If you are however planning to buy a property either now or in the near future, you should know by now that maintaining a good CIBIL score is considered to be of utmost importance. With the RBI having made the CIBIL score assessment mandatory, most of the commercial banks in India are thus unlikely to consider the people with a CIBIL score below 750 (out of 900) for a home loan.
In case your CIBIL score is, however, unsatisfactory, the article below mentions the hacks as to how to tackle with a low CIBIL score in order to make things work in favor for a home loan application.
The hacks are:
- Check for errors in the report
Even after maintaining a good credit behavior if the borrower finds that his CIBIL score is low, then he must check his CIBIL report for errors. Sometimes the discrepancies can appear on the CIBIL report for no fault of the borrower’s. There can thus be wrong information about an overdue loan that has thus been closed from the borrower’s end, or a mix up of identity that may thus have occurred when the bank was passing on the credit information to CIBIL. If the borrower spots such an error, he is supposed to approach CIBIL with a request for the rectification of the same. This is called raising a “dispute request”. The borrower’s request would then be sent to CIBIL’s Dispute Resolution Department. This team would then analyze the error and then resolve it with the help of the relevant bank, which has however given the said information to CIBIL. Once the issue is resolved, the updated information is then put on the borrower’s credit report in approximately a month’s time. After the dispute resolution process is complete, the borrower can make a home loan application.
2. Make an infallible repayment plan
If there are no errors in the CIBIL report and borrower’s credit score is low due to bad payment history, then the borrower has no choice but to rectify it. Here’s what he can do to get your CIBIL score back in order.
- The borrower should start by tackling the costliest debt.
- If it is a credit card debt which is the pain point, the borrower should clear out all his dues at once.
- If need be he should consider liquidating some of the other assets in order to pay off your credit card dues
- Don’t cancel the credit card. Keep usage on hold for a while, and then ensure that the utilization is under 20%.
- Make the bill payments on the credit cards well before the due date.
3. Consider co– applying with your spouse or parent
If the borrower has to take a home loan and he has no choice, despite a poor credit score, then the borrower can consider co-applying with his spouse if she has a good credit score.
- Put down a higher down payment :The borrower can also consider putting a higher down payment of more than 20% of the purchase price. The bank may be willing it lend if borrower shows some credibility on that front but it may still offer him a loan that might be a higher rate of interest than the prevailing rates in the markets.
- Approach a smaller bank
The largest commercial banks may however not be willing to give the borrower a home loan with a poor CIBIL score, but there are also regional rural banks, co-operative banks or even family banks that may still be willing to give the borrower a home loan with a poor CIBIL score.
- Stay on rent a little while longer
A poor CIBIL score just before the borrower applies for a mortgage can thus indeed be troublesome, but he need not lament about it because it is not something that would stick to him forever. The borrower is only supposed to get into a strict financial regimen and then get his credit history back on track in order to get the CIBIL score in order before he makes a fresh application for a mortgage.