It's been a while you have been thinking of buying your dream house, you are saving from ages and decide to go for a home loan and apply for the same, you get a call from the bank you applied the loan from that you do not have a credit history, what happens when you apply for a home loan without a history?
The answer is the application gets rejected! You have been paying the rent on time, paying mobile bills on time and purchasing products on cash basis, but qualifying for a home loan needs more than that.
A credit history is a systematic record of all your debts and your pattern of repayments, your history is recorded from many resources such as banks, collection agencies and credit card companies and also from government. Your credit history is stored with various credit bureaus that differ from country to country.
There are various types of payments we make in our day to day life, but if you assume that paying your phone bills and other utility bills on time will get you a loan then you are wrong. Many banks look for the three digit credit score which is allotted by the credit bureaus which counts toward the payments of various types of loans like education, car etc. Paying your utility bills on time will never contribute to your cibil score as these transactions are never reported to the bureaus.
The answer to this is yes, there are many lenders in the market who do manual underwriting and consider non-traditional ways to give credit. These lenders will consider on time rent payments, insurance premium payments also mobile payments. Such situation is considered if you have high monthly income, no debts and a lot of savings in the bank.
But finding a traditional lender is no easy job in today's world instead it will be suggested if you start building your credit history and be patient about it.
Building a credit is no joke, there are a lot of factors which can either boost your credit score or take a dip in no time. For starters try getting a small loan, for example an electric appliance or a mobile phone. You can easily avail such loans from various banks and lenders and try making the payments on time. There are many lenders who provide interest free loans to customers for appliances. If not an appliance you can apply for a personal loan without cibil score i.e. from insurance companies or from government banks which can also contribute to your credit file. The best way to boost your credit score is to apply for a credit card, if you are applying for a credit card try making small transactions initially and make timely payments for the same, this way your credit rating can immediately see a hike and you can apply for a home loan as soon as possible.
There are many ways to avail a mortgage loan, but many recognized banks always go for the three digit cibil score. like for example if you are applying for an HDFC home loan you will avail a lot of benefits like low processing fee, low interest rates and also you can negotiate the interest rates if you have a cibil score and it is great. If you do not have a credit score or a low score it is very difficult to get a mortgage loan to buy a dream house.
We as Indians have a problem, we always think why we need a loan when we can buy stuff for cash and we teach the same to our children. It is suggested, if you have any one in your family who has just started earning, encourage them to get a small loan and ask them to make timely payments. This way they will have a credit report and in the future if they want to buy a house they won’t be facing such problems.