CIBIL score is considered as the yardstick for approving bank loans. An individual with a low credit score or CIBIL score would find it difficult to obtain a home loan. It directly implies the credibility of the applicant. The 3-digit value ranging from 300 to 900 will reflect the financial habits of a person. It should be above 750 to get a home loan or any other loan without much difficulty.
Even so, one can get a home loan with a bad credit score as well. A reality many are not aware of is that banks want more applicants for loans nowadays. The sluggish performance in the market, due to the pandemic situation, is affecting the financial health of banks and other financial entities. They can survive only if they lend out money, rather than keeping it as liquidity.
Tips to Get Home Loan Even with Bad Credit Score
It is better to keep the credit score positive than searching for methods to circumvent the issue when it goes down. Keeping debts under control, paying EMIs properly, maintaining a healthy credit card repayment process, and obtaining periodic reports from banks to confirm that all repayments are reflected properly, are good practices to maintain a CIBIL score above 750.
- Apply for Joint Home Loan
If one of the spouses has a low credit score and the other one has a good score, a joint home loan application would be an advisable option. The banks would evaluate both the applicants together and approve a home loan in that case. The co-applying spouse must be employed or should have the assets for mortgaging.
- Home Loan Housing Finance Companies
Housing Finance Companies (HFC) would offer home loans without considering credit score much. Their sole criterion is that the individual has the financial strength to repay the home loan. Rather than examining the credit score, the HFCs would check the financial history of the applicant and approve the loan if found acceptable.
- Approach Non-Banking Financial Companies (NBFCs)
There are several NBFCs awaiting customers to apply for a home loan. Their main aim is to find more customers. Hence, they neither consider credit score as the benchmark nor undertake any in-depth scrutiny of the borrower. The interest rates of home loans at NDFCs is higher than banks. Furthermore, non-repayment of the loan or defaulted EMIs can create complications for the debtors. Individuals requiring a home loan at the earliest or those having a low credit score only approach NDFCs normally.
- Personal Relationship with the Banks
The individuals who have a long relationship with the banks may discuss the home loan requirements with the bank directly. The banks will positively consider home loan applications from the customers, who have a salary account with the bak, a long association including previous loans, which were repaid properly, etc.
- Salaried Job
Those in a salaried job, earning a good payment monthly, can get a home loan even if the CIBIL score is low. It would be better if they can reach out to the bank and discuss the loan requirements, instead of worrying about the low credit score. As we have stated in the introduction, banks also want borrowers to keep a healthy money flow.
How to Keep the Credit Score Healthy?
Observing a proper financial record would be necessary to maintain a credit score above 750. A score from 300 to 579 is considered poor. The habits one can pursue to keep the CIBIL score in the acceptable range are:
- Proper repayment of loan EMIs
- Maintaining a balanced mixture of secured and unsecured loans
- Controlling the expenditure on credit cards
- Avoiding loan on credit card frequently
- Check credit score report in a periodic manner
- Regularizing erroneous entries in the CIBIl score statements
- Increasing the credit limit
- Ensure that the joint applicant is also keeping a healthy credit score
OMG Properties will help you! – Bank Loan Assistance
Reputed real estate developers like OMG Properties help customers to obtain a home loan from the bank of their choice. We will be the interface between the bank and the customer to expedite the process and conclude documentation.