Your credit history determines your credit worthiness and loan repayment capabilities. Banks assign a credit score to each applicant. Credit scores are from 300-900. Usually 750 score is considered Good for home Loan.  http://selfindeal.com/loan.htm

1. Effects of Credit score on Your
Home Loan Eligibility

2. 5 C’s home loan eligibility
1) Credit history
Your credit history determines your credit worthiness and loan repayment capabilities. Banks
assign a credit score to each applicant. Credit scores are from 300-900. Usually 750 score is
considered Good for home Loan.
One should apply for credit score and check details themselves. This will help rooting out
pain points of your credit score and present a strong case to Bank. You can also save
processing fee and time, if your score is not up to the mark, presently.
2) Capacity
Lenders need to make sure, you will pay up in future. Your credit research is means of
determining the assurety of repayments. Your credit score determines home loan eligibility
i.e the loan amount banks will sanction to you.
Your debt to income ratio is determining factor for credit capacity.
Your financial capacity determines your home loan eligibility.

3. 3) Collateral
For secured loan product such as home loan, the applicant pledges something
that they own. In this case, the property is taken as collateral. The value of
collateral is considered for loan amount.
4) Capital
Your assets, investments, savings and other repayment sources are also
considered as capital other than primary income source for loan repayment.
Capital is helpful in future repayments when primary source of income is not
available.
5) Conditions
Present market & economic conditions, government policies, employment
growth etc also effect lending practices of banks.

4. Best practices of keeping good scores
Pay your Dues & On Time
Defaulting on loan repayments reflects negatively on your credit score(CIBIL).
Defaulting on credit card payments is also a negative on your credit score. The
records of your default are maintained for years.
It is very important that you pay all your Dues in time.
Automate EMI payment
Ask Bank for facility in which your EMI will be deducted automatically from your
account. If not possible, make a mental note of it. Make a reminder of EMI payments
in your smart phone. The reason is not miss the Due date.
Don’t miss EMI due dates
A single day of delay shows up in credit score report.
If for some reason, one could not pay on time. Write an application to your bank
branch manager for not reporting it. (for the lack of better words)
NOTE : If the EMI due date is not convenient to you, One may request the bank to
change the due date accordingly.

5. Multiple credit card
Your credit history is because of credit cards, online transactions and previous
bank loans. Having more than 2 credit cards is negatively viewed by bank’s credit
team. If you have more than 2 credit cards, make payments and close unwanted
credit cards.
Any credit card defaults and remaining balances will show up in your credit
report.
Note : Make sure and take confirmations that your unwanted credit cards are
indeed properly closed.
Don’t exceed credit limits
Your credit transactions should not monthly exceed 35% of your net monthly
income. Maxing Out credit cards, every second month, shows very properly and
reflects poor financial planning. The risk to lend is more.
Timely credit card EMI repayments
If you default in any loan repayments of any bank, it shows up negatively in your
credit history. Banks are skeptic of defaulting applicants. Provide good reasons for
any defaults that show up in your credit inquiry. Cheque bounce is also common
problem with loan applicants.

6. Breakup of credit score
1. Payment history
2. Outstanding Loan amount
3. Duration of credit record.
4. Liabilities and assets
5. Recent credit activity

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