Improve your Credit Score for a Cheaper Home Loan
Nov 09, 2019 Home Loan
When taking a home loan, the loan lender looks at your credit history. Repeated reminders to pay your outstanding bills or other EMI can reflect negatively on your credit score. For the uninitiated, the credit scores are assigned by the credit bureaus to the borrowers in India. The score is assigned from 300 to 900 which determines your repaying habit.
A score above 700 is required to get a home loan. The score assures the back that your lending and repaying capacity is good and that you will repay the money you borrow from the bank. Based on your repaying habit, the ban can also offer your lower interest rate.
The home loan borrowers with good credit scores had found that the non- banking and financial institutes showed a more liberal approach towards them and even offered lower loan rates. The option, however, is not available with the Reserve Bank of India (RBI) coming at the helm for such an approach.
India’s biggest bank, State Bank of India (SBI) has brought the marginal cost lending rate (MCLR) to 8.05%. the home loan borrowers with a good credit score can be offered the loan without any mark-up. The same is true for other banks and financial institutes.
Bank of Baroda is offering the MCLR rate at 8.40% but this rate is available to the people with a credit score above 760.
For the borrowers with a credit score between 729 and 759, the state-run banks charge an additional markup of 50 bps, bringing the loan rate to 8.90%. Those who have a credit score between 700 and 724 are charged 100 bps.
How high credit score gets you a better deal
A good bargain is not unknown that a good part of your home loan is the interest that you pay for years and years. When you have a good credit score, you have a solid ground to bargain for the lower interest rate. The reduction in the interest rate can save you a lot of money in the end and you will have to pay less interest.
Fringe benefits:
loans come with a lot of additional expenses like processing fee, legal assistance, technical analysis charges, franking charges, stamp duty, etc. The home loan borrower often forgets to add these expenses when it comes to taking the home loan. If you have a good credit score, you can ask the bank to lower these charges for you. Apart from stamp duty and franking charges, there is a good chance that the bank will agree to lower the cost for the rest.
What can affect the credit score?
Unknowingly many home borrowers make mistakes that affect their credit score negatively. Asking for your credit report regularly, not paying your dues on time, cheque bounce, etc. If you have a guarantor in your credit card, their defaults can also affect you negatively.
Some people have the notion that not having any credit score is better than having a bad credit score. This is not true. Having no credit history is also a red siren for the bank and without anything to refer to regarding your repaying habits, the banks or financial institute will avoid giving you a home loan.
A score above 700 is required to get a home loan. The score assures the back that your lending and repaying capacity is good and that you will repay the money you borrow from the bank. Based on your repaying habit, the ban can also offer your lower interest rate.
The home loan borrowers with good credit scores had found that the non- banking and financial institutes showed a more liberal approach towards them and even offered lower loan rates. The option, however, is not available with the Reserve Bank of India (RBI) coming at the helm for such an approach.
India’s biggest bank, State Bank of India (SBI) has brought the marginal cost lending rate (MCLR) to 8.05%. the home loan borrowers with a good credit score can be offered the loan without any mark-up. The same is true for other banks and financial institutes.
Bank of Baroda is offering the MCLR rate at 8.40% but this rate is available to the people with a credit score above 760.
For the borrowers with a credit score between 729 and 759, the state-run banks charge an additional markup of 50 bps, bringing the loan rate to 8.90%. Those who have a credit score between 700 and 724 are charged 100 bps.
How high credit score gets you a better deal
A good bargain is not unknown that a good part of your home loan is the interest that you pay for years and years. When you have a good credit score, you have a solid ground to bargain for the lower interest rate. The reduction in the interest rate can save you a lot of money in the end and you will have to pay less interest.
Fringe benefits:
loans come with a lot of additional expenses like processing fee, legal assistance, technical analysis charges, franking charges, stamp duty, etc. The home loan borrower often forgets to add these expenses when it comes to taking the home loan. If you have a good credit score, you can ask the bank to lower these charges for you. Apart from stamp duty and franking charges, there is a good chance that the bank will agree to lower the cost for the rest.
What can affect the credit score?
Unknowingly many home borrowers make mistakes that affect their credit score negatively. Asking for your credit report regularly, not paying your dues on time, cheque bounce, etc. If you have a guarantor in your credit card, their defaults can also affect you negatively.
Some people have the notion that not having any credit score is better than having a bad credit score. This is not true. Having no credit history is also a red siren for the bank and without anything to refer to regarding your repaying habits, the banks or financial institute will avoid giving you a home loan.
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