The home loan market is booming in the country and has also become accessible to more and more individuals. This means more home loan applications and also means more home loan rejections. Having your home loan rejected can not only affect your chances of obtaining a loan in future but also damages your credit score as well.
Unpaid dues – Credit history and credit scores are one of the major factors that influence the approval of a home loan. Unpaid dues, late payment history, etc., all deplete your credit score and reflect badly on the credit history. This can be a cause for rejection of home loans.
Other debts – Other debts can hamper your chances of getting a home loan. If a lender decides that you’re incapable of paying off your debts after verifying your income, it’s very unlikely they are going to grant you the home loan.
Job Stability – Changing too many jobs in a small period of time translates to instability. Having a stable job improves your chances of acquiring a loan. Jumping in and out of jobs frequently doesn’t help with your loan getting approved.
Age of applicant – If the applicant is close to retiring age, it gets harder for him/her to get a home loan granted. The rationale being that the applicant will not have a stable source of income post retirement.
Loan Guarantor to a defaulter – If you’ve stood by someone who had defaulted in his credit payments, you stand partly responsible for that person. Don’t stand as a guarantor for someone you think is incapable of paying off his/her debts.
Credit Score – As mentioned earlier, your credit score is of paramount importance when it comes to loan approvals. Make sure to have a healthy credit score before applying for a loan.
Rejected loan applications – Having loan applications that have been previously rejected can have a negative impact on your credit score, which in turn affects you when it comes to home loans.
Suitable security – When providing your property as security, make sure that it’s suitable in terms of the resale value and demand. Any discrepancy with regard to layout or title of the property will also result in a rejection of your home loan.
Mismatched signature – It is important that there isn’t a mismatch in signatures in any of the documents you provide, while applying for a loan.
Non-availability – In case you aren’t available on the phone number or at the address you’ve provided, your loan is likely to get rejected. Lenders usually try and contact you for verification purposes. It is your duty to provide accurate information to banks/housing finance companies while applying for a home loan.
Credit score
One of the major reasons your home loan application gets rejected is because of a low credit score. When you apply for a home loan or credit card, lenders usually use your credit score and credit report as a guiding factor for dispensing your loan. In case you haven’t paid much attention to your credit score, it is advisable that you do as there could be adverse repercussions in the event that you apply for a loan with a bad credit score. check all possible reasons here https://www.bankbazaar.com/reasons-for-home-loan-rejection.html
While assessing your home loan eligibility, apart from looking into your income, age, property, etc., lenders also look into your credit score. In fact, your credit score plays an imperative part in your eligibility evaluation. A credit bureau records all your activities with regard to loan repayment, credit utilization, etc., and equates this into a number between 300 and 900. This number is referred to as your Credit Score and a low number means a low credit score and vice versa. These Credit Bureaus have been set up by the RBI to enable a lender to know a borrower’s entire lending history.
Reasons to know your Credit Score
How to increase your Credit Score
It’s a boon to see the credit market develop in a growing economy like ours. However, this also has impacted the number of loan defaulters in the last few years as well. And while it is relatively easy to obtain a loan in this modern era, having a bad credit score can tarnish your dreams of doing so. All the same, it is possible and quite easy to reform your credit score. Follow the steps mentioned below to see an increment in your credit score.
Obtaining a secured credit card is not only easier than obtaining a unsecured credit card, but can also help you build your credit score. A secured card is one that is backed by your fixed deposit. The fixed deposit acts as leverage to your banker to grant you a credit card.
Building a good credit history is one of the most important factors that determine your credit score. Making timely payments and not exceeding your credit limit are good places to start in order to build a good credit history. Maintaining a good credit utilization ratio also can build your credit score. Ideally, you should not exceed 70% of your credit limit.
The next step, after getting a secured card, is to maintain it and diligently pay off the debts to be on the way to a good score.
This article has been produced by TNM Marquee in association with BankBazaar.