Disha and Bharat. A very dedicated couple in their late 20s and married for almost 5 years after an affair of 8 long years. Both are working, staying in a metro city – Mumbai. They both started working soon after their Engineering was over. Both are in good position with the combined income of more than twenty lakhs. They are now thinking to start a family and for that thinking to buy a new home, a home which they can call theirs and start the new beginning with a lot of dreams that they have been seeing since long! let’s hear their story by them.

Disha says, in every couple usually one is of spending nature and other with a saving nature. In Bharat and me, he is the one with spending nature and I am with saving. Sometimes, of course, the roles get reversed. But we are still spending into the budget that we have fixed. The Credit cards sometimes give the tough times as the track is lost when going shopping and parties every second weekend. But, we have always paid the bills on time except for a few times and we consider that okay. As we are nearing 30, now we want to start a family and hence to make the whole parenting experience we nor wish to buy a home we can call in ours and the rent could be given in the EMIs for the loan that we wish to apply for! Metro cities have expensive houses, so this is ought to be a very calculative decision and a longer one too! To understand this all, we went to HDFC bank and started to know HDFC Home Loan procedure. Credit score, eligibility criteria, repayment capacity, loan amount that can be sanctioned, locations, property type if it is old building or new, under construction or ready to possess, we were understanding it all.

We wanted to take a joint loan with Bharat and my name. So, both our credit score was going to be checked. We were sure that it won’t an issue as we both have been responsible for payers. When the procedure was on of eligibility check, we got too many things that got us shocked. Bharat, even being on spending side had his score 747, which was decent enough to get a loan approval. But, my score was 639. With the detailed check on it, we came to know that my credit card usage was the issue. We came to know that day that the credit card usage should be done under 40% of the total Limit allocated to us! Usually, the household things, including the big purchases including television or refrigerator were done from my card and rest all shopping, dinners, movies etc were done from Bharat’s card. So, many times the credit utilised was more than 65% – 70% of its total limit. We that day came to know that my credit card usage can impact my home loan eligibility.

From the above example, we can definitely understand that there are a few things which can affect the score randomly and we won’t be aware of it. It is import to understand the credit report and credit score in detail so that we know what all things are to be taken care for keeping a good score and decent report to not fall to loan defaulter list and getting the loan approved anytime we want.

The credit card utilisation ratio when is considered to 35% – 40% of the total limit, will reflect credit usage. With the facility of credit cards, it is also that evidence that in the end, it is credit which is offered to an individual for a month. Where in we can use the money without actually having it. But, it is still a credit. The more credit limit utilisation gives the idea to the lender that we are in need of more credit and that may be a greedy need. That is the major reason. If the utilisation is more in usual cases, apply for one more card. So, if suppose the credit limit of the card is 1,50,000 and your usual utilisation is 1,00,000, apply for one more card which similar limit. So, you will have 3,00,000 limit summing it up and utilisation as 1,00,000 still which is 33%. so it works! Else, make payment twice a month so the credit line is revived.

 That after a particular limit, you will have to pay first and then the frozen limit will revive.

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