A loan against property is a lucrative credit form that is beneficial in meeting big-ticket expenses like medical charges, weddings, home renovations, education and more. Individuals can leverage their property’s equity by availing a loan.
However, potential borrowers must fulfil basic parameters like maintaining a 750+ CIBIL score for loan against property. Before approving a loan application, lending institutions generally assess the credit report, borrowing habits, and repayment history.
Hence, individuals should practise ways to improve their credibility for a hassle-free LAP approval.
What are the ways to maintain a healthy CIBIL score?
Individuals should take a planned approach when availing a high-value loan like a LAP. Ideally, borrowing bounds an individual into a long-term repayment cycle and failing to repay the liabilities deteriorates the CIBIL score.
Hence, one must keep a tab over credit reports and work on the areas that need improvement. They should also read the loan against property eligibility criteria set by a chosen lending institution.
Here are some tips to improve the score effectively:
Avoid multiple loan application
Every time an individual applies for a loan, the lender initiates a hard inquiry. This is done to scrutinise an applicant’s reliability and repayment capability.
However, a credit report showing multiple loan applications can make an individual look credit hungry. This can lead to loan rejection as a lender may fear defaulting risk.
If multiple lenders reject a loan application, the CIBIL score will degrade drastically. This will create issues in loan approval during medical emergencies. Moreover, a borrower with a poor credit score may have to pay a high-interest rate on a loan against property, even on small value loans.
Make on-time repayments
The ideal way to improve credit is to practise timely repayments. Individuals who manage their disposable income and make timely repayments receive privileges from a lender.
These borrowers substantiate their repayment capability and remove the risk of default. Individuals can use their additional funds to clear the outstanding debts and simultaneously leverage their reliability.
Additionals ways like clearing credit card dues, pre-payments and part-payments can improve the credit score significantly.
Individuals with 750+ credit scores are obligated to receive better terms and customised features on loan against property.
For instance, reputed financers extend pre-approved offers that simplify the loan application process. Such offers are available on several financial products like a LAP, home loan, etc. Check your pre-approved offer by entering your name and contact number.
Avail a mixed range of credits
To improve credibility, borrowers should avail a diverse range of secured and unsecured credits. This will give an impression that a borrower can manage multiple loan accounts.
A lender will be obligated to offer better terms and an affordable interest rate. Additionally, an individual can disclose his/her additional income source and submit documents for the same to substantiate the financial capability.
This would facilitate a hassle-free borrowing experience and simultaneously leverage the credit score.
Maintain a low credit utilization ratio
Factor-like debt-to-income ratio plays a significant role when lenders decide whether or not to approve loan applications. They check an individuals’ capability to repay the liabilities without affecting their disposable income.
Maintaining the debt-to-income ratio below 40% is advisable for hassle-free loan approvals. Managing the funds and making timely repayments will help boost the CIBIL score. Individuals can also disclose their additional income source to prove their financial stability.
Check for discrepancies in the credit report
Every existing and potential borrower must keep a tab on their credit report. With digitalisation, today, credit reports are maintained online. This increases the risk of wrong data entry or discrepancies.
Failing to notice these faults can cause issues in loan approval. Hence, it is essential to keep a tab over the credit report and inform authorities even when minor problems are found.
It is recommended to check a lender’s eligibility and documentation terms before making a loan application. This practice would help understand the prefered credit score range and areas that need improvement.
Following these steps will help individuals score a 750+ CIBIL score for a loan against property. Moreover, they can improve the vital areas in their credit report for future loan endeavours.