Your credit score can get you cheaper home loans – Check the latest interest rates
A credit score is one of the most important factors in your financial profile that lenders consider when applying for a loan. It reflects the current state of your financial health and helps the bank assess your ability to repay. The score is calculated based on your past payments, credit history, and current and former credit accounts.
When applying for a home loan, your credit score is the only thing the lender will check to assess the risk of lending to you. Based on your credit score, the interest rate is also decided. The lender will likely charge you a higher interest rate if you have a low credit score.
A credit score is between 300 and 900, and most lenders prefer a credit score of 750 and above as a good profile to lend. If you want a home loan easily, your credit score should be closer to 900. Banks and other financial institutions prefer to give home loans to borrowers with high credit scores because they have less likelihood of default.
A higher credit score will put you in the driver’s seat to negotiate for a lower interest rate when applying for a home loan. However, many lenders offer preferential loan rates to potential borrowers with good credit scores.
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The interest rate on a home loan can vary from institution to institution, but if you have a high credit rating, you can easily get a good deal. If you have a credit score of 750 and above, banks or other financial institutions can offer you home loans at a competitive interest rate.
If you pay your debts on time, keep your credit exposure low, avoid multiple credit applications, and pay all your loans and credit card bills on time, your credit score will likely be higher. Even if your credit rating is low, there are steps you can take to improve it.
Check your credit report once a month. It’s easy to check your credit score online at portals like Bankbazaar.com. If there are any errors, report them to the credit bureaus and ask them to correct them, if necessary. Also, make sure you are spending within your ability to repay and avoid delaying or defaulting on your debts to a financial institution.
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In addition, you should also compare the interest rates of different financial institutions when taking out a home loan. You can also review the terms and conditions of the loan related to repayment, late fees, duration, etc.
The table below will help you compare interest rates based on different credit scores. Banks offer a lower interest rate based on higher or lower credit scores. You can compare and make a decision based on your needs related to home loans.
Compiled by Bankbazaar.com