How to Get a Home Loan With a Low Credit Score

Getting a home loan if you have a low credit score is not an easy task. The better the credit the simpler it becomes to qualify for it. Based on your credit situation it may not even be possible. You may have to pay more than borrowers who have a sparkling credit and you may not even qualify for low interest rates in the current market. However you may be able to qualify for a home loan in spite your low credit score if you have a stable income. Here are some ways in which you may be able to get it even with a low credit score.
The first thing to do is check your credit score and try to boost it ahead of time. The Credit Information Bureau (India) Limited (CIBIL) collects your credit information, creates a credit history report and gives you a credit score ranging from 300 to 850 points. There is a rating system used by them which places your credit score in categories ranging from A to D, A being excellent and D being poor. You can get a free report from them and find out how bad your credit is. Locate any errors and discrepancies that may be present in your credit report and get them resolved immediately. Be sure the credit report you provide the lender is correct and accurate.
The interest rates on low credit score home loan can range from very high interest to a rate reasonably higher than it for customers with good credit. So if you know your credit score you will know exactly how it will affect your interest rates and possibility of getting a home loan.
Once you know how you fair in your credit ranking make arrangements to improve your credit ranking. There are several ways in which you can boost your credit score. The fastest way to improve your score is to pay down your balances. Always make it a habit to make timely payments as payment history comprises the maximum amount of credit score. Scan through your credit reports for any errors and discrepancies and have them resolved instantly. Even 6-8 months of good credit behaviour make a good impact on your credit score and bring them up enough to be able to qualify for a bad credit home loan.
Try to collect as much money as you can to make a down payment. A large down payment will ensure more favourable terms on your home loan in spite of a bad/low credit ranking. The larger your down payment in the loan, the lower risk you present to a lender.
Try and secure your home loan i.e. offers the bank some protection in return for it. This means if you default the lender can seize the collateral you provide. This keeps you in good faith with the lender and increases your chances of qualifying for it.
Another very effective option and in some cases the ideal option would be finding a Co-signer. A co-signer can be a relative like a parent or spouse who would sign the home loan with you and assume the liability for it. A co-signer helps to guarantee the loan by signing loan documents with you. The co-signer or co-borrower will responsible for repayment if you default. So if you can manage to find a co-signer the bank will use his/her credit rating, income, and assets information instead of yours for the home loan qualification procedure.