CIBIL Scores – Pathway for easy home loans
STEP 1: Take a look at your score
A credit score is a three digit number between 300 and 900 that reflects your borrowing history. The Credit Information Bureau India Limited or CIBIL has a file on each of our names; the file is updated monthly with information provided to CIBIL by banks and financial organizations. Banks and lenders are allowed to request for a copy of your file if they receive an application for a loan from you. You can also request to look at the copy of your own file. Log on to cibil.com. Fill out the form and pay the Rs 500 fee online. The website will then ask you a few questions to verify your identity. Once the authentication is complete, you will instantly be able to access your credit score and you will also receive an email with your file. A score of 700 and above is considered a good score, a score of lower than 700 needs your attention
STEP 2: Correct errors in your credit report
First, verify all your details. Make sure all the information on your loans, credit cards and outstanding balances are accurate. The common errors are inaccurate balance or outstanding amount, incorrect personal details, like name, date of birth or PAN etc. or you might find that one or more loans listed do not belong to you. If you find that data in your credit report is inaccurate, you should approach CIBIL’s dispute resolution cell. This can also be done online. Fill out the form under dispute resolution on the website, you will have to provide your name, address, date of birth and highlight the nature of the inaccuracy. CIBIL will contact the lender in question and once the error has been identified and authorized by the lender CIBIL will make the change in your Credit Information Report (CIR). It takes roughly 30 days to resolve a dispute which is why it makes perfect sense to do this well before you apply for your
STEP 3: Fix Defaults
When reading your report, you’ll notice Days Past Due (DPD). This indicates the number of days a payment of an EMI is delayed. If you made your payments on time the DPD will be ‘000’. The higher the DPD will work against you in your loan application. If you have a default in your file, speak to the lender and pay the outstanding in full. You might be tempted to settle the amount. But a settled loan will also reflect as such on your file, it is better to pay in full.
STEP 4: Improve a bad score
If you have a bad score, it would be best to put off your home loan application until your score improves. In the mean time, pay all your bills on time, pay credit card bills in full and not just the minimum payments; make sure you have a mix of secured and unsecured debt in your portfolio.
If you have a good credit history, you become a perfect candidate for a home loan; lenders will be vying for your business. You should use your score as leverage to negotiate a better deal with your lender. Ask for a rate as close to the base rate as possible and maybe even a discount on your processing fees.
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