Saturday, 28 February 2015

Understand your Credit History

Credit history is an individual’s or company’s records of his past borrowings, repayments, other payments and bankruptcy. It is basically all the past records of your credit life. Credit History plays a very important role in shaping up your credit score and that is why it is important to understand your credit history.

All the factors affecting the CIBIL score are somehow or the other related to your credit history.  Having a good mix of credit in your credit history forms 10% of your credit score.  You should’ve taken a good mix of unsecured and secured loans including home loans, auto loans, personal loans etc. to score higher in your credit report. Not only taking loans but servicing them in time also affects your credit score. You should have timely made payments as part of your credit history so as to get a good credit score.

 CIBIL score

The other factor which gets affected by your credit history is the length of your credit accounts.  The longer your credit history, the better your credit score. That is why it is recommended by most people not to close old credit card accounts which have been going on for a long time, as it brings down the average length of your credit history. 

But also be aware that defaulting on your payments and bankruptcy stays on your credit history for a long time too and negatively affects your credit score. Therefore, making timely repayments and servicing your debts responsibly for a long time is the way to a good credit history which in turn is the way to maintain a credit healthy life and a good credit score!

Wednesday, 25 February 2015

How to use a balance transfer card wisely?

Balance transfer cards are cards that offer very low or zero interest rates. If you have high-interest debts to pay like loans, credit cards then you can opt for a balance transfer card to save money on the high interest rates.  You can transfer your due balance to a balance transfer card with a low or zero interest rate and pay off the balance without worrying about the interests piling up. But to get approved for a balance transfer card, you need to have a good credit score. A good CIBIL score also helps to get the balance transfer deals. But you should also know that balance transfer cards have an expiry period ranging from 3 months to a year.

So how should one use a balance transfer card wisely? 

Your main aim should be paying off that balance before the low interest rates for the balance transfer card expires and interests start piling up again. Don’t transfer a balance if you are not sure of paying off the debt before your low interest rate expires. Transferring a balance when you are not sure about paying it does more hurt than help because in the end you’ll be stuck with a bigger interest rate than the one in last account, once your low interest rate expires.  You would lose money than what you were thinking of saving while transferring the card. Make sure you understand all the terms of the cards before you make a transfer. Try to get the lowest fees & interest rates and the longest period of time.

Balance transfer card don’t make the balances go away- they optimize your debt by making it less expensive for a limited period to help you pay it off. So follow these steps and use your balance transfer card wisely!

Monday, 23 February 2015

Should you pay down your debt or go for an investment?

You have suddenly got a lot of cash in your hand- what would you do? Go for an investment or decide to pay off your debt and reduce your obligations. It is a hard choice but the choice can be solved after looking answering these questions.

First look at the interest rates of your debt and your probable investment. Calculate whether the money you are investing will give you enough high returns than what you will spend on the interest and fees of the debt you are supposed to be paying off. Go only for the investment if it is getting much more returns than what you need to pay off your debt (with interest) in the future. If not, it will be a loss to you- you can rather than pay off the debt.

Taxes are another thing which may affect your returns- they may reduce the returns on your investments or also make your debts less costly. Calculate your returns after taxes to get the exact worth of what you will earn or how much you need to spend.

The second thing is to check is whether the prepayment of the debt has a penalty. Some creditors impose a penalty if you pay off your debt early and to avoid such penalties, take a look at the terms of your debt’s terms.

The other side to this can be that if you have a bad credit score, it would advisable to pay off your debt than invest. Because delaying paying off that debt could prove more detrimental to your credit score than the returns on your investment would help your finances.

The conclusion to this is that to pay off a debt or investment depends on your financial situation. What your present financial situation is what determines whether you pay off your debt or invest.

Wednesday, 18 February 2015

Tips for Identity Theft Protection

Identity theft is one of the growing crimes these days. Identity theft can be avoided by Identity monitoring services. Also you can follow these tips to protect yourself against Identity Theft:

Checking your Free Credit Report:
Checking of your credit report at regular intervals helps you spot any errors or inaccuracies and lets you know of any unusual happenings in your report and avoid frauds. There are three credit rating agencies- Equifax, CIBIL and Experian who give credit reports.
Less Data on your hand:
Try to carry less sensitive information as much as you can. Carry only the essentials which you need in your day to day life. Try not to use cheques, use your credit card or debit cards instead. A  Cheque contains your bank account number and the thief just needs one cheque to steal your identity. Credit and Debit Cards are safer options.

Handle your finances online: 
The best way to avoid identity theft is handling your finances online. Instead of your personal documents coming through the mail and getting into the hands of some thief, it is better to get your bills and financial documents online. You can also check a website’s safety by its certification.

Don’t give away information:
Whenever somebody asks you to give away information, ask yourself if they really need it. Never give any private information to any callers who ask, without a very important reason.

Computer/Mobile Protection:
Nowadays most of the people store their important information in their mobiles and laptops. Protect your mobiles & laptops with passwords to stop any thieves from accessing your private information. Put an Anti-Virus on your computers to protect it from any malwares who may access your information through any spam or pop-ups.

Tuesday, 17 February 2015

FAQs about CIBIL Score

Many people are new to the concept of a credit score and the credit rating bureaus like CIBIL, Equifax, and Experian. They go to take a loan and get stuck when at the CIBIL score part and have questions. We’ll answer some Frequently Asked Questions about CIBIL score in this article:

1) How can a person with no credit build a credit score?
It is hard for a person who is just out after completing his studies and has no credit score to build a good credit score. You don’t get a credit card and loan without a good credit history.So where does he start? The best option would be to get a secured card. In a secured credit card, credit score is not needed and it is given on the basis of a cash deposit as security collateral. It is a refundable deposit which becomes your credit limit. You have to make monthly payments but if you default, the bank keeps your deposit.After some time using the secured card, you can move to a credit card and thus build your credit score.
 CIBIL score

2) Checking your Free Credit Report lowers your credit score?
This question is asked by many new credit users. No, checking your credit report at regular intervals won’t lower your credit score. It is a soft enquiry and doesn't affect the credit score of an individual. In fact checking your credit report helps you spot any errors and inaccuracies in the report and correct them.

3) Should unused credit cards be closed?
People think closing old accounts increases your credit score. But this can work more against your credit score than help in raising it. If your credit card account has a big credit limit and has been with you for a long time, avoid closing it. Because it affects two things- the average age of your accounts and your credit utilization ratio, both of which are factors which affect your CIBIL score. Closing a credit card account lowers your credit limit and also reduces the average of your accounts which may negatively affect your credit score.

Monday, 16 February 2015

How to get healthier personal finance?

The New Year has just started, and we all must be looking forward to a more financially stronger future in the upcoming year. What defines our finances may not be in our hands always but most of the times it. Our Finances define many of the important factors so it is necessary to have a healthy financial life.

Prioritize your financial goals:
Write down the financial goals you are aiming for and focus on the ones which rank high on your priority list. Having goals set is very important and the first step to healthier finances. Find out what was wrong last year and what changes you can make this year.

Get a Free Credit Report
Credit Report is a major factor defining the health of your finances. Checking your credit report at regular intervals is good financial practice and helps you spot any fraudulent activities on your reports immediately. You can correct these errors before they devastate your finances.

Reduce Debt: 
Optimize your debts to pay less. Pay off any pending balances to keep your credit report clean. Because the better credit score you will have, the more money you can save. Higher credit score not only gets you lower interest rates but also gets you more ways to pay off your debts with debts consolidations, balance transfers etc.

To tackle the risks in our financial life, insurance is a must. Search for the best insurance deals with lower costs and enough protection. It makes your finances safer and gives you a safety net.

Follow these steps to healthier personal finances.

Wednesday, 11 February 2015

Build your credit fast by these rules!

Following a responsible credit life is good financial practice for every individual. You get better chances of getting approved for loan and that too with better interest rates. In spite of all this, advantages during renting or buying a house and during employment opportunities, qualifying for a corporate credit card etc.

Want to build credit? Have patience:
Credit score cannot be changed overnight as they reflect your credit behaviour over a period of time. You can’t just improve them in a day- don’t listen to people who say you can fix it in a day. The good thing about it is that credit scores concentrate more on present activity so if you have negative information in the past they won’t matter much as they keep on ageing.

Bad credit cannot be erased:
Negative information ruins your credit score because it stays on your report for a long time. They may remain on your report from a period of 7-10 years. So try to avoid adding any kind of negative term to your report.

Regular bill payments:
Paying bills regularly doesn't give you any additional points but it certainly does help you build a responsible credit history. In fact if you are not regular and default on your payments, it would hurt your credit score that much.

Use Credit:
The main key to building your credit is using credit in form of credit cards and loans. But this credit should be used in moderation and not be over used. Maintaining a low balance on credit cards and paying off the instalments on time is the right way to build your credit. These show how responsible you are with the credit you use and helps boost your score. Also having different lines of credit is important.

Establish a long history of good responsible credit behaviour and you would build your credit in no time. Credit scores are calculated by the credit bureaus like CIBIL, Equifax etc on the basis of the information provided by various banks and lenders.