How Do Credit Scores Impact The Home Loan Application?

By Author: Shreya Eppili
Total Articles: 28
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Purchasing a residential property is a smart move. You acquire property ownership, which frees you from paying a hefty monthly rent and saves you from keeping up with your landlord's unrealistic conditions. You enjoy incredible capital appreciation that several investment options cannot match up. It also lets you pass on something of immense emotional significance to your loved ones that they may cherish for a lifetime.
Today, property prices are touching the sky. Hence, you may need financial assistance to finance your home purchase. A Home Loan is a viable financing option to explore. Every bank offers a Home Loan up to Rs. 5 crore, ensuring your dream of buying a home does not remain just a dream. You can repay the Loan at a competitive interest rate in Equated Monthly Instalments over a reasonable tenure.
You can apply for a Home Loan at any preferred bank. Upon application, the bank determines your Loan eligibility to decide on the approval and extend a suitable Loan offer. Excellent eligibility may speed up the Loan approval and get you a fair Loan offer.
How do credit scores impact the Home Loan ...
... application?
A credit score is a summary of your credit history. It is an important factor in Loan eligibility. The bank considers your credit score to establish your credibility as a borrower. A higher credit score means you are a reliable borrower. Hence, the bank approves your Home Loan request without a second thought and extends a fair Loan offer. Here is a detailed explanation of how your credit scores impact your Home Loan application:

Home Loan approval

As mentioned, a higher credit score portrays you as a trustworthy borrower in the eyes of the bank's eyes. Given this, the bank may readily accept your Home Loan request. Furthermore, banks extend pre-approved Credit Cards, Personal Loans, and Car Loans when you have an excellent credit score. Applying for such Loans may help fast-track your process.

Loan amount

You need a significant amount to finance your home purchase. You need to obtain a considerable amount from the bank. They consider your eligibility to provide a suitable Loan amount, and your credit scores play a crucial role. Use the Home Loan eligibility calculator to check if you can apply for such a higher amount. A higher Loan amount means higher risk. Hence, the bank only offers such an amount when they know you are a reliable borrower.
An excellent credit score means you are a reliable borrower. Improve your credit scores and overall eligibility to get the desired Loan amount from the bank.

Loan interest rates

Your credit scores impact the interest rate at which you can get a Home Loan from the bank. An excellent credit score helps you get a significant Loan amount at a competitive interest rate, making your repayment affordable. Therefore, work towards improving your credit scores.