Home Loan Credit Score: If you are thinking of taking a home loan to buy a house, then first check your credit score. Before giving a bank loan, they definitely check whether you have paid the loan or credit card taken earlier on time or not. Your credit score is formed on the basis of this record.

Let us know what is credit score?

• Credit score is a number by which banks understand whether you have repaid the loan or credit card taken earlier on time or not.
• Although credit score ranges between 300 to 900. Generally a score of 750 or more is considered good. Along with giving easy loans to such people, banks can also give low interest rates.
  At the same time, if the score is less than 700, then there may be difficulty in getting the loan. Many times banks give loans at higher interest rates or may also impose some conditions.
• Even a small difference in interest rate can increase your expenses significantly. Suppose you have taken a home loan for 20 or 25 years. In such a situation, if the interest rate is even just half a percent higher, you may have to pay lakhs of rupees.
• But it is not necessary to get a loan just by having a good credit score.

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How is your job or business?

What is your salary every month, how many EMIs are you already running and whether the documents of the house for which the loan is being taken are complete or not. Down payment also plays an important role in getting the loan approved.

If your credit score is low, it can be improved gradually.

• For this, pay all EMI and credit card bills on time.
• Avoid using the entire credit card limit and try not to use it more than 30 percent.
• Apart from this, one should also avoid applying for loan or credit card at multiple places in a short period of time.
• Keep checking your credit report from time to time, so that if there is any mistake in it, it can be corrected.

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While taking a home loan, do not focus only on the interest rate.

It is important to understand the processing fees, other charges, rules for pre-paying the loan and the total amount to be paid during the entire loan period. A little preparation and a good credit score can help you get a home loan at better terms.

In today’s time, credit card is no longer just a plastic card, but it has become an important part of people’s everyday financial needs. Credit card is useful everywhere like online shopping, travel, booking, bill payment or sudden expenses. This is the reason why a large number of people are using it. However, this question definitely comes in the mind of many people that how does someone’s credit card limit reach lakhs of rupees, while someone else gets a limit of only a few thousand. Actually, before deciding the credit card limit, the bank assesses the complete financial profile of the customer. In this, many things like income, job stability, credit score, spending habits and existing loan are considered. On the basis of all these aspects, the bank decides how much credit limit to give to a customer.

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Income and job stability are most important

While deciding the credit card limit, the monthly income and employment conditions of the customer are first considered. Banks try to understand how much a person earns every month and how stable his job or business is. The higher the salary or business income, the less risk the bank feels and accordingly higher credit limit can be given. On the contrary, banks keep the limit lower in case of low income, because they feel more risk in payment.

Credit score also plays a big role

Credit score is considered an indication of the financial credibility of any person. This score depends on whether you have paid your earlier loan or credit card bills on time or not. If a customer has a good credit score, especially 750 or more, then banks consider him trustworthy and the possibility of giving a higher credit limit increases. Whereas in case of bad score, banks keep the limit less. Apart from this, banks also know how much debt the customer already has and how much of his income is going towards repaying the EMI. If a large part of a person’s income is being spent on the installments of the already ongoing loan, then banks avoid taking extra risks and remain cautious in giving higher limits.

Spending habits are also assessed

Credit card issuing banks also try to understand the spending patterns of customers. If a customer uses his card responsibly and makes timely payments, his chances of getting a better credit limit increase. Experts advise that it is better to use only 30 to 40 percent of the total limit of the credit card. This indicates that the customer is controlling his expenses.

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