Boosting the credit score, the rent way

Sarika found absence of rent in credit score parameter unjust and set up company to correct it

- Namita Shibad

PUNE: According to the National Sample Survey of the Indian government, 25 to 30 people migrate from rural India to cities every minute! Generally, for better paying jobs and quality of life. All this is well, but it puts pressure on cities that are already bursting at the seams with an ever-increasing population.

This translates to greater demands for housing, generally on rent since the ability to afford purchase of a home is not possible for most. Sarika Shetty was in the same "rent boat" while she was the CEO of a luxury auto dealership. And like all upwardly mobile folks, she had rented a home in a nice suburb in Mumbai. And since she could afford it, had bought two cars on bank loan. All was smooth sailing till she felt that it made much more sense to use the rent towards paying for the EMI of her own home.

"My husband and I felt that instead of paying a substantial amount of rent for our home, why not take a home loan and use the rent as EMI to purchase our own flat?" she said. Since the vastu of the rented house suited her, she got into an understanding with the landlord to purchase the flat.

But the trip to the bank for a home loan opened up a paradoxical box.

"I was capable of paying the EMI for the home loan I needed, but I did not qualify due to over exposure to credit. This despite the fact that I was paying my rent regularly, as well as the EMIs for loans. I was told by the bank that it was because of over exposure to loans," she said.

Sarika could not believe it! She was earning well, had a good credit history, was paying off her EMIs and rent promptly, yet she did not qualify for a home loan. "I asked the bank that even though I had two other loans, I was paying my rent regularly, yet it did not qualify to a positive credit score?"