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Why is a Good Credit Score Important?

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Posted In HOME LOAN
Why is a Good Credit Score Important?

After a three year meltdown, the number of buyers showing more and more interest in buying the property has increased. This is very much due to the fact that the banks are now giving out loans at much less rate of interest as compared to the rate pre- demonetization. The new rules and laws are also the contributing factors for the sudden increase in the sales of real estate properties in the country. To encourage the prospective buyers, even more, banks are offering attractive offers as well.

Most people who apply for home loans are now getting approved without any issue. In this case, people wonder why there is so much fuss about credit score when the banks and financial institutes give out loans to even the ones with low credit score.

A credit score is assigned by the credit bureaus and it reflects your credit profile. The credit ranking in India ranges from 300 to 900. The higher your credit score, higher the chances of the buyer getting his loan approved sooner. Still wondering why maintaining the credit score when the loan gets approved even with the low credit score? It is because; there are many advantages of maintaining it.

Banks and financial institutes give out the loan after gauging your credit score. If you apply for a loan with a good credit score, you have the power to negotiate a good deal. If you have a low credit score, the banks will still approve your loan but you will not be in any position to bargain. You will also lose few lakhs in the process. The banks and financial institutes put a lot of energy, time, and resource to avail your credit score from the credit bureaus. Hence, the matters of the credit score should not be taken lightly.
 
Benefits of a good credit score:

When you approach the bank with a good credit score, it gives you a better chance of establishing a good relationship with the bank. You will also be able to negotiate the rate of interest and the banks may give you the loan at reduced rates. This will help you save a lot of money in future.

Home loans come with a lot of other expenses like processing fee, legal assistance charges, technical fee, analysis cost, stamp paper cost, franking charges, and taxes. Except for the last three mentioned expenses, banks have different rules regarding them.

When you add all these expenses, they sum up to a lot. If you are a smooth talker with a good credit score, you will be able to convince the bank to lower the charges for you.

When you are in the better position to talk, you can convince the bank to relax the norms of terms and conditions for you. With a good credit score, you will be able to get some relaxation on the fees that you have to pay to while switching the rate of interest.

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