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How do credit cards impact your home loans?


How do credit cards impact your home loans?

Your credit card and home loan have a deeper inter-relationship than you probably imagine. Your chances of getting a home loan sanctioned will go down hugely in case you have a higher limit for your credit card. Credit cards can be used wisely for building credit history and fulfilling some immediate needs but if they are used impulsively, they can lead to an individual falling into a huge debt-trap which can ruin financial goals and cause a lot of anxiety as per experts.

Experts also talked of how those who were impulse buyers, just swipe credit cards everywhere without even thinking about the total impact on their overall credit score and credit history. Credit scores tabulated by CIBIL or the Credit Information Bureau of India Limited are widely used by financial institutions and banks for ascertaining whether a loan applicant is credit-worthy or not. CIBIL scores above 750 are considered to be really good as per experts.

Increasing one’s credit score is possible if a credit card stays clean, i.e. there is no debt amount that remains outstanding. In case a person defaults or delays on his/her payments for credit cards or if he/she opts for write-offs from credit card companies for particular amounts, it will be very tough to get a home loan sanctioned in any case.

When a bank scrutinizes any home loan application, the borrowing capabilities of any applicant is worked out on the basis of the credit limit that he/she possesses at present. Home loan applications will never be approved in case prospective applicants have huge debts on their credit cards or an excessive number of credit cards. Home loans will not be approved in case there are any defaults in monthly payments which will impact the credit score badly. As a result, managing your credit card wisely helps you keep your credit limit higher, thereby scaling up your chances of securing a home loan.


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