Credit Cards && Home Loans

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Deal Cadet
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Hi Dimers,
I was reading some articles about credit cards and their impact on approval of home loans; stumbled on this article:
https://economictimes.indiatimes.com/industry/b...
I was shocked to read that even if you have a good credit score and credit history, still the high count of credit cards and their high credit limit DOES impact approval of home loans. I researched more and found that the total credit limit to your income ratio (not to confuse with debt-to-income ratio) shows your credit hungry nature, even if your utilization ratio be low.

So my question to folks is that while applying for a home loan, did anyone face any such questions or issues as to why they hold this many credit cards (even after maintaining a good credit score and history).

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This is something new. Experienced dimers can verify this

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rohan8397 wrote:

This is something new. Experienced dimers can verify this

Kindly tag some experienced folks if you know who might have taken home loan and have a collection of cards smile

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Have 15 cards with timely payments.I have pre-approved instant home loan eligibilty of 40 lacs in icici. Earlier had personal loan at that time loan approval was only 12 lacs. They ask to close and pay any outstanding amounts to increase eligibility. If you have huge outstanding amount then the eligibility amount will go down drastically.

Before joining Desidime, I had only one primary credit card. blush

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JaiKrish1031 wrote:

Have 15 cards with timely payments.I have pre-approved instant home loan eligibilty of 40 lacs in icici. Earlier had personal loan at that time loan approval was only 12 lacs. They ask to close and pay any outstanding amounts to increase eligibility. If you have huge outstanding amount then the eligibility amount will go down drastically.

Before joining Desidime, I had only one primary credit card. blush

Cool. Yeah having outstanding amount surely makes sense; but given that no outstanding amount with a good credit score with timely payments; can just the high number of cards raise a question on approval ?
I happen to have 10 CCs right now with all timely payment and good score, hoping to go for a home loan in a year or two maybe, so that’s why got a bit worried reading this article rolleyes

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On my experian credit report via one app it says having more higher no of cc is affecting your score. shows 12 cc in my acc. 4 are due to unclosed cc in my report.
kotak & stanchart both havnt closed my acc in report even after more than 5 years.

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@BlueFlash This does affect your personal unsecured loan but not home loan as home loan is a secured loan. I have low income compared to high credit card limits on my 2 cards but no issues in taking either vehicle loan or home loan was faced due to the nature of loan(s) applied for

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There are other factors involved too but yes having a large no. of cards is not so good. The most important factor though is loan giving institution’s own discretion so a loan approving person may approve someone’s home loan if he is convinced about person’s financial capability & that out of 12 credit cards the person has a few are super premium/top tier while rest are probably taken early in life/because of offers/being ltf etc while another person may reject same person’s loan application based on their loan institution’s internal guideline of not giving home loan to a person with more than 8 cards irrespective of any other factor.

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jambui wrote:

kotak & stanchart both havnt closed my acc in report even after more than 5 years.

Raise a dispute with Experian via their site and send them a follow up email every 3 weeks. Get this rectified for future benefit.

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Ramta_Jogi wrote:

@BlueFlash This does effect your personal unsecured loan but not home loan as home loan is a secured loan. I have low income compared to high credit card limits on my 2 cards but no issues in taking either vehicle loan or home loan was faced due to the nature of loan(s) applied for

From what I read everywhere, for home loans (mortage), the total credit limit comes into play; banks consider around 3-4% of total limit as the person’s expected monthly cc expenses (irrespective of whether he even uses it or not) and then substract this from his income to calculate the emi (hence total loan amount indirectly).
Say your total CL is 10Lakhs (10CC each of 1L), then banks will assume that you must be spending a minimum of 3% of this, i.e. 30K, so now if your salary is say 80K, then automatically the emi will be basis on 50K as per regular calculations. This clearly shows that higher number of cc, or rather higher total credit limit is an important factor in deciding the loan amount to be sanctioned. Again this is as per my recent understanding, might be misinformation too…

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BlueFlash wrote:

From what I read everywhere, for home loans (mortage), the total credit limit comes into play; banks consider around 3-4% of total limit as the person’s expected monthly cc expenses (irrespective of whether he even uses it or not) and then substract this from his income to calculate the emi (hence total loan amount indirectly).
Say your total CL is 10Lakhs (10CC each of 1L), then banks will assume that you must be spending a minimum of 3% of this, i.e. 30K, so now if your salary is say 80K, then automatically the emi will be basis on 50K as per regular calculations. This clearly shows that higher number of cc, or rather higher total credit limit is an important factor in deciding the loan amount to be sanctioned. Again this is as per my recent understanding, might be misinformation too…

Open a wealth account in any banks and wait for a year , you will get pre approved home loan around 20-40Lac

All this funda of cibil and checks are for the middle class , once bank sees you as a mota party they will itself give you loan at Comp rates without income proof

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SastaRaju wrote:

Open a wealth account in any banks and wait for a year , you will get pre approved home loan around 20-40Lac

All this funda of cibil and checks are for the middle class , once bank sees you as a mota party they will itself give you loan at Comp rates without income proof

Very true

Paisa paise ko kheechta hai

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jambui wrote:

On my experian credit report via one app it says having more higher no of cc is affecting your score. shows 12 cc in my acc. 4 are due to unclosed cc in my report.
kotak & stanchart both havnt closed my acc in report even after more than 5 years.

Check if this is problem with experian or with banks..
If its banks, then write an application/mail (dont say it verbally)for an NOC and closure certificate of CC.
I read it on some financial site, we need to raise a request for NOC/or some some Closure certificate for every loan/CC.
So that it is reflected in these Cibil Reports..

Please correct me if I am wrong.. Open to improve my knowledge wink

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BlueFlash wrote:
Again this is as per my recent understanding, might be misinformation too…

Your information might be correct but tell me something – How do they (these so called experts writing in newspapers, magazines etc.) actually calculate a credit limit on your credit card when some of the card issuers don’t even report the credit limit to the bureaus?!

Some would say they take the highest amount spent on credit card as the credit limit. In that case they can’t be farther from truth.

When i applied for a vehicle loan, the bank itself asked me to verify my credit limit saying it has no knowledge of the same from my CiBiL. Same happened at time of small home improvement loan.

My income is 1/110 of my total credit limit.

Though, as SastaRaju rightly remarked – Show them the money & they will piss on all rules. Rules are for fools.

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The beauty of our country is even defaulters can get loan easily from same bank from where you have been struggling to get a good credit score…

(One of my known got his car financed from SBI bank (paid little high rate of interest) with defaulter record which was a great shock to me..)

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netXpert wrote:

The beauty of our country is even defaulters can get loan easily from same bank from where you have been struggling to get a good credit score…

(One of my known got his car financed from SBI bank (paid little high rate of interest) with defaulter record which was a great shock to me..)

If you have money everything is forgotten

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Topsey wrote:

The whole point of taking loan is you not having money toungueout

Not always someone might not want to dip on their investments ,get tax benefits , improve cibil etc

I have seen people earning lakhs per month taking loan of 50-70k

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@BlueFlash
*I have faced an issue with a personal loan, I have cards of all banks
Though I already have pre-approved offers from each one of them, they are at a higher interest rate
My record is all clear, however, cibil reflects 1 month earlier data, and each month I have substantial outstanding
so 3 banks rejected my PL and 2 of them asked for the latest credit card starments for further procrssing
However, I ended up not taking that loan

Talking about secured loans ( Home / Car ) there is no issue, got approval from 3 banks for a home loan without any issues
The only chances of not getting a secured loan are you being convicted in serious fraud or criminal activity*

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BlueFlash wrote:

Cool. Yeah having outstanding amount surely makes sense; but given that no outstanding amount with a good credit score with timely payments; can just the high number of cards raise a question on approval ?
I happen to have 10 CCs right now with all timely payment and good score, hoping to go for a home loan in a year or two maybe, so that’s why got a bit worried reading this article rolleyes

No issue with HL chill

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BlueFlash wrote:

From what I read everywhere, for home loans (mortage), the total credit limit comes into play; banks consider around 3-4% of total limit as the person’s expected monthly cc expenses (irrespective of whether he even uses it or not) and then substract this from his income to calculate the emi (hence total loan amount indirectly).
Say your total CL is 10Lakhs (10CC each of 1L), then banks will assume that you must be spending a minimum of 3% of this, i.e. 30K, so now if your salary is say 80K, then automatically the emi will be basis on 50K as per regular calculations. This clearly shows that higher number of cc, or rather higher total credit limit is an important factor in deciding the loan amount to be sanctioned. Again this is as per my recent understanding, might be misinformation too…

your understanding completely wrong
The person who has written this article has done it from his imagination

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Topsey wrote:

The whole point of taking loan is you not having money toungueout

No
A home loan is for tax benefits, PMAY etc
and if you are into business any kind of loan can be made a business expense.
expenses reduce profit, less profit, less corporate tax
any CA will explain this better

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Topsey wrote:

The whole point of taking loan is you not having money toungueout

Banks will give loan to people who can prove that they don’t need it.

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I talked to HDFC Bank home loan executive he said now the scenario is changed home loan eligibility and intrest is based on the cibil score.If you have cibil score > 750 you can get higher limit and interest rates around 6.8 %.

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Aravind_18 wrote:

If you have cibil score > 750 you can get higher limit and interest rates around 6.8 %.

Another horse shit. Even if you have your CIBIL at less than 700, you’ll get home loan at that rate.

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netXpert wrote:

(One of my known got his car financed from SBI bank (paid little high rate of interest) with defaulter record which was a great shock to me..)

My cousin has NEVER paid his credit card dues on time – defaults of over 1 year, defaulted on vehicle loan – twice & still got a home loan from LIC. Then keeps defaulting on home loan for 6 months~ and recently got a CC from Citi with 5 L limit.

These commission agents sell the banks for a few takkas

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Ramta_Jogi wrote:

My cousin has NEVER paid his credit card dues on time – defaults of over 1 year, defaulted on vehicle loan – twice & still got a home loan from LIC. Then keeps defaulting on home loan for 6 months~ and recently got a CC from Citi with 5 L limit.

These commission agents sell the banks for a few takkas

Next gen Nirav Modi sunglasses

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