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.

Monday, 3 August 2015

Credit Sudhaar reviews the credit situation in India

Credit Sudhaar, India’s first credit health management company had conducted a survey in 2013 on credit health awareness in India. The results showed that a large number of people were not aware of ‘credit bureaus’, let alone of their own ‘credit scores’. Credit score is a term every individual should be aware of, especially those who are going for any type of credit.Credit Sudhaar’s survey stated 85% of the respondents not being aware of ‘Credit Bureaus’ while a big 92% not knowing what a credit score is.

Their survey also found that 91% of the respondents didn’t know how non-payment of dues was having a negative effect on their credit score. By this survey Credit Sudhaar wanted to stress the importance on knowing your credit score as most people didn’t know that a bad credit score was being the cause of their loan/ credit card applications being rejected.

Being aware of your credit score also helps a person keep a track of the changes in their credit files. Being aware of the changes in your credit file can alert you of any suspicious activity in your account and save yourself from identity theft and other fraudulent activities.