Buying a home in India is a dream almost everyone loves to bring into reality. Owning a home brings a sense of stability in one’s life. But it requires you to be strong on the financial front. A home loan ensures you fulfill your financial requirements to buy a home in Lucknow or anywhere in India.
With banks advertising 24*7 for a home loan, getting one is not simple. One essential factor affecting your home loan eligibility is your credit score (CIBIL). This credit score decides your creditworthiness based on which banks intend to provide you with long-term credit. Given the financial fragility in today’s day and age, it’s not possible for everyone to manage a flawless credit score.
So, how to get a home loan when your credit score is low? This question vexes many people. Well, here in this blog, we will discuss how you can get a home loan approval even with a low credit score. Let’s check it out.
Tips to get a home loan with a low CIBIL score
Take steps to improve your credit score gradually
Banks often neglect a home loan request from an applicant whose credit score is below their guidelines. So, it’s vital to take a few steps to improve it. Make sure to clear all your outstanding dues, regularise your EMIs, and fix errors in your CIBIL.
Do not apply for a loan from many banks or financial institutions at a time
Applying a home loan from many banks at the same time can lead to rejection. Every time an applicant applies for a loan, the bank runs a credit check. Multiple applications means multiple credit checks and inquiries, which may not work in your favour. Also, after loan rejection, you may have to wait for a few months before making a fresh application again.
Add a co-applicant for home loan
If you credit score isn’t flawless, you can add a co-applicant or family member whose credit score is good. Ensure, the co-applicant has a good relationship with the same bank as it will expedite your approval process.
Make a hefty down payment
Since your credit score is low, you can make a higher down payment to show that you’re financially sound. This will instill a sense of confidence in the banking institute to approve your home loan application.
Here’s how a credit score work
A credit score is calculated considering the following factors.
Repayment history:
The bank checks your credit history. if it showcases any default on your bills, it means your credit score is low.
Credit duration:
A longer credit repayment may negatively affect your score. So keep the duration as minimum as possible.
Credit utilisation ratio:
Credit score depends on how much utilisation you do. For example, if you utilise the 70% amount on your credit, it results in a low credit score. But if you contain it within 40%, it significantly improves your score.
Conclusion
Getting a home loan sanctioned with a low credit score may seem impossible, but it’s doable. You can improve your credit score by making a timely repayment and keeping your expenses controlled. By following earlier tips, you can get a home loan even with a low credit score.
