home loans

How To Finance A Home Loan With a Poor Credit Score?

Unless, of course, you are wealthy from a family inheritance, obtaining a loan is necessary if you want to purchase or construct a home of your own before you reach your golden years. And since the majority of individuals do not have such good fortune, they must rely on lenders to finance their ideal home.

You might believe that getting a home loan can’t be that difficult because there are so many public and private sector organisations competing with one another to attract customers for a loan. If your credit score is low compared to other applicants, your loan appeals may be ignored by legitimate money lending institutions, whether they are businesses or individuals.

What is a credit score?

Your credit score, which ranges from 300 to 850, is used by lenders to determine your creditworthiness. A credit score is, to put it simply, an assessment of your full credit history and financial behaviour, including the number of open bank accounts, the amount of any debt, the history of payback, etc. The likelihood of loan repayment increases with the increasing scores. Therefore, lenders take into account credit history and credit score when someone applies for a loan of any kind to ensure successful and prompt payback.

What to do in case of poor credit score?

Let’s now talk about the subject that this post is named after how to finance a home loan while having a low credit score. The credit score is an important factor in determining your home loan eligibility. Even though most banks and lending institutions view persons with low credit scores as high-risk borrowers, there are ways to bend the odds in your favour if you do have a poor credit history.


If you already own a home but need money to make improvements or repairs, you can apply for a loan against property by mortgaging your asset, in this case, your home.

Leverage your income

If you have reliable work and income, your loan application may be successful. The risk connected with the borrower’s capacity to repay the loan is the main factor in loan appeals being denied. Having a reliable source of consistent income, such as a job or family estate, makes a borrower more trustworthy in the eyes of the lender. So when you submit your loan application, don’t be afraid to boast about your well-paying employment and promotions.

Right the wrong

It might still be possible to undo your earlier blunders. Try to talk to the relevant institution and come to an agreement if you have previously missed a loan or credit card payment. While you won’t get off easy, you might receive a No Objection Certificate after paying a settlement sum. Your credibility will increase in the eyes of the financier thanks to the NOC.

Piggy ride

A co-applicant or guarantor with a solid credit history is ideal. If your spouse has a superior credit history, this will work best for you. They can be dragged down with you by adding them as co-applicant. Just kidding, negotiate better loan interest rates. Right, for better or worse?


A sizable down payment will greatly lessen the risk of loss connected with a pricey purchase like a home loan. By successfully lowering the total loan amount, will increase the likelihood that the loan will be approved.


Check your CIBIL score to rule out any irregularities in your financial records, even though it might be a long shot. It costs nothing to request a credit report, and it needs to be done frequently to track credit scores and correct any mistakes.

Get your bank involved

Approaching the bank where you have long-standing, reliable financial transactions is the greatest strategy to win over sceptic financiers. If you have been a dependable customer for a long time, banks may be more likely to assist you with your loan. They are likely to offer you enticing interest rates as well, especially if you have a healthy account balance or deposits with them.


Keep in mind that even if you are successful in obtaining the loan, you will still be required to pay extremely high-interest rates and other costs. Please be aware that failure to pay your EMIs on your approved loan may severely damage your credit history, making it impossible for you to be granted any loans in the future. You can choose auto-debit and pre-fund your account to be on the safe side. Strive to improve your creditworthiness. Improve your credit score by making some real efforts. Increase your debt-to-income ratio and settle any unpaid debts. Maintaining sound financial habits will help a lot.

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