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01 September 2011

With Low Credit Score How can I get my Home Loan Approved?

One of the important criteria for approval of any loan would be your credit score. cibil is an organisation consisting of financial institutions that keep a record of financial dealings of credit card users. The trans union score is an important figure and will help you get your loan approved.
Usually the ratings are considered with figure of 900. These institutions keep a watch on your monthly credit card use, spending habits and repaying procedures. If all your payments are on time and you also keep your credit within limits then you have better chances of lending institutions approving or sanctioning your loan. Your credit score has to be on the higher side that is near the 900 level. The higher credit score is one of the factors that the lenders consider for approval of home loans. Even a small delay in payment or overuse of the card over limit will come up with cibil and the report will have the entry of default. Why am I discussing these points and how does this entry affect any borrower.
Well, many top financial lending institutions are registered with cibil. Your score of default will be notified on your record and this is universally known to all lenders. This score will give a critical alert to any lender and they will think before approving your loan. Since this figure or credit score will directly lead to your repayment capacity and spending habits this will bring up a question of your repayment capacity among the lenders. Is this so important?  past approvals of home loans  in the years from 2006 till date 2011 show figures that indicate that home loans that have been approved for borrowers who have a score higher than 700 and above as their credit score. The trend is moving towards offering loans for individuals having a score of 800 and above now.
For getting your loan approved maintain strict financial discipline. Clear off your past loans and keep a check on expenses. Monthly incoming has to increase, and if not then try to show as much savings as possible. If you are marked negatively by cibil then you will have to wait for few years and build up your credit ratings. One way would be to have a conversation with the credit institutions if your credit expense off limit has happened only once. See that you repay your payments immediately and request them not to have this on record. Club investments and assets to increase your financial standing, and of course start saving as much as possible to increase your chances of loan approval.

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