Home Loan: Will you get a home loan even with a credit score of 500? This is the calculation..

It is very important to have a good credit score for personal loans, home loans, or any other kind of loan. A bank or NBFC gives you a loan based on your credit score. If your credit score is good, then you can get a loan without any hassle and a guarantor. Sometimes you get a loan even at low interest. On the other hand, if your credit score is bad, then the bank or NBFC can refuse to give you a loan.

Today, through this news, we are going to tell you whether people with a credit score of 500 will get a loan. A credit score of 500 is considered a poor score by major credit bureaus like CRIF High Mark CIBIL, Equifax, and Experian. Such a score reduces the chances of home loan clearance to a great extent.

The bank is reluctant to give a loan on a low credit score, especially when you are considering applying for a home loan from mainstream banks and housing finance companies. Most banks like HDFC Bank, ICICI Bank, and Axis Bank prefer applicants with a credit score of 650 or more. Most bankers think that account holders should be cautious about building their credit profile, as lenders are more cautious in lending money to borrowers who have a poor credit score and weak credit profiles.

Do these things before taking a loan

According to the news of Live Mint, Atul Monga, CEO and co-founder of Basic Home Loan, believes that "If your credit score is low, try to improve it by reducing your total debt before applying for a new loan. Try to keep your credit utilization ratio below 30 percent and make sure that you pay your loan EMI and credit card bill on time.

Along with this, he said "Avoid making any loan or credit card-related inquiries in a short time, as repeated inquiries can make your credit score even worse. Check your credit report regularly to identify and correct any errors, and make sure all the information is accurate.

What are the challenges with a 500 credit score?

A credit score of 500 indicates a pattern of missed payments or high credit utilization. Due to this, getting a home loan becomes challenging. Even if approved, conditions may include: High interest rates: Financial institutions may charge interest rates of over 10%, while for those with a credit score, interest rates may be as low as 8.1%.

So, it is made plain that getting a home loan with a poor credit score of 500 is quite difficult. Nevertheless, making efforts to gradually improve your credit score by making timely payments and not applying for new credit lines in a short period are simple steps that can help you fix your credit score.

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