A home loan is the best financial instrument you can
avail to fulfil your dream of owning a house. But with rising NPAs taking its
toll on the financial health of lenders, they are taking extra measures to
ensure that the borrowers are of high quality. And, the CIBIL score is the most
crucial parameters that show the financial health of the borrower.
If you have been struggling with a bad credit score and
still want to get a housing loan,
then you are in the right place. This article gives you a rundown of the things
you can do to apply for a housing loan
despite having a bad credit score and shows you how
to increaseCIBIL score.
The following are the things you should do to get a housing loan when you have a low
credit score.
Convince The
Lender That You Can Repay
The most significant disadvantage of a low CIBIL score is
that it convinces the lender that your credit repayment history is not up to
the mark. Hence, they worry about approving a high-value loan for fear of
losing their money.
If, however, you can prove to the lender that your income
is enough to take care of the EMIs, the lender may approve the loan. However,
the interest rate, in this case, might be slightly higher than the ordinary
rate of interest.
Reduce Your
Loan Amount
When your CIBIL score is weak, the lender assumes that it
would be difficult for you to repay the loan. Hence, they might not want to
sanction the loan. The chances of rejection will further increase if the amount
you apply for is higher than you can afford to repay.
You can avoid this by reducing the loan amount and
proving that your income is sufficient to take care of all your financial
liabilities.
Apply For a
Joint Home Loan
If your credit score is not sufficient to grant you the
loan, then you may apply for a joint home loan. Remember, the co-applicant must have a strong credit
profile.
Generally, lenders want at least one out of the two
applicants to have a credit score above 650. The higher the score is towards
800, the better are the chances of getting a high-value loan approved.
Check Your
Credit Score Once in a While
If you want to know
how you can increase your CIBIL score, then the best thing you should do is to check your
credit report periodically. Sometimes, your CIBIL score might not be updated,
and this can send a wrong signal to the lender.
By checking your credit score occasionally, you can point out any anomaly and request
them to update the records.
Choose The
Right Lender
In India, lenders are incredibly dynamic. While some
lenders do not entertain housing loan requests from people with a credit score
below 700, others, like PNB Housing Finance, provide loans to everyone,
irrespective of their credit score. However, your monthly income has to be above
the threshold set by the lender.
Hence, if the lender you visit is not willing to approve
the housing loan, be a little
courageous and explore other lenders.
Conclusion
When there is a dream, there is a loan. Although credit
score plays a significant role in determining your eligibility, it is not the
only criterion for housing loan
approval.
