Improve Your Credit Score for a Home Loan

Improve Your Credit Score for a Home Loan

The pandemic has brought many adversities to various industries all over the world. The impact of the crisis has forced the shut-down of few ones and many others have reformed their norms for survival. The builders in Kerala have brought-in a number of favourable changes in their policies that are benefiting the clients.  Affordable housing solutions have been introduced which has attracted many buyers also because the banks have reduced the interest rates on home loans and relaxations are provided in loan repayments. Flats in Kochi, are still seeing a rise in investors because the pandemic has changed the perspective of the public and they are now looking forward to investing in flats because they consider owning a house is favourable for their financial stability.

In order to avail for a home loan, it is necessary that you have a reasonably good credit score. The person’s ability to repay the loan that he is seeking for is his creditworthiness and when it is measured in numbers, indicates his credit score. The score ranges between 300 and 900. Your credit bill repayment history accounts for the calculation of your credit score. As you apply for a home loan, the financial institution or the bank assesses your credit score before sanctioning your loan. A score of 700 and above is considered good enough.


Here Are Some Tips On How You Can Improve Your Credit Score


Pay Your Bills on Time

Make sure not to delay the payments of your outstanding credit payments. Ensure to pay your credit card bills and EMI appropriately as per the schedule. Lessen your savings if your outstanding are more, because pending payments adversely affect your credit score.


Keep Your Credit Cards Active

By meaning to keep your credit cards active it indicates that to keep all your credit cards active, even if you aren’t using all of them. Credit scores also depend upon the duration you have kept your credit cards. Hence, do not cancel or close those additional credit cards you have. Instead, keep them active, by using them to pay certain small payments like an electricity bill.


Keep a Track of Your Credit Report

Make sure to keep a regular track on your credit report, especially if you have an intention to avail for a loan. A free copy of your credit report is available from any of the credit bureaus upon request. It would be beneficial for you if you keep a track on your credit report at least once a year, which helps you to plan appropriate action to improve it if required. A credit score between 740-799 is considered very good and one above 800 is considered excellent.


Reduce Your Fixed Obligations

A parameter used by banks to determine a person’s loan eligibility is FOIR or Fixed Obligations to Income Ratio. FOIR indicates the amount of monthly income which is used to repay your regular EMIs and other instalments. A decreased FOIR improves your credit score and the chances of getting a loan are higher. Hence, repaying your existing debts is the best way to increase your credit score, because a higher credit score allows you to seek a loan at lower interest rates and will make you eligible for many other repayment benefits.


To Conclude

There are numerous builders in Kerala, but be careful and wise enough in choosing only a trustworthy one. With innumerable financial options, people are much inclined in purchasing a Flat in Kochi as it provides them a sense of financial stability. As you seek a home loan, always make sure to have an improved credit score which enables your processes to be simplified and quicker.