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.

Tuesday, 10 February 2015

Should debt be paid early?

If you have extra money, it’s always a question for people whether to use this money in paying off your debts or rather investing somewhere. Would paying off the debt early affect our credit score? Would it help us go ahead financially? Check these points before deciding on where to use your extra money.

Dangerous debts: 
Some debts are very dangerous for your financial health as they can result in jail time or monetary penalties .Such debts should be prioritized and paid off first. Examples of such debts are delinquent taxes, debts given to collection agencies etc.

Check the terms of the debt:
Check and see if there are penalties for paying off a loan early. Some creditors put a fee for the early repayment of the debt. Go back to your paperwork and check your fine print for prepayment fees.

Enough Cash:
After you strike through the dangerous debts checkpoint, next is the cash on hand. You want to have enough savings to cope during a financial crisis. Having cash reserves helps you to go through a rough financial patch without having to rely on more debt

Do the maths! If you are earning more from the after cutting taxes rate of the investment than what is piling up due to the debt interest rate, then it is better to go for the investment. Paying off a debt early may not give you a benefit- that is why you are better off using your extra money for investing. In fact you can use the money earned on the investment to pay off your debt in future.

Monday, 9 February 2015

Things that don’t hurt your CIBIL score

Nowadays people have been extremely careful about their credit health so as to secure better loans with low interest rates. But mostly such people focus on what affects their credit score and ignore certain myths about things that supposedly affect their credit scores when they don’t. It’s necessary to know about what things don’t affect your CIBIL score so that you don’t waste time fretting over them.

It may be surprising for people to know that income doesn't direct affect your credit score. Creditors know about your income from your application, not from your credit report. Income doesn't negatively affect your credit score but lenders would take your income into account to determine whether you would be able to make payments in future.

Personal Information:
Name, Address and birth date is included in your credit report but other than that your education level, marital status, race, age and gender won’t have an effect on your credit rating whatsoever nor would they be taken into account to calculate your score.

Checking your credit report:
This is the biggest myth among people. Checking your credit report is good financial practice and checking it at regular intervals won’t affect your credit score in a negative way but rather help you know more your credit health.

Application for credit rejected: 
When banks turn down your credit card or loan application, people believe that your credit report is affected. But this is a myth, your credit report doesn't show if an application is declined or approved. Yes there would be enquiries against your report when you apply for these loans, but being approved or rejected won’t affect you credit score.

Paying bills of other people and small merchants:
Bill payments to small businesses don’t help build your credit score because most probably they won’t even show up on your credit report. Credit bureaus have strict requirements about who reports information to them and usually small businesses don’t fit in those requirements.

Also paying off somebody else’s bill won’t have any effect on your credit score. When a bills gets paid, it doesn't matter who paid it, the payment would get reported on the file of the person who borrowed the money.

Friday, 6 February 2015

Do you know the difference between Credit Score and Credit report?

Many people get easily confused between Credit Score and Credit Report. They both are different thing and used for different purposes. So here are some differences between Credit Score and Credit Report.

What is a Credit Score?
Credit Score is basically a 3 digit number calculated on the basis of your credit history. The range of CIBIL score number is from 300 to 900. Where 300 to 400 is the poor score and 750 & above is a good credit score. If your score is above 750 means you will get approval for your loan.

What is a Credit Report?
A credit report contains all the detailed information regarding your credit history. The bureaus collect information from many sources such as lenders, companies, landlords, etc. the report contains information such as name, address, number of cards, number of accounts, loans, any defaults, etc.

Why are they used?
The lenders pull out the credit score whenever a person applies for a loan. The lenders use your credit score to determine how much credit risky you are? If your credit score is within a certain range, they’ll offer you certain credit terms.

Credit report is used for other purposes. For instant, employers can pull your credit report (with your permission).  Employer will use your report to check if you are responsible regarding your finances, which means you will be more responsible on the job.

The bottom line. 
Now that you know the difference between your credit report and credit score, take steps to improve both. Check your credit report regularly for errors, time and avoid maxing out those credit cards.

Thursday, 5 February 2015

Is it necessary to keep a track on CIBIL report?

Do you know that more than 50% of consumers have errors or mistakes in their credit report?  It will directly affect your credit score because the bureaus use information from your credit files to calculate your credit score. But if you keep checking your credit report then you can easily correct it on time. Here are few steps on how you can keep track on your CIBIL report?

 Get Your Credit Report:
 You can get a copy of your credit report for free of cost of the bureaus. Review your credit reports  regularly, looking for changes and any incorrect account information.

 Check Your Credit Report for Errors:
 Check your credit report very carefully for any errors —like accounts that are not yours, missed out    accounts, loan amounts are incorrect, account balances which are incorrect, showing late payments,    etc.

 Report your Errors to the Credit Agency:
 If you detect any error in your report, immediately report it to the website of concerned credit  agency. Be specific and explain exactly why an item is inaccurate in your report. Remember that  credit agencies receive information from your creditors and then prepare your credit score.

Contact the Creditor:
Call the creditor which is responsible for an error in your report and then let them know that why you are disputing an item which is mention in your CIBIL report.

Wait for a Resolution:
A credit agency can take maximum 45 days to resolve and investigate your dispute against the error in your report with your creditors.

Get Your Dispute Results:
you will get notification from the agency about the investigation results. The error will get removed from your credit report if it is confirmed by the agency.

 Add a Statement of Dispute:
 If an error was not removed and you disagree with the decision, you can add a statement of dispute  of up to 100 words to your credit report. That allows you tell your side of the story and future  creditors and merchants may take your statement into consideration when evaluating you.

Wednesday, 4 February 2015

How Business Credit Cards Affect Your Personal CIBIL Score

Every business credit card affects your credit report. But how they affect your credit report depends on you- more specifically, how you choose to handle your company's decision to grant you a business credit card.

Only having business credit card will not improve your credit score. If you're paying your bills on time with your business credit cards, you can expect your credit score to be improved in your credit reports. But if you're not paying on-time, expect to see negative markings in your credit report hence it will harm your credit score.

Personal and Business credit: New businesses don’t have a lot of their own credit history. You may not have built up specific credit accounts related to your business name - that's why you're looking for a business credit card in the first place.

Lenders will routinely look at personal credit for new business owners who haven't yet established their own enterprise. That shows having a good credit score will benefit you a lot, and help you dedicate yourself to repaying borrowed amount.

Personal Credit History: You might be surprised to find that having no credit in the past, also might count against you on some card applications. Lenders routinely run a simple credit report for a potential borrower. There are a lot of issues that can come up on this credit report that may stand in the way of your loan or business credit card.

If you have someone is consigner on a loan with you, that can be a potential solution, but those individuals have to know what they are getting involved in, and it's up to you to reassure them that the situation won't end in loan default and complications. You can also shop around and try to find lenders who will take the time to scratch the surface of your credit history

Tuesday, 3 February 2015

Raise your CIBIL score by paying off your credit card

Credit reports are used by loan companies to help them determine whether you are a good risk or not and if you are likely to repay any loan taken out. There are some very simple steps you can take to raise your credit rating. Many of these actions are things not to do also.

"If you consistently pay off your bill as soon as you receive it, your balance will remain lower. If, on the other hand, you continue to charge up the card between receiving your bill and paying it off on the due date a couple of weeks later, your reported balance will be higher. This increases the chances that when the credit bureau takes the snapshot, your credit utilization will be higher."

Avoid jumping from credit card to credit card.: If you "transfer your balance" - a scheme that doesn't hurt you, and gets you 0% interest on your balance for a period of time, sometimes as long as a year – unnecessary don't open the new account. Your credit history looks better to the credit bureaus if you have long-standing, established accounts.

Rely on your seniority in age: You can't do anything about, being older, but at least there's something good about ageing! Age is one of the personal factors which bureaus take into account while giving the credit ratings.

Regularly pay your bills on time: This is actually first in the order of things you must do to better your credit score. Each late payment is affecting your credit score and presents a picture of unreliability. You must determine that, going forward, if you want to improve your CIBIL score, you should pay your bills on time. The biggest hunk of your credit score is based on your payment history.

Monday, 2 February 2015

How to restore CIBIL Score

Banks and credit card companies use credit scores to determine your credit worthiness and whether to qualify you for a loan. The higher credit score you have, the lower interest rates banks offer you and vice versa. Even some employers check your credit report before giving you the job and even landlords check before signing the lease. That is why it is of utmost importance to have a good credit score.

Check errors:
Checking your credit score at regular intervals is good financial practice. Most of the times the credit score dropping is cause of errors on the report. If you find errors, contact the bureau as soon as you can and go as per the procedure to correct it.

Talk to the creditors:
If you are having financial problems, contact your creditors as soon as you can. They can help you with lower interest rates, and counsel you about balance transfers and debt consolidations.

Make your payments:
This is the hardest part- Try to make pay off all your debts and don’t accumulate any more debt. Turn to cash payments and cut down on your expenses till you pay off your debts.

Your credit score is your emergency financial tool for the future. If you don’t restore your credit it will keep going down and risk your chances of getting a loan in the future.