Having a good CIBIL score is important when applying for a home loan. Even though it is not necessary to maintain it as high as needed for unsecured credit types like personal loans, one should keep it at least beyond 650.
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If potential borrowers check their credit score and observe that their score is too low, that is below 500, they can take some steps to improve it. Here are some ways to improve CIBIL score that borrowers can use to get the necessary score for housing loan approval.
5 practical tips to improve CIBIL score
Below are 5 effective tips that can promptly improve CIBIL scores of borrowers:
- Repaying all existing debts: It would be best for borrowers to pay off all the existing credits at once before applying for a new one. This frees them from their present liabilities. This way they can manage their new credit efficiently and also not feel a financial burden when repaying it.
- Limiting credit card utilisation: Utilisation of credit cards whenever making an expense projects borrowers as a poor financial planner. Also, it can lead to exceeding the credit limit every month which can notably reduce credit scores. To prevent this, borrowers can plan their expenses or even increase their credit limit.
- Reporting mistakes in a credit report: Mistakes in the credit report are quite common and can be observed in various data. This data is mainly the name, address, contact details and account details. So, it would be better to report them as soon as an individual identifies these mistakes.
- Opting for a healthy credit mix: Individuals should maintain a healthy balance between secured and unsecured loans if they often opt for credit. Doing so reflects that the borrower can manage and repay both types of loans easily. Thus, officers assign them with a high CIBIL score.
- Paying monthly instalments on time: This is one of the primary factors that borrowers need to consider when repaying their credit. If they often tend to forget, they can go for automating the EMI payments or setting reminders. This makes them good financial planners and earns them a high credit score.
Once an individual improves CIBIL score, they can apply for a housing loan. However, before that one must check the eligibility criteria.
Eligibility criteria for a housing loan approval
Applicants should fulfil the following criteria to stand eligible for a housing loan:
- One must be a citizen of India
- Salaried individuals:
- Should have a minimum of 3 years of work experience in a public or private company or an MNC.
- The age should be between 23 years and 75 years
- Self-employed individuals:
- Must have at least 5 years of business vintage in the present venture.
- Must be aged between 25 years and 70 years
In addition to these, it is essential for applicants to maintain a 650 or higher CIBIL score for home loan, to get approval for their housing loan applications.
There can be some variations of these eligibility criteria among lenders. So, it becomes mandatory to go through these criteria before beginning the application process. In addition to this, applicants should also keep the necessary documents ready to ensure a hassle-free application process.
Documents required when applying for a home loan
Individuals should keep the important documents ready when applying for a housing loan:
- KYC documents like Aadhaar card, PAN card, voter ID card, and driving licence.
- Property papers such as title deeds, tax receipts, allotment letters, and more.
- Salary slips of the last three months for salaried people
- Educational certificates, proof of business and profit and loss statements for self-employed people.
- Bank account statement for the last three months and ITRs.
Borrowers should note that lenders can ask for additional documents during housing loan applications. Once a person arranges all the important documents, they can proceed with the home loan application.
Steps to apply for a home loan
One can follow the steps below to successfully apply for a home loan:
Step 1: Visit the official website of a financial institution and move to the home loan page.
Step 2: Click on the “Apply Now” button and fill out the application form.
Step 3: Upload the necessary documents in the appropriate format.
Step 4: Review the application form and click on the “Submit” button.
Once done, a representative from the financial institution will connect with them to guide them through the next steps. There are several benefits that one can get when apply for housing loan.
Advantages of opting for a home loan
Following are some of the notable benefits of applying for a housing loan:
- Easy repayment tenor: Borrowers have the flexibility to select a repayment tenor of up to 40 years to pay off their credit. Thus, they can select easy EMIs so that they do not have to face financial burdens every month.
- Sumptuous loan amount: One can get a sizable loan of up to Rs.5 crore or more as per their eligibility. This allows them to build their dream home without having to face any financial constraints.
- Quick credit approval: Applicants can expect approval for their credit application within 48 hours. However, they must make sure that all the information on the application form and the documents uploaded are accurate and authentic.
- Top-up facility available: There can be sudden requirements for additional funds during the construction of a house. In such situations, instead of going for another credit, one can top up their existing home loan.
- Competitive interest rates: The interest rates for housing loans start from 8.60%. However, one can also go for negotiating with their lenders to make their home loan affordable.
- Customised repayment: In case a person is purchasing an under-construction property, it can appear meaningless and burdensome for them to pay EMIs. In such situations, they can go for customised repayment options.
- Balance transfer available: This is one such feature of home loans that allow borrowers to access lower interest rates on their remaining credit amount. Furthermore, they can also receive several other benefits by selecting this option.
There are several top-rated lenders that provide various pre-approved offers on products such as a home loan and loan against property. Existing customers can avail these offers to hasten their credit approval process. To check their offers, one can visit the official website of the financial institution and enter their personal and contact details.
Knowing about various ways to improve CIBIL score can help potential borrowers to give the necessary boost to it when planning for a home loan. However, they should note that it will require ample time and financial discipline to increase the score if it is too low.