HDFC home loan applicants! Get your credit score before applying for credit line

HDFC home loan: Getting Cibil score before applying for a home loan helps you save money that you may lose in the form of token money payment etc. if the loan is rejected.

Banks verify one's credit history through credit information bureau (CIB). Presently, there are four CIBs but Cibil is the most prominent. Photo: PTI

HDFC Home loan: Buying a home requires ample funds. These can be in the form of bank savings, investments either in mutual funds or in the stock market or in ELSS funds. In case a person doesn't have ample investments in the above-mentioned investment options, he or she will have to rely on borrowing money to buy his or her dream home. In such a scenario, bank borrowing in the form of home loan is one of the most preferred options. But, to avail a home loan, one needs a better credit history that a bank cross checks before disbursing the home loan. Banks verify one's credit history through credit information bureau (CIB). Presently, there are four CIBs but Cibil is the most prominent and hence a loan applicant's credit history is also known as CIBIL rating. So, investment experts advises a home loan applicant to have his or her credit history before applying for a home loan.

Elaborating upon why one should access his or her credit history or Cibil rating before applying for a home loan Balwant Jain, a Mumbai-based tax and investment expert said, "As the lender will invariably obtain the details of your credit profile from the CIB, it is in your own interest to know in advance, the particulars about you that will be available to the prospective lender. This will help you in finding out whether, prima facie, you will be able to get a home loan or not. For example, people with a CIBIL score of more than 750, have a better chance of getting a home loan than those with a lower score." Jain said that a bad credit history or CIBIL rating may also be due to the negligence on the part of the financial institutions in reporting one's transactions records or on the part of the CIBs in collating the data received.

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On how getting Cibil score in advance helps to save any losses in future Balwant Jain said, "If you become ineligible for a home loan, due to bad credit history or low credit score, your plans to buy a property may go haywire. In such cases, if you have already partly implemented your plan to purchase a house, by either paying token money or advance, you may end up losing the earnest money paid to the seller or the builder."

Standing in sync with Balwant Jain's views Kartik Jhaveri, Manager — Wealth Management at Transcent Consultants said, "It is advisable to obtain your credit report in advance, to ensure that there are no erroneous transactions reflecting in your profile. If there are any, you can take corrective actions to get it rectified, before the lender accesses your credit report. As per the RBI mandate, all the CIBs are required to provide the credit score and credit report, free of cost, once in a year."

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