Home loans are easily available and one of the major criteria for approval of this loan is the credit card statements that are received every month. Credit information report (CIR) is the statement that one receives from the credit giver institution or bank which indicates our spending habits. How this is related to home loans will be discussed in this article.
CIR mentions our salary, expenses and savings every month. Since the lender has to assess the repaying capacity of the borrower before approval of home loan this CIR is an important indicator at a glance of our financial standing. Our spending habits are also noticed in the CIR. How tactfully do we spend every month is assessed. Many people may always spend impulsively and their report always shows more expenses than their monthly salary. This goes in carry forward mode for the next month. Interest is applied in case of late payments and this shows that the person is not balancing their income and spending. This clearly indicates to the lender that the borrower does not have left money then how will he repay the loan? In another case when the borrower does use credit card only in emergency and has his expenses mostly in cash dealings and also shows balance remaining then this gives a positive signal to the lender. The borrower in this case has remaining savings every month which can be used to repay the loan.
Hence the first and foremost point a lender notices is our CIR and only if it has positive indicators then the home loan procedures begin. Our repaying capacity will indicate in our savings and assets and the lender gets reassurance that the loan will be repaid on time. So this credit information report has become a major criteria for selection for the approval of home loans.