Home loans are something which you don’t avail every now and then. That is because typically the tenure lasts for about 15 to 30 years. Therefore, it is in the borrower’s interest that he/she should keep the Home Loan interest as low as possible. But how to do so? This is exactly where the role of your Credit Score comes into the picture.
Let us explore Credit score –
It is nothing but a three-digit number ranging from 300 to 900. An algorithm is used to generate this number with the help of inputs from your credit history. CIBIL is the primary Credit Bureau in India and all the Banks and NBFCs depend upon CIBIL for their credit information requirements.
Why is it required for financial institutions to depend upon your CIBIL score –
Normally, NBFCs and Banking organizations take a note of your credit score before they sanction you a loan as it reflects your creditworthiness. A low score indicates that you have a poor repayment habit whereas, a high score tells the lenders that you have been on time. Naturally, the customers with better repayment habits are charged lesser interest rate as the lending institution trusts them to repay the loan on-time.
Therefore, your credit score is required to be high to get a good deal for your Home loan.
How does your Credit Score Determine your Home Loan Interest Rates
Aman Khanna is an experienced financial advisor who is well known for his ability to foretell the market trends as well as for his financial astuteness. He has an MBA in finance from Toronto University as well as years of experience delivering seminars on sound financial practices and debt management.