Mortgage Loan can fix your CIBIL score

Buying a property is a stressful affair and it is a life-altering decision for a salaried individual as well. But what most people are unaware that buying a property can improve a person’s CIBIL score. Property is a largest piece of debt that a person carries. When you take a home loan, your CIBIL score will drop, but when over the time you pay for the mortgage payments, the CIBIL score will go up

 Mortgage will show that you are responsible for your credit:

When you are able to buy a property, it shows that you have been responsible in your financial dealings. The banks will also give a mortgage provided your CIBIL score is above 750 and hence it shows that you are loan worthy in the first place 

Mortgage is a good debt:

it is tied to a physical asset that is your home in this case. This is also a secured loan unlike the personal loan and credit card which are unsecured loan. Mortgage is a secured loan because it has asset backing in a physical form.

Mortgage impacts CIBIL score with a positive credit mix:

10 percent of the credit score is based on the credit mix that you have. They expect you to have both secured and unsecured loan in the right mix. If you have a mortgage along with the unsecured credit like personal loan and credit cards, it indicated that you have managed to maintain the right mix of credit. This positively impacts your credit score.

 CIBIL score increases with the mortgage loans:

If you have opted for a mortgage loan, you have to be confident that you can repay it on time. When you make the repayments on time for a long period, your CIBIL score increases gradually. That happens because you are making the payments on time and servicing a mortgage loan for a long time will considerably boost your CIBIL score.

You control your credit:

If you are a salaried individual taking a mortgage loan, then a huge sum of your income goes towards servicing your loan. This in turn will restrict you from taking other loans. You will not want to be in more debt than you can afford to repay and hence your credit is controlled and will keep your CIBIL score intact. You will also not be viewed as a credit hungry individual.

          

Though a  can help you fix your credit score, you need to be cautious towards it. You need to make sure that you don’t miss any payments as that will drastically bring your CIBIL score down. Mortgage has a largest bearing on your CIBIL score and hence a negative impact will be just as heavy as the positive impact. You need to be sure that you have emergency funds in place so that you never miss any payments towards the loan. The best way to do that is to make sure that you have sufficient fund to meet your regular expenses including your mortgage for the next three months. 

Therefore, you need to ensure that you have enough funds to repay the loan and never miss a repayment and this will help you maintain a high CIBIL score throughout the loan tenure.