When you apply for a home loan, there are many factors that go into determining the rate of interest that you will be offered, how much loan amount you can avail, and even if your loan will be approved or not. While your income, age, employment history, etc., all have an important role to play in this, equally important is your credit history or credit score.
The higher your credit score, the more likely you are to get approved for your home finance and also get favorable home loan interest rate. The lower your credit score, the more difficult things may be for you. So, it is always a good idea to keep an eye on your credit score and make sure that it is in the higher levels, especially before you go to apply for a home loan.
Knowing the factors that affect your credit score will help you get your credit score under control, if it is not already, or help you improve it easily. So here are the top 6 factors that affect your credit score that you need to be aware of:
It goes without saying that the best way to get this factor under control is to make all your payments on time. Make sure that your loan EMIs and credit card bill payments are automated or have standing instructions to debit directly from your account before the due date. This way, you won’t miss any payments or forget to pay your bills before the due date.
The best thing to do to avoid this is to stop indiscriminately applying to all the banks or NBFCs but to carefully research, compare, and shortlist a few to apply to. This way your chances of rejection too will be lesser.
Secured loans are those that require a collateral, such as vehicle loans and home loans. Unsecured loans are those that do not require collateral, such as personal loans and credit cards. The best thing to do is to pay off your unsecured loans so that you have a higher credit score.
Take these factors into consideration, work on them, and you will surely be climbing your way to a high credit score in no time at all!