If you are trying to get a home loan to support you finance your dream of buying a property, nothing can be more worrisome than a low CIBIL score. Basically, a CIBIL score is a number between 300 to 900 that is based on your credit records. Banks use your credit score to define whether or not you are a reliable person for a loan. A high CIBIL score means that you have paid all your loan instalments on time and have no unpaid dues left. While, a low CIBIL score (usually below 750) tells a bank that you have defaulted on your past payments and hence, might default on future ones as well. If you are seeking to get a loan but are being held back by your low credit score, there are a few methods you can use to speed up the process of buying property in India.
5 effective steps to increase CIBIL score
Clear all your outstanding dues
The first step to raise a CIBIL score is to clear up all your unpaid dues. If you yet have old credit card bills that have been left unpaid, it’s best to finish your payments prior to you apply for a loan. Your CIBIL score can also decline if you haven’t been regularly updated with your loan repayments. If this is true in your matter, make sure you pay the remaining amount and also ensure that no any kind of loans has been left unpaid. It is suggested that to apply for a home loan is to limit the number of credit cards you have. In case, if you have more than two credit cards, it becomes simple to spend more than you perceive and lose track of all pending payments. This can eventually lower your credit score and hurt your chances of getting a loan.
Check Your Credit Report for Errors
Sometimes, even if you have been concerned about all your payments, administrative errors can still occur in a low credit score. You should go through your comprehensive credit report and check for errors if you’re trying to learn how to enhance your credit score. Occasionally, loans that have been repaid or accounts that have been closed can still show up as open on your record. If you find any kind of errors, then you can register an appeal on the CIBIL site. It will take near about 30 days for your request to be looked into and rectified. Once all the corrections have been made, your credit score will quickly reveal an improvement.
Be Regular with Your EMI Payments
Nowadays many people falsely believe that they will not get approval for a home loan if they are already paying prior loans. However, this is not the case. The most critical factor is not whether you are currently paying back loans, but how consistent you are with these payments. If you have been paying your EMIs (Equated Monthly Instalments) on time every month, then your CIBIL score will be good. This shows the bank that you are very likely to be regular with your EMI payments even for your future loans. If you have not been constant with your payments, then clear up any remaining dues and try to be more precise with future monthly payments to rise CIBIL score.
Don’t Exceed Your Credit Card Limit
While not increasing your credit card limit is very essential for a high CIBIL score, it can also be necessary to stay well below the limit. Try not to spend higher than 50 per cent of your total credit card limit every month. If you consistently spend close to your complete credit card limit, it provides banks with the impression that you are a casual spender and might run into debt quickly. Another valuable tip to increase your CIBIL score would be to keep your old credit card accounts open. If you have a well-maintained credit history with a specific account and haven’t made any higher amount of purchases with it, this can significantly improve your CIBIL score.
Don’t Apply for Too Many Loans at the same Time
You might need multiple loans for several purposes, but it isn’t the best concept to apply for a loan for all of them at the same time period. If your lender sees that you have made multiple requests for loans, it might make you seem unreliable and desperate. This is precisely the opposite of the image you want to give your bank. Apart from applying for multiple loans, you should also restrict yourself from applying for multiple cards at the same time. Taking out numerous loans simultaneously can make it simpler for you to lose track of payments and exceed your budget. Try to broaden your loan applications over a period of a few months to help improve your CIBIL score.
A low CIBIL score is far from permanent. In most of the cases, just 4-12 months of careful repayments and clearing outstanding dues can dramatically improve your CIBIL score. Now that you know how to raise your CIBIL score, you can definitely find your dream home and buy it.