When it comes to getting a home loan from the market, your credit score is crucial. Based on the three-digit financial credit score, individuals are able to get a home loan from the loan provider. Having a low credit score does not mean you can not improve it. Whenever you plan for a housing loan, it is very essential that you improve your credit score with time. When you get a high credit score of at least 750, it becomes very easy for you to get an affordable rate of interest on your existing housing loan. Therefore, with the right credit activities, you always need a healthy credit score, which is anything above 750. The loan providers always offer the best rates of interest to individuals that are able to meet the free credit score requirement in order to get the best housing loan on the market. Let us see how you can always get a healthy credit score with proper CIBIL score calculation and the right credit activities.
Make your payments on time
Paying on time is a critical factor that accounts for 25% of your overall credit score. You need to make your payment on time by the due date that is offered by the financial institution. Whether it is your credit card bill or any loan repayment, you need to make the payment by the due date. If you do not pay your bills on time, you damage your credit score and make them more expensive.
The best way to make your payments on time without any delays or missed payments is by automating or setting reminders for the payment. When you automate the payment option, it becomes very easy for you to make the payments on time and have a clean track record. This helps you to get a good credit score, which makes you eligible for an affordable housing loan interest rate, which eventually makes it affordable for you to manage the repayment within the right tenure.
Keep your credit accounts open
The longer the credit date, the better improvement you will see in your credit score with time. Therefore, if you have had a credit card that you have used for a long time, maintaining a clean track record, consider opening it for the improvement of your credit score. This is simply because when a credit account has a long credit history with recorded timely payments, it improves the credit score. There is no point in keeping credit accounts open that are very new and have less than six months of credit history.
Keep any outstanding or pending funds
Pay all of your bills in full. You are not permitted to keep any pending or overdue amount on any type of credit account bill. It is important that you only spend and get the bills that you are capable of repaying at the right time. If you end up keeping an outstanding or pending amount on your credit card bills or loan repayment, it will damage your credit score and will not allow you to get an affordable rate of interest. In such a scenario, your housing loan will become very expensive with a high rate of interest, which gets added to the principal loan value, and you will need to pay a high monthly instalment amount. Know What are business loan interest rates right now?
Do not keep applying for multiple loans
Do not keep applying for multiple loans. If you have faced rejection, start working on the loopholes other than applying for multiple loans. When you apply for multiple nodes, it becomes difficult because the hard enquiries run on your credit profile damage your credit score. It is easy to apply, but the damage caused to your credit score will take a long time to repair. Unless it is urgent, one should not keep applying for multiple loans within a short span of time. If you have got a rejection other than simply applying for multiple loans, it is important that you work on the loopholes.
Keep your credit utilisation ratio low
It is very important that you work on your credit utilisation ratio and keep it below 30%. This ratio actually means the total credit limit given to you by the loan provider and the credit limit that has been exhausted by you. Therefore, if you exceed your credit limit, it does not speak well of your financial stability and credit health. Therefore, your chances of getting an affordable rate of interest on your housing loan will be minimal. Always work on getting your credit utilisation ratio below 30% by keeping your utilisation low or paying extra bills so that you get back to your credit limit.
Whenever you decide to get a home loan, make sure you meet the home loan eligibility based on the CIBIL score calculation. Eventually, the home loan interest rate will be minimal if you have a good free credit score and it will become very affordable to repay the loan at the right time.