Why to Check your Credit Score Before Availing for a Home Loan? - Home Loan Stories

07 JUNE, 2021

Credit score or CIBIL score is an essential parameter that determines your home loan eligibility. The higher the credit score, the better are your chances of home loan approval. Moreover, with a good credit score, you are in a better position to negotiate the interest rate and other charges levied by the lender. Apart from these, there are other benefits of checking your credit score before availing a home loan. Read on to learn more.

Reflects Your Financial Health

A credit score ranges from 300 to 900, with 300 being the lower and 900 being the higher. The score is a representation of your credit worthiness, calculated based on the data provided to the credit bureaus by banks and financial institutions. Checking the credit score before applying for a home loan will give you a fair idea about your financial standing. A credit score of 750 or above is considered a decent score and will make you a low-risk home loan applicant. In case of a low credit score, you must take corrective measures to improve it before applying for a home loan.

Ensures Accurate Credit Information

Any errors in the credit report can affect your credit score and consequently hamper your loan eligibility in the future. This is true for any loan and not just a home loan. Therefore, if you spot any errors in your credit report, ensure to raise a dispute with the credit bureau. You can also ask your lender to provide the correct details to the credit bureau. All of this will be possible only if you pull your credit report before applying for a home loan.

Reduces Chances of Home Loan Rejection

Rejection of a home loan application can also affect your credit score, making it difficult for you to avail loans in the future. Therefore, it becomes essential that you get your credit report beforehand and apply for a home loan only if you have a good credit score. Your home loan application is most likely to be approved if you have a good credit score and it satisfies all the other eligibility parameters such as age, income, work experience, etc.

You can generate credit report online through the official CIBIL website www.cibil.com. All you have to do is enter personal details such as name, PAN number, date of birth, gender, etc., and complete the personal verification process. Make the payment to access your credit report. Your credit report will be available online as well as a physical copy of it will be sent to your residential address. Typically, you can fetch one CIBIL report for free every year.

So, if you wish to avail a home loan for purchasing your dream property in the near future, do not forget to check your credit score before applying for a home loan. All banks and financial institutions usually check the applicants’ credit score while processing their loan applications. Hence, a good credit score can help you avail a home loan in a smooth and hassle-free way.

Disclaimer: This Article is for information purpose only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. Bank make no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Newsletter. The information contained in this Article is sourced from empaneled external experts for the benefit of the customers and it does not constitute legal advice from Kotak. Kotak, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein.

Why You Must Check Your Credit Score Before Availing a Home Loan?

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