Planning for dream house? Focus on your credit score

More and more people are seeking home loans these days but they encounter lots of hurdles. If you have a higher credit score, then half the battle is won in getting loan for that dream house. Here're some tips how to enhance your credit score that indicates your overall financial discipline and repayment capacity to banks, financial institutions, insurance companies, mobile phone firms, etc.

Hyderabad: More and more people are seeking home loans these days but they encounter lots of hurdles in the process of getting one. Here steps in credit score, which is the index of our overall financial discipline. If you have a higher credit score, then half the battle is won in getting loan for that dream house.

The 300 to 900 score card shows your capacity to repay the loan. The basis for deciding this all important credit score is one's track record in repayments. Banks and financial institutions easily get an idea about prospective borrowers with one glance at credit score. Against this background, let's find out how to improve our credit score in order to increase chances of getting the required loan.

Your history of timely repayments plays a key role in determining your credit score. Payments should be made before the last date and any delay will leave an adverse impact. Keep a track of your credit card limit and never spend more than 30 percent. Once your overspend your credit card, the financial institutions will conclude that you are depending on loans. Credit card bills should be paid regularly. Timely repayments will tell about your financial discipline thereby increasing your credit score.

Going for just zero-collateral loans will also adversely impact your credit score. Some surety-based loans should also be taken in order to improve the overall score. Your ability to provide collaterals will create confidence in the financial institutions about your repayment capacity against any odds. A mixture of loans with and without collaterals will decrease the adverse impact on credit score.

Check your credit reports from time to time to fix any anomalies. Without your notice, loans and credit cards may have been issued. False information may creep into your credit report because of fraudulent transactions that may take place without your knowledge. If any such false information is reflected in your credit report, immediately contact your banks and credit bureaus to correct the same.

There are many unfounded notions about credit score and reports. People usually think that only banks and financial institutions examine these credit reports. But, even insurance and mobile phone companies check these reports. At times, even the managements of firms will look at credit report before employing somebody.

Checking your credit reports regularly will not leave any impact on your score. This will help you to keep control of your financial behaviour. As per the rules of the Reserve Bank of India (RBI), we have eligibility to get free credit report from any credit bureau once every year.

Your income details will not reflect in credit score, which indicates only your loans and details of your credit cards. As such, one should set aside all false beliefs and focus on improving their credit score to get the home loan they need. As of now, home loan interest rates are on the higher side. A good credit score will get you a small reduction in interest rate. This will enhance your loan eligibility.