Wednesday, 30 September 2015

How to boost your credit score

Looking at ways to boost your credit score? Let us go through a checklist of items that would help, if not immediately, over a period of time.
Check your credit report – The first step towards bettering your score is to obtain your credit report and understand it. Go through it at length, and ascertain the areas that are pulling your score down. These could be myriad issues: late payments, delinquencies, or collections. An incorrect entry can also hamper your score, so ensure that the report is updated with accurate information.

Dispute errors – Raise a request with the concerned lender to have the discrepancy rectified. Again, check your report to ensure that it is updated with the revised information.
Use card limits well – Remember, not more than 30% is a good rule of thumb, when it comes to utilising your credit card limit. Hitting the limit assigned to you every month can negatively impact your score.
Healthy credit mix – Ensure your credit history has a good ratio of both secured (home or auto loans) and unsecured (such as personal loans or credit cards) loans. This can help impact your score positively.
Retain old ‘good’ debt – Have a home loan with impeccable payment records? Do not foreclose the loan; having a clean credit history can boost your score significantly.
Pay bills on time – Delinquent payments on card bills can be detrimental to your score. Even if it is a small amount that you can pay off, do so. It is always wise to minimise outstanding debt, and to make timely related payments.
Credit counselling – If the task of boosting your credit score is seemingly impossible, or you are unsure where to begin, there is help at hand. Professionally trained counsellors can be consulted to work closely with you, to rebuild or boost your credit score.
Ultimately, keep in mind that there is no quick-fix or ‘instant’ solution to boosting your credit score. However, with time and patience, it can indeed be achieved.

Wednesday, 23 September 2015

5 things you should do to be financially fit

Financial management is an important aspect of everyone’s life, be it a salaried employee, a self – employed professional, a business owner or even a homemaker. Just like physical fitness, mental fitness, being financially fit is also a key to happiness. There are some basic things that each individual can do to ensure financial fitness:

1. Set proper financial goals: Whoever you are, you should plan well for future always set proper financial goals according to the money requirements you may have at different stages of life. Some of the basic goals to plan for are pension fund, children’s education, property purchases, lifestyle purchases like car, electronics and finally a good insurance cover.

2. Never let your expenses exceed your incomes: It is common sense that if you let your cash outflows exceed your cash inflow; it is going to get you in trouble sooner or later. Expenses can include, day to day expenses of maintaining your current lifestyle and the payments for credit cards, loan EMIs etc. To maintain financial fitness it is imperative that you keep a good control on your expenses and avoid splurging on things beyond your financial capacity.

3. Take credit cards and loans; but remember to pay them back on time: To create a good credit history, it is important to have taken credit / loan from time to time, depending on your needs. In fact, a person without any credit history is treated as bad as a person with bad credit history by credit bureaus. Simply because in absence of credit history, they have no way of judging your credit worthiness and calculating your cibil score. Taking loans for life essentials like a house, car helps you live comfortably but making the repayments on time is essential to avoid any credit troubles.

4. Monitor your bank statements, bills, payments and credit history : Many individuals are so busy trying to earn more that they forget to check if there are any unnecessary cash outflows. It is like trying to through out water from a sinking boat without plugging the holes in the base. Whenever you go for a new account, new credit card or loan, please understand the terms and conditions very carefully. The caveats and hidden charges are always hidden here. The bank executive may try to avoid informing you about these charges, but it is your own responsibility to ask for them until you are satisfied.  Also, many customers pay off their monthly credit card bills without actually looking at each line item. Sometimes credit card companies may charge a very small amount for a service and quietly mention that it is customer’s responsibility to call up and ask for deactivation. If you do not pay attention, you may keep paying charges for services that you don’t desire.

5. Good tax management: This is again like a leaking boat. Every year, many people hurriedly take schemes and tax saving plans just before financial year end without really setting any financial goals. If you do not have time, hire a professional to manage your finances. The saving and earnings over time will more than pay back for the fees you pay.

Friday, 18 September 2015

Can you take a loan if you don't have a credit score

Most of the people who do not have a credit history, worry about getting loans for the first time ever. People who do not have any credit account or a credit score at all, are termed as 'no history customer' [NH customer] in the credit language. Well, there are some banks and lending institutes [NBFCs] that are willing to take risk on such people with no credit history to show. But here, the terms and conditions of lending could differ for first timers. For example, they may have to show assets of value as security against the loan being taken; or their pay back interest rates may be higher. These factors depend on and vary from bank to bank. Yes, one can take a loan if they do not have a credit history, means no credit score on record.

Most of the banking and non_banking finance institutes have recently opened up to the idea of lending to no history customers, to avoid disappointment. The process here may require a guarantor and/or an additional value deposit as a security. There are several factors taken into consideration when dealing with such customers. For example, their education background, employment details, type of residence and tenurity of stay at such residence, age,
Certain banks would be willing to welcome first time credit customers so that they get an experience of handling loans or credits. The customer will need to handle the credit given properly, with correct, timely payments, monitoring usage, and keep error free record; and keep a check on their credit.

For example: somebody who is a fresh pass_out from a reputed university with a higher degree of education, and is recruited with a prestigious firm; can probably avail for a credit card and maintain a good track record with the card lent. Once they achieve this over a period of time, they can probably gain the trust of a prospective lender and apply for a new credit line. Hence, a credit history of a considerable period can be looked at for new applicants and they could get a loan with a credit score to show.

Monday, 7 September 2015

Does loan history affect my CIBIL score?

Your credit history plays a significant role in determining whether a lender will extend credit and the interest rate that the loan would be approved at. Before you apply for a loan, it would be prudent to check your credit history, in order to ensure that not only is your cibil report accurate, but also updated.

Previous history, including information such as past loans taken and their duration, your repayment track record, delayed payments or defaults (if any) will be reviewed carefully by a prospective lender. The amount of debt you owe by way of any outstanding loan accounts will also influence your score. Simply put, any negative records, such as even one loan default can cause damage to your credit score.

However, it is interesting to note that having late payments or written-off loans on your credit report are not the only factors that indicate credit risk and may negatively affect your score.
With no loans on your account, it means that you have no previous history to show. For a financial institution, since the credit report is the first piece of information about a customer, little or no recent, active credit history can also prove detrimental. This is because with no history, there may not be sufficient information on which to base a lending decision.

How do you correct this situation?

Even a small loan can help you get started! Apply for a credit card, and use it judiciously. This will help you establish credit history. A positive payment track record is the first step towards qualifying for any loan or card account in the future. Remember, higher the score, higher are the chances of your loan or credit card application getting approved.

However, if you have any loan or credit card payment outstanding on your account, it would be a good idea to start paying off those dues, slowly but surely. This can be done with the help of prudent credit counselling, if the task seems daunting at first.

If you think that any details on your report are incorrect, it is always possible to contact the credit bureau and raise a CIBIL ‘dispute’. The bureau in turn will pass on your query to the concerned financial institution and have it reviewed. If indeed erroneous and rectified, the updated information will reflect on your credit report, immediately boosting your score as well. Hence, how to clear CIBIL issues is something that can be tackled with time and patience.

Monday, 31 August 2015

What is the ideal credit score to get loans

CIBIL, the first Credit Bureau in India, generates credit reports for all individuals who have been reported by lending institutions. The CIBIL score is computed in the range of 300-900, with 300 being lowest and 900 being highest. While the score is an outcome of various factors, it is highly important to have CIBIL disputes resolved which can be on account of a non payment of dues or an error on report.

Following is the broad demarcation of CIBIL score that is taken as good, bad of ugly by the banks and lenders.

> 750 : Good
650 – 749 : Average
< 600 : Bad

As per CIBIL, over 79% of loans are disbursed for people who have a score of greater than 750. This means that the chance of getting a loan with a score less than 750 is very low.

Hence, an ideal [recommended] credit score would be 750 and above; with this score, one can avoid being on the CIBIL defaulters list.

CIBIL as a bureau does not set any standard or benchmarks for credit score. Different lending institutions may have different score cut off for similar products. Also, apart from Credit Scores, there are several other criterion that banks and underwriters follow for approving loans. Suppose you have a 'good score' on your report. Despite that, your loan application could possible get rejected – this can be due to reasons besides credit points. Hence, while it is important to be watchful on your credit 'scores', it is equally important to be watchful about all your trade lines, credit and financial activities as well.

It is highly recommended, that before planning to apply for any loans one should check out his credit scores.

So technically, a score of 750 & above is considered a healthy, ideal & worthy credit score for a loan prospect.

Wednesday, 19 August 2015

Credit Sudhaar Review - ET now

Credit Sudhaar Services was reviewed by ET now. Our directors Mr. Arun Ramamurthy and Mr. Gaurav Wadhwani talked about the awareness of credit scores in India and why they feel 'credit score' is such an important term in an individual's financial life. Check out the full video here :

Monday, 17 August 2015

Avoid making multiple loan 'enquiries'

When the need for a loan arises, many a people enquire on various lending institutions. While shopping around is not a bad thing, it has been observed that a few people actually apply for loan with various lenders at the same time with an objective of faster turnaround on loan disbursal and getting the best rate of interest.

There have also been situations where a person gives his papers to an agent who in turn processes the loan through various lenders under the pretext of getting the best and fastest disbursement.

What such borrowers do not understand is that they are actually hurting their objective by applying through various banks at the same time. Multiple inquiries in short span shall only have a negative impact on the credit bureau score.

Let us have some clarity on how it hampers the credit bureau score.

Credit score is an outcome of various factors and an enquiry is one of those factors that impact it. Each time an enquiry is run it impacts the credit score. Thus multiple enquiries will have negative impact on score. This in turn shall impact the prospects of loan approval.

Also, from an underwriting perspective, a person with multiple enquiries on his credit bureau report shall be construed as credit hungry and may result in getting a decline letter.

Therefore one has to be very careful while applying for a loan and should completely avoid a situation where multiple enquiries are being made on his credit bureau report.