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Tips To Improve Your Credit Score For A Home Loan

IndianMoney.com Research Team | Updated On Thursday, January 10,2019, 10:13 AM

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Tips To Improve Your Credit Score For A Home Loan

 

 

Credit score is an important factor which helps you get a home loan sanctioned. If you want to get a home loan sanctioned, you must have a good credit report. It will help you secure the home loan easily.

There are various factors that play an important role in building credit score like credit utilization ratio (CUR), payment history and clearing dues and loans. However, if you have a low credit score, these are some tips to improve your credit score:

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SEE ALSO: Understand Credit Score

Tips To Improve Your Credit Score For A Home Loan

Review your credit report on a regular basis:

There are various credit portals which allow you to check credit score for free. You can check your credit score as often as you want called soft enquiries. This will help you keep track of your credit report and credit score.

By staying informed on your credit score, you can make better decisions. You can take the necessary steps that are needed to improve your credit score. You can also get errors rectified and keep the hard queries at bay by checking your credit report online. Check free credit report and credit score on IndianMoney.com.

Make timely repayments:

Paying your loan EMIs and credit card dues on time, helps create a better track record of repayments that has a positive impact on your credit score. It is not easy to make payments on time each month. So to make this a habit, create a list of payments to be made at the beginning of the month, so that you do not miss out on any payment date. This will help you remember payment dates and clear dues on time. Making an ECS mandate helps pay home loan EMIs on time, as amounts are debited directly from the bank account.

SEE ALSO: How To Improve Credit Score?

Close unused accounts:

Closing credit cards is not an option in case you want to improve credit score. However, closing the unused accounts won’t damage your credit score. Closing an unused bank account or credit card account will save you from incurring the annual fees and will reduce the risk of fraud on these accounts. However, try to keep your oldest credit card accounts operational and active as long as possible, especially if you have made timely repayments.

Create a Plan to Improve Your Credit Score:

To improve your credit score, make sure your credit report is accurate. Carefully evaluate the points that you need to improve on. Make a List of various aspects that you need to work on. Start by working on the short term goals that will immediately help improve credit scores.

Fix Your Late Payments:

Late payments are derogatory for your credit score and can hurt your credit reports badly. If you have missed a payment then, it impacts credit score. Check your credit report thoroughly for any inaccuracies. You can file a dispute with the credit bureau to rectify any errors.

SEE ALSO: Check Credit Score Online

Space out credit applications:

Don’t apply for multiple loans with different banks at the same time. Hard enquires conducted by the banks can severely impact your credit score. Multiple loan applications convince banks you are in financial trouble and could struggle with repayments. If you make too many enquiries for loans at different banks, you are viewed as credit hungry. Banks will not lend money if they view you to be credit hungry.

Fix Your Credit Utilization Ratio:

Credit utilization ratio is a key factor in determining your credit score. Generally, a good credit utilization ratio must be less than 30%. That means you're using less than 30% of the total credit available to you.

Opt for a Secured Credit Card:

Secured credit card is secured against fixed deposit. Secured credit card is offered to an individual who is unable to obtain a normal credit card and has a fixed deposit account with that specific bank. These cards are secured as the bank has the right to liquidate the fixed deposit account to recover dues. Certain private sector banks like Axis Bank, Kotak Mahindra Bank, ICICI Bank, and a few public sector banks namely State Bank of India (SBI), Syndicate Bank, Central bank of India, provide the option to avail secured credit cards against fixed deposit accounts.

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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