Being successful in getting a home loan, these days, is dependent on more than one element. Apart from your income and capacity to repay your credit report and credit score are also very important factors which establish your eligibility for a home loan approval and also the rate of interest at which the loan would be approved by the bank. In this post about home loan in Delhi I shall talk about the significance of credit score.
The credit score actually summarises your behaviour as a borrower whereas credit report shows all the aspects of your credit behaviour.
Currently there are four credit bureaus in our country which offer credit reports and give you a credit score. These are: Equifax, Experian, Crif High Mark and CIBIL. They gather only credit information (details on home loans, automobile loans, personal loans, etc.) and information on credit facilities like the overdraft and credit cards. Their reports do not consider other details linked to customers’ savings accounts, FDs or any other investments which compose the liability portfolios of financial institutions.
We shall discuss the CIBIL TransUnion score- a widely accepted score. CIBIL is India’s premier Credit Information Company and works in association with the TransUnion International Inc. and Dun and Bradstreet. The company keeps a record of the credit related details of each person as submitted by registered institutions. A score released by CIBIL indicates a person’s individual credit value. CIBIL TransUnion Score is in the range of -1 or NH to 0 or NA and 300 – 900. Score above 750 is treated as favourable according to banks. In fact, the nearer the score is to 900, the best it is.
In India an individual’s loans are approved on the basis of his CIBIL score and bank’s credit policy. An applicant gets a score of NH or -1 when he does not have a credit track record at all and a score of NA or 0 when his credit track record is less than 6 months. As per CIBIL, a credit score of NA or NH is not a matter of concern. This may mean:
- One does not have a credit history at all or enough of a credit history to be scored, i.e. the applicant is new to the credit system.
- One does not have any credit activity in the last couple of years.
- One has just add-on credit card(s) and no direct credit exposure in his/her own name.
There are also a few common mistakes that can adversely affect your score:
- Default in EMI payment
- More unsecured credit in the form of credit card or personal loans, than secured credit like home loan or car loan
- High utilization of credit card limit
- Rising outstanding credit amount
- Applying for multiple loans at once
Maintaining a good credit score will help you secure any loan with quite an ease, that too at a lower rate of interest and maybe with processing charges getting waived too. Get your CIBIL score checked before applying and make necessary amends quickly. Hope you will be more prepared with this information when you apply for home loan in Delhi NCR.