Get a home loan with no credit history – Here’s how

When it comes to availing of a loan to finance the purchase of a house, individuals often fail to avail of the most favorable terms owing to a lack of knowledge about a few parameters. Among these factors, not knowing how to read CIBIL report or understanding their importance can be particularly damaging in the long run.

Few individuals proceed to apply for a home loan without having any credit history or a CIBIL score. Now, while this is possible, it may lead one to undergo a more elaborate documentation process.

Following is an elaboration on how to avail of a home loan without a credit history and a few other factors that influence the availability of this advance.

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How to avail of a home loan without a credit history?

If you know what is meant by CIBIL score and credit history, you will understand its heft in any loan processing. It is the parameter that determines your creditworthiness as a borrower. So, availing of a home loan without a credit history will require you to strengthen your case as a borrower.

In the absence of credit history, a lender will turn to other yardsticks to determine the eligibility of an individual to avail of the loan. Factors like income, employment stability, educational qualification, etc., will play a crucial role in this regard and will help lenders to ascertain if the applicant can bear the EMI liability.

Take a look at the factors considered in this regard.

Factors that a lender considers before providing a home loan 

Lenders emphasize on the following factors if they cannot read the CIBIL report of a borrower – 

  • Income 

The financial institution checks the applicant’s repayment potential by going through his/her income statement. The monetary inflow indicates whether the person will be able to pay off the loan amount efficiently. It also helps decide the amount the institution will disburse. 

  • Age 

Usually, the age of a person also determines their stability. A younger applicant has to bear fewer financial obligations and is at the beginning of his/her career, from where the salary is only expected to rise. On the other hand, applicants closer to retirement age have lower chances to settle the loan on time. Resultantly, lenders prefer younger borrowers.

  • Work experience

Self-employed and salaried individuals are eligible for a home loan as long as they present their work experience in a field. It ensures that the applicant possesses the knowledge and ability to pay off the loan amount. 

  • If you approach with a co-applicant

If you don’t possess the income level to pay off the home loan amount, you can apply with a co-applicant. This will also help distribute the financial burden and also ensure fast repayment. 

  • Educational qualification

Lenders may also take note of educational qualifications before approving the loan amount in the absence of credit history. Individuals engaged in professions like chartered accounting, medicine, engineering, etc., have a higher chance of securing a home loan, owing to their income stability. Lenders deem such applicants as risk-free since a solid educational qualification automatically ensures job and income stability.

Thus, while lenders can offer a home loan without reading the CIBIL report, individuals will have to comply with the other eligibility requirements set forth. Compared to going through this hassle and the uncertainty of approval, you can choose to develop your credit history instead, by opting to use a credit card. After using this payment card for a while, check your CIBIL score online for free and keep tabs on your credit report. 

You can then apply for a home loan and enjoy approval without hassle.

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