The credit score is an important aspect when it comes to loan. Especially if it is a home loan, it plays a major role because the home loan is a loan of long tenure as far as repayment is concerned. A credit score is a 3 digit numeric summary of entire credit behavior of a person. It usually varies from 300 to 900 numeric score. The credit score is dependent on the credit history. You can obtain the same from CIBIL by paying nominal charges and come to know about your credit score before you apply for the home loan. The credit report will be consisting of the information such as a record of credit card bills, late payments, defaults of past credits (if any), loans, credit cards, recent information of the credit card or loan application and many more.
The CIBIL score and credit record are closely related in terms of sanctioning of the loan. If you apply for a loan with a good credit score and an appreciable credit history, you are likely to get that credit easily as lenders can put a faith on such applicants. If the credit records are good, then there are high chances for the loan to get sanctioned. However, if the person does not hold the good credit record there are considerable chances for the loan to get rejected and the same is applicable in terms of home loans as well. Rather, it impacts home loan more because the amount of the loan and duration of the loan tends to be high in such cases.
CIBIL collects all the data related to your financial history and organizes the same to provide to the banks or financial institutions whenever required. CIBIL manages to get all the information from the banks or financial institutes that are registered with it. The information is provided on monthly basis to CIBIL and on the basis of that information; the CIR (credit information report) is prepared along with the credit score for all commercial organizations as well as the individuals. This determines the creditworthiness of the person and that plays a significant role in deciding whether the home loan or any other kind of loan will get approval or not.
The person can check the CIBIL score online on the official website. One can fill the application form that contains basic details such as name, address, date of birth, income, ID Proof, and loans you have taken. Once, the details are filed you will be redirected to the page, where you will have to do the payment of Rs. 470. Once the payment is done successfully, your authentication details will be taken and once gets completed, CIBIL will send your credit score via email within 24 hours.
It is always advisable for the person to improve the credit records and CIBIL score, before applying for the home loan. The person can improve the credit records by paying all the bills and EMIs on time, without causing any kind of delay. Also, the person has to ensure that the payment should be done in the full & complete mode and not on the part-payment mode because the part payments will also be recorded as the overdue in the report that will have an adverse impact on your records. The banks or the lenders never appreciate the late payments. The person should also keep a check on the usage of credit limit as well. It is advisable not to use the entire credit limit. It is essential that the person keeps a check on the utilization of the available credit. The low or nil amount of the outstanding balance can improve your credit score; hence try to maintain the same. It is also needed that the person evaluates all the bank accounts he or she holds, be it single account or joint account, so that one does not miss any payment during the month. The person can keep a track on the credit history and transaction by taking the timely updates. The continuous monitoring will be helpful to identify and remove the errors on an immediate basis. The person must also maintain the balance between the secured & unsecured loans. The combination of the secured & unsecured loan will be helpful to maintain the good credit score. Too many unsecured loans can be risky for the loan holder.