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How to Improve Your Credit Score for a Home Loan during Pandemic
While the whole country is still trying to adjust to the current situation, the real estate market has faced a lot of transformation. This time has come out to be the perfect time for home buyers. As banks have reduced interest rates, developers are coming up with many schemes and promoting affordable housing, and relaxations have been given for repayments of loans. There are many convenient EMI plans to avail for a home buyer, but for that, you need to have a good credit score.
What is a credit score?
A credit score refers to the measure of one’s creditworthiness or the ability to repay their loan. This number lies in a range of 300 to 900. In India, there are commonly 4 credit information companies licensed by RBI. CIBIL (Credit Information Bureau India Limited), Experian, Equifax, and CRIF high mark. When you apply for a home loan to buy a home, the bank or the lender first access your credit score to acquire your credit information. This helps them know whether you are capable of paying for your loan or not. This credit score is calculated and measured on the basis of credit bill payment history, whether you have repaid your loans on time or not. When you are having a credit score above 750, you are more likely to get a home loan easily at attractive and low-interest rates. Are you up for a home loan? Or planning to take a loan to invest in property? Here are some tips for you to improve your credit score during the pandemic. Go through these tips well and find a good loan deal for yourself.
Try to pay bills on time
To start from the initial stage, the first thing you should do to improve or enhance your credit limit is to pay your monthly credit bills on time. Timely repayments of your bills and loan EMIs will definitely help you acquire a higher credit score. ?Paying your credit card balances on time, whenever it is possible is one of the necessary things during this crisis. Any kind of late repayments will surely affect your credit score. Even if your savings are less, try not to delay the repayments of your credit cards. You should be so organized and mindful about your spending habits, that you avoid unnecessary expenses on your clothes and accessories during this COVID season.
Keep other credit cards active
You must not be aware of the fact, that your credit score also depends on the duration of the time period you are having your credit card. So during this pandemic or COVID time, do not cancel or close any of your extra credit cards, which you might be having in your wallet. You all need to do is to keep them active by using them once in a while. Whether it can be for a recharge of your mobile phone, DTH TV, or electricity bills. The longer you keep your credit card, maintaining the repayment strategies; the good credit score you may have. This factor directly reflects on your credit limit. A good credit score always depends on many factors, which are being taken care of.
Pay EMIs on time
The most important factor that helps you maintain a good credit score single handily is paying your EMIs on time. Paying EMI should be your commitment, once you avail of a loan. Similarly, if are having a credit card, it becomes your responsibility to pay the remaining limit back. It is always a perfect idea to ensure that you never miss a single repayment on time. Moreover, this should be done on or before the due date. Missing a single payment, can result in penalty charges and also will reflect on your credit score. You can even use a moratorium, issued and approved by RBI, the good thing about this moratorium is that it does not affect your credit score. But this may significantly increase your loan rates of interest.
Check your credit regularity
To maintain a good credit score, it is mandatory for you to know your credit score and analyze what to do next to improve it. During these times, when your income can fluctuate due to salary cut-offs, it is important for you to know where your credit score lies regularly. Try to analyze your credit report at least twice a year to know where your score stands. When you keep an eye on your credit score, it helps you take the necessary steps to improve or enhance it. Generally a credit score between 750 to 900 is considered to be good and if it is 800, it is considered to be the best. This is a good way to keep track of your creditworthiness and the factors that are responsible for your credit score.
Avoid withdrawing cash from credit card
However it is an option available to you, to withdraw cash using your credit card, but this is always advised to avoid this. During these crisis times, many additional charges were included like cash advance fees, additional finance charges, and the late payment fee. This directly affects your credit score, so make sure don’t opt for this option.
Your home is not only a shelter; it is your security for your bright future. Investing your funds to buy your home is easy nowadays. With a plethora of flexible loan plans and credit subsidies, you can buy a home of your own. Follow these steps to improve your credit score during this pandemic, this will surely help you secure your future and buy a home for your own and your family.
