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Ashoka Patkar made post

How can I improve my home loan eligibility?

Answer
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Samita Patil answered.
2 years ago


Most individuals in India need to take a home loan to fulfil their dream of buying a house. With the multiple lenders available in the market, one thinks, assumes rather, that getting a loan will be super easy. Unfortunately, more often than not, it is not true.

The reasons for this may be many but the most common one is that of poor credit history and bad credit score.

However, there are a few ways by which you can improve your credit score and hence, eligibility for a home loan. Some of them are:

1. Make regular prepayments–

This is your way of showing a lender that you pay your dues on time. Regular prepayments can improve your credit score and a lender will develop confidence in you. You should be aware that your repayment capacity is determined on the basis of both your past financial records as well as your current actions.

2. Paying outstanding dues –

As a rule, outstanding bills should be treated with utmost urgency and cleared almost immediately. Unpaid dues, payments made after due dates, etc reduces you CIBIL score, which is your credit score. If possible, pay all your outstanding balances, including your credit card bills. Avoid minimum amount payment as much as possible as this shows that you cannot repay the amount you have used up in the stated time and hence, works against you.

3. Co-applicant basis –

If you have a poor credit history, you could consider having a co-applicant who has a good credit score. What you can do then is apply for a joint home loan. The lender will then segregate the risk among both the applicants and resultantly, the probability of your eligibility for home loan approval will increase.

4. Cross check your transactions –

To err is human, and it is us humans who make mistakes even in financial transactions either by way of data entry or faulty calculation. If you track any mistake committed by your lender in any transaction, the onus of having it corrected falls on you and it is crucial that you get it corrected immediately. You’d be happy to know that financial institutions have to act on financial discrepancies within one month of the filing of the complaint. As a result of the error resolution, your credit score, too, could improve simultaneously. Hence, it is advisable to sort out any discrepancy or old issue before going for any new credit.

5. Preserve good financial records-

Most of us, usually, close our previous credit cards, if we’re not using it. But this is not advisable as that credit card could have recorded your good credit history. If you paid that credit card’s dues on time then it would have a good CIBIL score and work in your favour. So, don’t close a credit card if you have been disciplined in your usage and payment towards it, for a card with no default can work wonders when it comes to taking a loan.