Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
Four CIBs – CIBIL, CRIF High Mark, Experian, and Equifax- have beenestablished. Considering the details offered by the financial institutions, the CIBs can maintain records of borrowers who borrow from a financial system.
Data reported by financial institutions get collated by CIBs & made available in the forms of reportsand scores. Details of the credit transactions like loans &credit inquiries, and credit card transactions get reported by the financial institutes. These are reflected in the single credit report from the bureaus.
Prior to sanctioning any home loan, a lender requires verifying the creditworthiness and credentials of CIBs. It assesses the applicant’s probability of defaulting on housing loans. Creditworthiness gets assessed from the credit reports and credit scores issued by CIBs to mitigate the risk of housing loans.
When the lender obtains details of credit profiles from CIBs, it’s in your own interest to learn in advance. That will help find out whether,prima facie, you can get the home loan or not. For instance, individuals with a CIBIL score of over 750 have an improved chance of getting a home loan than the ones with lower scores.
There might be different reasons for home loan applications getting rejected by a prospective lender, depending on the credit history and score. At times, it might be due to defaults in payment of credit cards or servicing some other loans that affect the credit score. It might happen because of the adverse transactions of somebody else included under the profile but accidentally. That might be due to similarities in fields such as name, city, address, and more.
So, these are the things to learn about credit reports and their importance in the real estate domain.
