Once you have successfully built up a good credit score, the challenge lies in maintaining it.
You may wonder why you would want to maintain a good credit score if you have already availed of a loan. Well, maintaining a strong credit score is not a one-time process.
Your credit score, through credit history, reflects how you have managed the debt in the past and serves as a reference point for future lenders. Most importantly, maintaining a good credit score would mean you qualify for more competitively priced loans, including Home Loans.
You can check your credit score through credit bureaus like TransUnion CIBIL, Experian, Equifax, and CRIF Highmark. Moreover, authorised partners of these bureaus, like banks and financial institutions, also provide access to your credit score. Though ‘credit score’ is the standard term, lenders often specifically refer to the CIBIL score, provided by CIBIL, when assessing creditworthiness.
Tips to maintain a strong credit score for Home Loan
Home Loan lenders usually consider a minimum credit score of 750 to grant you a loan. If you have secured a Home Loan, maintaining or improving the same can help you in the future. Although there is no secret formula to maintaining a strong credit score for a favourable Home Loan, the tips below can, however, help you achieve that.
Also Read: Can Home Loans be offered on the cost of the property?
Pay your debts on time, every time
If you have already achieved a strong credit score, the best thing you can do is maintain it. Paying all your debts on time, every time, plays a very crucial role in doing so. One way to ensure you never skip a payment or miss deadlines is to set up automatic payments or reminders.
Hold on to your older credit cards
Credit scores are based on long credit history. The more experience your credit report shows in making on-time payments, the better. If you have your old credit card and have continued paying complete bills on time, it can help show a long and strong credit history, favouring your credit score.
Also Read: Buy your dream home even if you are in your 40s
Apply for new loans only if needed
Applying for multiple loans at the same time shows you have an eagerness to borrow money and may also reflect that you have insufficient funds. Consider what credit you need and up to what extent since frequent multiple loans can affect your credit score negatively.
Check your credit reports for errors
Proactively checking your credit reports can help you spot inaccurate or negative details. Inaccurate entry can have an adverse impact on your credit score, which may, in turn, restrict you from getting competitive rates in the future. If you find any errors in your report, you can get them rectified by submitting a dispute form.
Longer tenure loans can help
If you have multiple loans, it is better to opt for long-tenure loans as they reduce your EMI burden. With lower EMIs to pay, staying on track with repayment cycles becomes easier.
Track payments of the co-applicants
If you have taken a joint Home Loan, the repayment pattern of your co-applicants may affect your credit score. Hence, ensure you keep track of their repayment history, and if there are any defaults or missed payments, clear them so that it doesn't impact your credit score.
Create a balanced mix of types of loans
Typically, unsecured loans like personal or car loans can impact your credit score negatively, whereas secured loans can positively impact your overall credit score. Hence, you must try and reduce your unsecured loans that may negatively impact your score.
In a nutshell, maintaining a solid credit score is a lifelong journey that has multiple benefits. When you use credit responsibly and follow good financial habits, you are more likely to maintain a good credit score and even improve it. Consider opting for Axis Bank Home Loans to ensure a hassle-free process in obtaining a loan.
Also Read: Secure independence from renting - own home via Home Loans
Disclaimer: This article is for information purpose only. The views expressed in this article are personal and do not necessarily constitute the views of Axis Bank Ltd. and its employees. Axis Bank Ltd. and/or the author shall not be responsible for any direct / indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information. Please consult your financial advisor before making any financial decision
