How to Revive Your Credit Score Before Applying for a Home Loan?

How to Improve Your Credit Score before Applying For a Home Loan |  Homeonline

Thinking about home loan kaise le? An important step to take for that is to build a good credit score or improve a low score. That is because a lender always checks your credit score to determine your creditworthiness before approving your loan request. A credit score usually ranges from 300 to 900, and a score of 750 or above can get you a home loan at the most competitive interest rate. If your credit score is already poor, here are some ways to revive it before applying for a loan. 

Pay Outstanding Loans and Credit Card Bills 

If you have unpaid loan EMIs or credit card bills, pay them off at the earliest to repair your credit score. Your payment history is considered to calculate your credit score. A history of delayed payments can bring down the score and vice-versa. Set payment alerts or reminders or initiate auto-debits to make sure you repay credit on time. Besides, pay the full credit card balance every time instead of paying just the minimum due amount. This can help you keep the outstanding low. 

Check Your Credit Report 

Since your credit score is calculated using the information in your credit report, the report should be error-free. So, check it regularly to identify any errors. If you find any, ensure to get them rectified right away. This can help revive your credit score to qualify for a competitive interest rate on a home renovation loan or housing loan. 

Avoid Removing Old Accounts from Your Report 

It is not a good idea to remove deactivated/old accounts or those with negative payment history from your credit report. The records get automatically removed after a certain period. Removing old accounts with good repayment history can reduce your score. If you have cleared your debts, keep them to prove your creditworthiness. 

Plan Your Credit  

Wondering, kaise le home loan at a low interest rate? Plan your credit well. If you apply for too many loans and/or credit cards back to back and fail to repay them on time, your credit score would go down significantly. Therefore, evaluate your repayment capacity and financial requirement properly and borrow responsibly. If you already have several unpaid loans, consider debt consolidation to manage the EMIs better. 

Ensure Proper Credit Utilisation 

The amount of available credit versus the part of it used reveals your dependency on credit. So, use up to 30% of the approved limit on your credit card. For multiple cards, ensure that the overall credit utilization is below 30%. 

Reduce the Number of Hard Enquiries 

A hard inquiry of your credit score takes place when a lender checks it before offering you a loan or a credit card. Such inquiries once in a while can’t adversely impact your score but can in a short span. The latter implies to lenders that you need more money due to a financial problem. This can make them skeptical about whether you can repay a loan in time. therefore, limit the number of hard inquiries to keep a healthy score and access a housing loan or a home renovation loan at a good interest rate. 

Follow the above tips to maximise your chance to get a home loan at a good interest rate. Also, consider choosing a reputed lending bank that offers housing loans at industry-best rates. When you save on interest payments, you can better afford the EMIs and pay them off conveniently on time. This can further help you maintain a good credit score and be eligible for the best loans in the future. That is how the cycle goes on.

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