Most of the prospective home loan customers are left distraught with the loan application rejection by the banks. One of the major reasons for the rejection of home loan application is attributed to bad credit score. If you are taking out a home loan jointly then it is necessary for even the co-applicant to maintain a sound and healthy credit score. Co-applicant can be spouses or business partners who are looking forward to purchase a property by securing a home loan.
Who can be your co-applicant?
A co-applicant can be described as a person who applies along with the borrower in order to secure a loan. It should be noted that a co-applicant can’t be a minor in any case as in legal fashion, a minor can’t be brought under a contract. Most of the banks offer a number of relations which can act as co-applicant when filing for a home loan. This includes parents, husband and wife, parent and son.
The importance of credit history of co-applicant
Banks always make a detailed check of the credit report of both the borrower and the co-applicant when you apply for a home loan. All the necessary information will be checked thoroughly and decision of whether or not to offer home loan to the prospective customer will be taken. Bank will look into the salary slip, balance sheet and other credit information for both the borrower and co-applicant.
In simple words the credit score helps in determining the customer’s borrowing behavior in a true way. If you have a good and healthy credit score but the co-applicant is a willful defaulter or happens to be late in making payment then it will adversely affect your chances of securing the home loan. Banks always get extremely cautious when they check a lower credit score for lending a home loan. Thereby it is necessary to maintain a strong financial track record of both the co applicant and borrower while applying for a home loan.
Smart steps to establish a good credit history
Establishing a good credit history is quite easier than you think. Just follow the below mentioned simple guidelines and you will be able to secure home loan without much difficulty within a short time.
- Make sure that the bills are paid in timely fashion as late payments are viewed quite negatively by the loan providers.
- Keep the balances low and maintain a relatively healthy mix of the credit.
- Make sure you do not apply for home loan after getting new loan sanctioned recently as this will be viewed as a credit hungry behavior.
- Make sure even the co-applicant has not taken out a loan recently while applying for a home loan.
- It is necessary to review the credit history on frequent basis throughout the year.
If the borrower and the co-applicant follow all these simple steps then they will both possess a sound credit score which will boost their chances of getting a home loan approved without much hassle.