How to Improve Your Credit Score for a Home Loan During Pandemic
How to Improve Your Credit Score for a Home Loan During Pandemic The unforeseen pandemic and the resultant lockdown have clearly disrupted the financial stability of millions across the globe. It led to a large number of business closures, income losses and salary cuts, etc. Realizing the hardships of the individuals, banks across the country announced a reduction in the interest rate on home loans. It has proved to be a welcome move for prospective buyers in these highly uncertain times where everyone seeks the comfort of his own home. The perspective of home buyers has changed significantly ever since the pandemic reared its ugly head. There is now an increased demand for spacious and elegantly designed abodes that have in store all the most sought-after modern-day amenities. With the threat still looming large, people still continue to spend more time in the confines of their own homes. However, it is necessary to gauge your financial health before you set off on the ambitious path towards the dream abode. Hence it is of absolute importance to keep a constant track of your credit score. Your eligibility for a home loan is decided based on the total credit score. Credit Score Ranging between 300 and 850, Credit Score is a number that depicts the creditworthiness of a customer. More the score, the better the borrower's profile would seem to potential lenders. It is used by lenders to evaluate the timely loan repayment capacity of an individual. It is ascertained by taking into account numerous factors such as total levels of debt, repayment history, number of open accounts and others. Following are the few ways by which you can improve your credit score Apply for a joint loan You can overcome the risks associated with the loaning process by adding a trustworthy co-applicant who has an equal responsibility to pay off the EMI. In addition to enhancing the loan eligibility, it can also boost your chances of approval. You can also avail of a loan for a higher amount if required. Longer tenure = less EMI You can effectively reduce the burden posed by monthly EMI by opting for a longer tenure. It will also help you increase the chances of availing a home loan. The mounting interest rate can be regulated by making part prepayment. This option is offered by most banks that offer home loans. Be financially disciplined Improve the credit score by adopting a financially disciplined approach. Make an effort to settle all the outstanding dues on time. Keep track of the score consistently to ensure that it is completely under control. Bring down the FOIR Fixed obligation to income ratio (FOIR) refers to the portion of income set apart for repayment of mandatory debts like loan EMIs, insurance premiums, and other instalments. It reduces the credit risk, enhances overall loan eligibility, and boosts loan approval chances. Invest in a reputed brand It is relatively easier to secure home loans if the concerned brand is a hugely popular one. Banks prefer established real estate developers owing to their trustworthiness. Timely delivery and financial security are mostly ensured in such cases. Conclusion It takes a lot of time to build a healthy credit score. Adhering to the aforementioned steps will go a long way in improving your overall credit profile. The combination of time and a pattern of on-time payments are the best tools to better your score.