New Delhi: The Reserve Bank of India (RBI) makes new announcements every day for banks and their account holders, often benefiting them. Home loan borrowers are now in for a treat. A few days ago, the Reserve Bank announced something that will surely bring relief to those seeking a loan.
If you have a good credit score, you can get lower interest rates on your home loan. Paying lower home loan interest rates will be a direct benefit. The RBI has made a major change in regulations.
For the past three years, banks and financial institutions have been prohibited from changing interest rates based on credit scores. However, the RBI has decided to completely lift this restriction. Customers with high credit scores will now benefit from lower interest rates on home loans.
Learn about the RBI’s new changes.
For the past three years, banks and financial institutions have been prohibited from changing interest rates based on credit scores. But now the RBI has decided to completely lift this restriction. Those with a high credit score will be able to get a home loan at a lower interest rate. Those with a low credit score may have to pay higher interest.
According to the RBI, a credit score is a measure of a borrower’s credibility. Loans are granted based on their credit score. Sometimes, loans are denied due to a poor credit score. Therefore, a good credit score is crucial for banks.
What is a good credit score?
A credit score of 750 is considered good. With a good score, banks consider you a trustworthy customer and offer loans at lower interest rates. A weak score poses a higher risk to the bank, leading to higher interest rates.
What are the benefits of a home loan?
This will reduce the EMI amount due to lower interest rates. Savings of up to lakhs of rupees over the long term are easily realised. Additionally, customers with a good credit score will be able to get a loan approved faster.
Therefore, if you are planning to buy a home in the future, you need to pay attention to your credit score. You will need to pay EMIs on time. This means keeping your credit card balance low. Pay off the old loan before getting a new one.