Your credit score is an important factor to consider when applying for a home loan. Home loan lenders can process your home loan with your preferred loan amount and other desirable benefits if you have a great credit score.
It is important to review your credit score on a regular basis in order to fully comprehend your credit rating. Bankers and financial firms use your credit score to assess your creditworthiness. As a consequence, it is a vital factor in deciding your eligibility for a home loan, or any other loan for that matter.
Although there is no set credit score that must be met in order for your home loan application to be approved, lenders do prefer applicants with a high credit score. A credit score of 750 or higher is generally considered good and can help you obtain a home loan with favourable terms.
Credit Score of 750 and Above: This is an ideal score to obtain a home loan. This score is an indication that you have managed your debt prudently and are creditworthy for a home loan. If you have such a score, all you have to do is take steps to maintain this score and ensure that it does not drop any further.
Credit Score between 700 & 750: This is not a bad score per se, but can get you a home loan at moderate lending rates depending on the banks or NBFC. You may end up with a higher rate of interest and a lower loan amount. It is advised to take some steps to improve your credit score before pursuing a home loan.
Credit Score less than 700: Most first time borrowers are found with such a score. For example, an individual may not have any credit history owing to the fact that he doesn’t own a credit card or has not taken any loan till now. These borrowers should take some time to build their credit to a healthy 750, before applying for a home loan. This will ensure that their application is not rejected resulting in a lower credit score.
Points to Note:
You may still get a home loan with a low credit score, but you may end up with less favourable conditions such as smaller loan size, higher interest rates, and other fees.
Another downside to getting a low credit score is that your credit score is impacted every time your application is denied. As a measure, it is advisable to refrain from applying for a home loan until your credit score has improved.
At CreditMantri, we help you find the best home loan offers matched to your credit profile. Use our home loan eligibility calculator for free to start finding the best home loans for you.