Factors That Keep Your Home Loan From Being Sanctioned

Owning a house is one of the biggest dreams that a person has. Everyone works hard enough to save money for a down payment. However, when you are about to apply for a home loan, you get turned down by your bankers. This mostly happens because lenders check your credit reportoften, your income and other essential details for deciding whether you are a good candidate for a home loan.

Here are some reasons because of which Cibil reports reject your credit worthiness.

Checking Credit Report

In case you have taken a lot of loans in the past or had taken on a number of credit cards, then your past loaners must have gone through your Cibil report. If you had applied for multi credit facility particularly for loans that were unsecured simultaneously, it might have sent a warning signal to your loaners. Numerous enquiries can work to bring down your credit score. It could be a problem for you when at the time of applying for a mortgage. In order to evade this problem, you should not apply for credit cards or loans at least 6 months before applying for a mortgage.

Poor Credit Score

People with poor credit history are often rejected by lenders. Poor credit score refers to issue of late payments, payments which were missed and similar problems. Also, your Cibil score would not be very good if you had always been nearing your credit limit on credit cards. Having a large number of personal and unsecured loans on your history of debt against secured ones such as car loans, could be held against you.

One type of credit or no credit

A lot of Indians still believe that a life of credit is a bad idea and therefore they do not take out loans or credit cards. This is an indication that you are not responsible enough to handle clauses of loans. It may not send out the signal that you want it to send out- that you have no credit history and hence are trustworthy. Therefore, you should have both unsecured and secured loans and must have met the criterion for repayment.

Mismatched Identity or Disputes in Cibil

There may be some problem with your CIBIL report because your past lenders may have provided incorrect information to them. In case there is a massive fault, you may be a victim of mismatching identities. Therefore, you should keep checking your CIBIL scores frequently enough to get these discrepancies corrected in time.

Not checking your credit score might have a lot of undesirable effects. For example, a credit card is one of the most common banking instruments in determining credit history. Indiscriminate usage would lower your score of credit and even spoil your chances of getting a home loan or get it at a very high rate of interest. Consider this instance that your friend and you apply for a home loan of INR 50 lakhs payable over 20 years. You got your loan at an interest rate of 10 percent per year whereas your friend got it at 12 percent per annum. A reason for this discrepancy may be that your friend’s credit score was lower. This 2 percent difference in interest rate could lead to a difference in interest payment of almost Rs 8 lakhs!

There a many ways in which your credit card could affect your chances of getting a home loan.

Using a lot of credit cards

If you have a number of credit cards to your name then it indicates that you have an appetite for credit. Carrying around a number of multi-coloured cards may seem fun but they can be a very bad signal as they show that you are a credit hungry person. An appetite for credit may lower your credit score and diminish your possibilities of getting a secured mortgage loan for house for sale in Pondicherry.

Carryover of balance frequently

Companies that offer credit cards make it easy for subscribers to pay a token amount and carry over their balance for the next period. By carrying over your balance, you would be losing out on free credit periods and paying a very high rate of interest. There are many hidden implications of carrying your balance over. They act a little too much on your score of credit as your outstanding loan amount rises and the defaults would show on your score and imply that no lender should deal with you. Therefore, your carried over balance may prevent your home loan application for house for sale in Pondicherry from getting passed.

High Usage of Credit

Using your credit card to the hilt may also adversely impact your credit score. For example, if a credit of Rs 3 lakhs is your ceiling on your credits and you have used it up to Rs 2 lakhs, then the credit rating agency might take that as a negative. To keep a healthy credit score, you should use only 30 percent of the credit limit allotted to you. On the other hand, non-usage of credit cards would not help to build up a payment history of credit and therefore, it will not be good for you. Therefore, you should use your credit card in moderation so that you can get a home loan at an affordable rate without hassles.

Credit Portfolio with a lot of Unsecured Loans

Your credit portfolio must have a healthy quantity of both unsecured and secured loans. If you have only unsecured loans such as personal loans and credit card balances, then your credit rating will go down. Therefore, you should balance your portfolio with secured and unsecured loans equally so that you don’t face any glitches.

Past Discrepancies that were unsolved

There may be some discrepancy in your credit rating or some disagreement about some charges levied by your bank. If you do not solve these disputes and keep from paying for them, then it shows up as outstanding in your credit account. This is classified as an amount for default and might blemish your report of credit. Therefore, you should get these discrepancies solved so that it does not tamper your credit worthiness and keep you from getting your dream house.