Home Loan Credit Score: If you are thinking of buying your dream house, then there is a very good news for you from the Reserve Bank of India (RBI). Taking an important decision, RBI has removed the three-year old restriction, due to which now customers with good credit scores will be able to take home loans at lower interest rates than before. This decision has brought great relief to lakhs of home buyers.
What is this new change?
For the last three years, banks and other financial institutions were not allowed to change home loan interest rates based on credit score. That is, no matter what your credit score was, you got the loan at almost the same interest rate. But now RBI has removed this restriction. This simply means that customers with higher credit scores will have to pay less interest on home loans. Conversely, customers with lower credit scores may have to pay higher interest.
Why is credit score so important?
Credit score is a mirror of your financial credibility. It shows how responsibly you have paid your past loans or credit card bills.
Score of 750 or higher: Generally, a credit score of 750 or above is considered very good. Banks consider such customers trustworthy and are more willing to give them loans at lower interest rates.
Bad Credit Score: If you have a bad credit score, banks feel a higher risk of you not being able to repay your loan. As a result, they may offer you a loan at a higher interest rate or may even reject your loan application.
What will be the benefits to the customers taking home loan?
With the implementation of this new rule, home loan customers will get many benefits:
Reduction in interest rates: Customers with good credit score will get loans at lower interest rates.
Low 🙂 Lower interest rates will reduce your EMIs, thereby reducing the financial burden on your shoulders.
Saving of lakhs of rupees: Over the long term of the loan, you will be able to save lakhs of rupees due to the low interest rate.
Faster Loan Approval: Loan applications from customers with good credit scores are approved quickly.
How can you improve your credit score?
If you are planning to buy a home in the future, it is very important to pay attention to your credit score right now:
Pay EMI on time: Always pay your loan installments and credit card bills on time. Missing any payment can have a negative impact on your credit score.
Use less credit: Avoid overusing your credit card limit. Generally, it is considered good to use less than 30% of your credit limit.
Pay off old loans: If you have any old loans pending, try to repay them as soon as possible before taking a new loan.
Avoid excessive loan applications: Making too many loan applications in a short period of time can have a negative impact on your credit score.
This decision of RBI will encourage those consumers who are aware of their financial responsibilities. A good credit score will no longer be just a number but will be the key to your dream home.
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