A credit score is a 3 digit score between 300 and 900 that indicates the creditworthiness of an individual. The credit score is generated by the 4 credit bureaus - Experian, Equifax, Transunion CIBIL ™, and CRIF Highmark. They calculate the credit score based on your repayment history, the total level of debt, the number of open accounts, and other factors. A credit score is used by lenders to assess the probability of whether you are capable of repaying your loan in a timely manner. Now, let us read on to find out what is the importance of a credit score while applying for a home loan.
What Is a Home Loan?
A home loan is a loan procured to purchase a property by offering it as collateral. Home loans come at affordable interest rates, flexible loan tenures, and high loan amounts. The loan can be repaid in EMIs. As soon as the home loan is repaid in EMIs, the property title is transferred to the individual’s name.
What is the Importance Of A Credit Score while taking a Home Loan?
Here is the importance of a credit score while applying for a home loan:
- It helps the lender understand your credit behavior
- It helps the lender understand if you have the capability to repay your loan
- It helps lenders understand if you have any other ongoing loans
How To Improve Your Credit Score?
- Avoid outstanding dues
- Do not overuse your credit limit
- Pay your EMIs and credit card bills before the due date.
Also Read: What is a good CIBIL™ Score for Home Loan?