Everybody wants to have a house of their own. But its not easy these days given the high prices that real estate commands everywhere. So more often than not, you will end up taking a home loan in future.
But do you know that your credit score can have an impact on the interest rate you get. At times, the difference between rates offered to applicants with good and poor credit score can run into 1 to 2%. And this small difference translates into a difference of several lacs in interest paid.
So it does make sense to try and improve your credit score before applying for a home loan.
One simple way to improve your score is to take a small personal loan first and then repay it regularly and without defaulting or delaying any payments. What this does is that it will slowly improve your credit score. Once your personal loan is paid off, you can then check your credit report to assure yourself of the score improvement. Finally, you can approach the lenders to apply for home loans. And if they find your score to be good, you will get the loan at much lower rates than you would have got earlier with a not-so-good score. And that is exactly what you want them to do.
Most people don’t realize the importance of having a good credit score. Its only when they are offered a very high rate of interest or when their application is rejected that they realize its importance.
So this goes out to all future home loan borrowers – do start working on your credit score from today itself. As it takes time to improve the score, you might not have enough time when you try to do it very close to your home loan application.