Most of us have heard about credit scores but we seldom hear the term cibil score. A credit score is generally referred to as your credit score on one credit card that you have accumulated over time. A cibil score is something that has all consolidated credit histories from all of your credit cards and other loans’ credit history is also accumulated in your cibil score.
So, a credit score is a score that tells the loan lender that after borrowing money you pay it back on time or not. Home loans are given to individuals who will pay back the installments on time and don’t miss any installments in between. Banks don’t even favor the people who repay the loan in the whole very early in the tenure because that way they lose a lot of interest on the principal amount. That’s why banks also provide schemes specifically for people who want to pay back the loan at once in just one installment.
You can also do early partial repayment wherein you return half the loan amount in one installment. Some people try to pay a small amount of loan in one installment which is not even near to the partial loan amount. By doing this you are most probably hurting your credit score. Because it makes it harder for the bank and also for yourself to maintain the accounts of people who don’t stick to the installment amount and pay more or less.
If you miss just one installment later in the tenure period then it is not that big of a deal so you need not worry too much about the credit score. But, if you miss one installment very early in the tenure then that can go on your cibil score and affect it negatively.
If you find yourself in a position where it will be nearly impossible for you to pay the EMIs then you can ask the bank to give you a moratorium period. This should purely be done in the case of emergency because doing so you are going to pay more interest to the bank as the bank still applies the interest rates in the moratorium even though you are not paying the EMIs. After this period is over you are more likely to pay more money to the bank than you first intended.
Also, remember that financial advisors always say that don’t take a loan that is more than 10 times of your annual income. Even though you might think that the monthly EMIs are less over years you will end up paying the bank way more than the value of your home.
There are income tax benefits for individuals who get a home loan. they can redeem the installments tax amount while filing the taxes. ICICI home loan provides repayment tenure of up to 30 years that can make your home loan EMIs quite manageable. They also have lenient criteria for loan approval. They also have a scheme for first time home buyers.
Also sometimes banks look at your transaction history and if it involves larger transactions then you are considered more worthy to get a loan. Banks also look at your monthly income to see if you can pay back the loan in time. If you are self-employed then your profit proofs and income tax returns can be checked and the business also needs to be a minimum of three years old to get a loan.
Home loan are generally offered to people with a good credit score. Get two to three credit cards and start paying your normal bills with a credit card. Remember to pay the bill before banks start cutting interest rates on your bill. Timely payments are the easiest and most secure way to boost the credit score. You can also get an online service to boost your credit score. The length of the history is also a concern so the earlier you get the credit card better it is for your credit score.
