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Applying for a home loan without proper research can lead to rejection of your application and may negatievly impact your credit score as well.
1) Keep your credit report clean: The first thing a lender looks at before start evaluation of your application is your credit report. Therefore, it is better to make all the payments for all the dues that you have and start improving your credit score.
2) Pay off existing debts: Pay off any kind of existing debts that you might have as multiple loans may impact your loan eligibility.
3) Stability of office and residence: Lenders verify your job and stability to avoid any risks of fraud or desertions during the repayment period.
4) Banking habits: Most lenders also seek your bank account statements to see how your previous repayment record have been, before approving a loan.
" Therefore, banks are basically traders of money. Banks look to lend money only to those who they feel have the capacity and have demonstrated the habit of repaying on time. Therefore, your credit score which is based on your previous credit record is an indicator of your repayment habit. Whether you are applying for a secured or an unsecured loan, this factor can never really be ignored. And yes, it will be extremely tough to get unsecured loans for some years (credit cards, personal loans etc.) if there is a history of poor repayment behaviour.
Your credit score can be ignored to some extent in case of a secured loan where banks get some mortgage as security for the loan. This deviation will vary on a case to case to basis. If the discrepancy in you report was small, such as a small delay in payment, then the major ""A"" class bank or non-banking financial companies might consider your case. But if the discrepancy is big and payments for earlier loans were defaulted for a long time, or later settled intentionally, then chances of getting loans from a good bank will diminish rapidly. But, there may still be some banks and non-banking financial companies which may consider your case favourably. Chances becomes thinner if you have still not repaid them and repayments to your previous banks still show as pending and overdue in your CIBIL™ report. In such cases it gets almost impossible to get new loans.
Home loan is a huge credit responsibility which of course demands a higher discipline for repayment till the completion of the entire tenure. Banks too take precautions before giving out big-ticket loans. Hence the borrowers will have to pass through the eligibility check to secure the home loan of their choice.
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