Home-Loan lenders lay a lot of emphasis on Credit Score

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Home-Loan lenders lay a lot of emphasis on Credit
Score Heres why
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A home loan is an important step to building a
personal asset your home. Whenever you apply
for a home loan (or any loan for that matter),
lenders pull out your due diligence report to
ensure your claimed identity and gauge your loan
repayment capacity.
For this, you are asked to submit supporting
documents. Besides documents, your repayment
history is also critical. While earnings and
financial capability indicate your home loan
eligibility, repayment history reflects your
intent and willingness towards repayment of a
home loan.
Banks alone, however, do not hold sufficient
information to establish a creditors identity.
It may happen that a lender with 2 bank accounts
has a great track record with one bank but has
been defaulting to the other. Hence, to establish
a fair identity of their customer, both banks
would have to exchange information with each
other.
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In reality though, lenders cannot practically
communicate with each other directly. Hence, this
job is done by credit bureaus. Banks and
financial institutions report customer data such
as payment history, defaults, etc to the credit
bureaus who then compile all of it in a document
that is called a credit report. 
Based on the information in the report, a 3 digit
number is calculated using a complex algorithm.
This number is called the credit score. Let us
understand what is a credit score and what makes
it important.
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Heres what Credit Score means
A credit score is a numeric indicator of the
creditworthiness of a customer. In India, the
credit score ranges from 300 to 900 and lenders
will require a good credit score for personal
loans. It tells the lender how likely the
customer is to repay the loan on time. It also
gives you loans at lower interest rates. A credit
score is largely evaluated on the basis of
repayment history, credit utilization ratio, and
level of indebtedness.
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What makes it important for you as a borrower?
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What do lenders derive from your credit score?
Your credit behaviour
Your credit report contains detailed information
about your past credit history which includes the
types of loans you have taken in the past and the
ones you currently have.
It also shows how you have used your credit card,
what your credit utilization ratio was, and
whether you have paid all your dues on time
without defaulting. All this data is critical in
shaping your credit score.
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Your loan repayment capacity
Not everybody can get a loan you have to be
eligible for it. One of the ways eligibility is
determined is by checking your income amount and
income sources. A loan amount is directly
proportional to the amount you earn.
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Your ongoing loans
This wont be a good scenario for the lenders.
Most lenders, especially banks, are quite rigid
and only sanction loans to borrowers who can
achieve a minimum score required for personal
loan. Hence, having a good credit score is
important. 
Borrowers who have ongoing loans while they apply
for another loan are considered rather risky by
lenders. Adding another loan would mean an added
financial responsibility with the same income.