A minimum credit score required 750. In case you have a score below 675, then it's time for you to improve the score. Besides, a good credit score will fetch you a good rate of interest for the home loan as the lenders always prefer borrowers with good credit history.
Few things to consider if you have a low credit score.
- Check if there is any error in the credit score. There is a possibility that you have already repaid the previous loan; however, in the records of the bank still shows outstanding. Rectifying such errors will improve your credit score.
- In case you have not repaid some loan, it is wiser to repay them and close the loan account. That will again improve the credit score.
- Make your payments on time - be it credit card bills or appliance loans.
- Credit consolidation also helps. For example, if you have several loans, consolidate them into one.
- Credit card bill: Many pay the minimum amount on the bill, and the rest revolves around the credit. This is not a good practice. You may choose to convert it to personal loan instead. This will enable you to repay the loan in a better way as the interest will be much lesser.
- In case you are a defaulter of a loan, and you cannot repay at the moment, you can correct it over a period of time. If you have a good proportion of unsecured loans and secured loans, try and alter the mix over time.
- Avoid excessive loans shopping. The hunger of grabbing best possible deal may lead to a tag of credit-hungry. Each time you enquire a bank will get you registered in the banks and will indicate that you are credit-hungry.
- Too much hunger for credit will leave a negative mark as well. Do not use up your entire credit limit just because you can, as this is also another sign of credit hunger.