5 Personal Habits That Are Detrimental To Your Credit Worthiness
It is time to make this clear. Just because banks are chasing you with repeated calls offering a home loan, it doesn't necessarily mean that they would, in fact, grant you one. Before they decide to do so, they will conduct a detailed study of your personal and professional movements. While doing so, financial institutions are not going to repose their full faith in you only because you are earning a great package or are in your early 20s. There are many other factors that would influence their decision.
Here are some of them:
Are you a drifter?
You would be mistaken if you thought it would not matter to banks how many jobs you changed in your entire career if you are earning a package fat enough to re-pay the loan. Frequent job changes might earn you the tag of being a drifter with an unstable persona. Most banks would not like to lend to someone who quits jobs frequently as it affects your credit worthiness adversely, thereby jeopardising their investment.
Are you a spendthrift?
Your regular visits to fancy hotels and expensive grooming centres might be your personal choice. Your investments in expensive apparels and jewellery, too, might be your own business. However, banks may not take it well while issuing you a home loan, if all the payments are done through credit cards and bills are not paid within deadlines. Your account statements reflect your tendency of being a procrastinator, something not at all taken kindly in the world of finance and banking.
What is your saving philosophy?
Again, whether you have your life insured, have invested in mutual funds or like spending all your monthly salary in partying should not be a bank's business if you show them you are young enough and earn fine enough to re-pay the loan. When a bank is about to grant you a heavy sum without knowing you personally, how you spend becomes its business. Someone with good savings, for instance, have better chances of getting a loan issued than someone who loves to spend lavishly.
Are you already carrying too much burden?
Some of us are good with living our lives on credit. We are also disciplined about it. But, when we apply for a home loan while we already have a car loan, an education and a personal loan running, chances of a bank issuing us another loan are thin. Excessive dependence on credit may reflect poorly on you. Therefore, it is advisable you pay off your small loans before you apply for plan to borrow a large sum such as a home loan.
Are you in the middle of a dispute?
Everything else apart, lenders will avoid granting a loan to someone who is caught in the middle of a financial dispute, even it happens to be a trivial matter. If one lender is chasing you over non-payment of an insignificant amount, another will likely not grant you a significant sum. This is the reason why it is of utmost importance to repay all your bills on time, small or big.