One of the biggest worries of home loan borrowers is rejection of their loan application. Lenders have various reasons due to which they may reject the loan application. Some of the common reasons are:

Applying for a loan amount which is higher than your repaying capacity-Home loan lenders approve the loan amount based on your repaying capacity. Your current income and debts are considered to determine how much of monthly instalments towards repayment of home loan you can afford. The lender uses this estimated instalment amount to compute the loan amount that you are eligible for. If you apply for a loan amount which is beyond your repaying capacity, then the lender may reject the loan application or approve a lower amount. Existing debts exceed repaying capacity -Your loan application may also fail to get the lender’s approval if your existing borrowings are more than what you can repay. This borrowing includes your outstanding towards other loans (e.g. car loan, credit card dues, etc.). Bad credit history due to default, non-payment -Lenders are wary of lending to people who have a bad credit history. A bad credit history may be the result of non-payment of any loan or default in servicing instalments. Inadequate paperwork- Loan applications may also get rejected if the applicant fails to furnish all important documents such as identity proof, address proof, income documents, property papers, etc.

However, it is not difficult to ensure that your loan application is not rejected and you get the loan amount you are seeking. Taking simple steps to improve your repaying credentials can get you a good deal on a home loan.

Lower your debts -If you are already serving instalments of other loans or have huge un- paid credit card bills, then it would be prudent if you clear the loans and bills before applying for your home loan. Lowering your debts will not only brighten your loan approval prospects but will also make you eligible for a higher loan amount.

Arrange for the down payment -You need to pay a certain percentage of the home loan amount as down payment. Depending upon the lender you choose, the down payment ranges between 10 to 30 per cent of the loan amount. Try and arrange a higher down payment. This will reflect your strong financial capability, which will bode well when your home loan application is considered.

Clean up your credit record -A Credit Information Report (CIR) plays an important part in the lender’s decision making with regards to home loans. A CIR is the record of all your borrowing and repayment history. The report is maintained by a neutral agency CIBIL (Credit Information Bureau (India) Limited). Most lending institutions, who are members of CIBIL, share an individual’s borrowing and repayment record with CIBIL, which then compiles all the information to prepare a credit report. Banks and other financial institutions access your credit report while processing your loan application.

You can access your credit report directly from CIBIL by paying a small fee. The request for a copy of your credit information report can be made via mail, phone, e-mail and fax:

Download the CIR request form from CIBIL’s website (http://www.cibil.com/accesscredit.htm).

Send the duly filled-in request form via mail, e-mail or fax to CIBIL.

	myreport@cibil.com
	Credit Information Bureau (India) Limited, P.O Box 17, Millennium Business Park, Navi Mumbai- 400710
	022-40789007
	022-61404300

Mail the self attested hard copies of your identity and address proof with a demand draft of Rs 142/- (inclusive of all taxes and express delivery charge), in favour of Credit Information Bureau (India) Limited payable at Mumbai. Once CIBIL receives the documents, it will dispatch a copy of your CIR to the address provided by you in the request form.

Improving your credit report

Look for discrepancies in your credit report. Check if all the information provided in the report is accurate. If there is any incorrect information then contact the concerned lender or CIBIL and request a rectification of the error. In case you have defaulted on instalments in the past or have not repaid a loan then contact the concerned lender and settle the outstanding.

A bad credit report can lead to failure in acquiring a home loan. And, even if the lender approves your home loan, it may ask you to pay a higher interest rate or a higher amount as down payment. So, get your finances in order before you apply for a home loan and realise your dream of owning a house.