to determine if you are eligible for a home loan or not. Thus it is important to maintain a high credit score. Pay your bills and EMI on time to improve your credit score as it is a major factor in finding out your creditworthiness.
