Improve your credit score before applying for home loan

When you are applying for home loan for 10, 15 or 20 years, it is advisable to obtain your credit report to evaluate your profile. Before you apply for home loan to purchase a property grassroot information is very important, as then you can be prepared to plan your budget and avail the best benefit.

When you are applying for home loan, it is good if you score between 750-900 but it is alarming if it is below 675, you can know this through credit bureaus namely Experian, Equifax ,CIBIL and Crif High Mark. 

If your score is less than 675, you need to dig into the reason for this and rectify it before you apply for home loan. Check for error in your lender’s book, sometimes there can be mistake in case if you have repaid a loan but it is still reflecting as outstanding. Resolve any issue if there is any disconnect between you and borrower, if there is any dues that is pending it is always better to pay it before applying for fresh loan.

You need to be very careful with your credit card payment, if you pay minimum amount on your credit card and take credit card loan to pay the balance, do not do that you can take personal loan instead as that can bring down the interest rate that you are paying for credit card. 

It  you have taken car loan, education or personal loan make sure that you have been regularly paying the instalment. Prepare a budget of your incoming and outgoing income and expenditures. Depending on your future expense and saving plan your money, as that would help you understand the tenure to go for to repay the home loan. There are benefit that you are entitled to get in income tax returns as well make the best of it. You can claim tax benefit on the interest that you pay to bank, discuss with your banker in detail to understand the charges related to loan qualify for tax deduction. Once you have figured out all the options and identified the best interest rate that you are getting, go ahead and apply for loan to ‘Own-a-home’. 

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