These days most working professionals need to take a loan in order to buy a car or a home. Not to mention the need to take a personal loan for an emergency medical situation or an education loan for your children’s academic aspirations.
These days most working professionals need to take a loan in order to buy a car or a home. Not to mention the need to take a personal loan for an emergency medical situation or an education loan for your children’s academic aspirations. In nutshell, credit plays a key role in fulfilling our dreams.
Despite our reliance on credit most individuals do not realise the importance the credit bureaus (which issues credit scores and credit information reports) plays in their credit life cycle. Lenders rely on credit bureaus while evaluating a loan application and managing the credit lines extended to individuals.
Hence, if you are not managing your credit history properly, you may find your access to credit limited. The effect that this would have on your ability to fulfill your life aspirations need not be reiterated.
However, it is quite simple to ensure that you will have access to credit whenever you need it.
Accurate credit info
If you already have loans and credit cards, the first thing you should do is to get your credit score and credit information report to ensure that all your credit details are accurately reflected.
Any bad/inaccurate reflection of your credit history can affect your credit score, which is used by lenders to evaluate loan applications. Your credit score may be negatively affected if your credit history is reflected as paying your dues late or your current balances and latest payments have not been updated.
Go to the credit bureau to make corrections
If there are inaccuracies you should visit the credit bureau’s website and follow the dispute resolution process to rectify your credit history.
You should be aware, however, that the credit bureau will take up your dispute request with the lender to confirm whether what you are saying is accurate. Only upon confirmation from the lender the credit bureau will make changes to your credit history.
EMI to income ratio
The EMI to income ratio is a benchmark that many lenders use to evaluate your ability to service additional debt. If this ratio exceeds 0.5 (which means you are spending half your income on servicing debt obligations) you are unlikely to have easy access to credit. On the other hand, if you have a lower EMI to income ratio, say 0.3, your loan application is more likely to be viewed favourably by lenders.
Basically, keep a regular check on your credit information to ensure that it is accurate and take debt only in moderation. This is likely to ensure that you will always have access to credit whenever you need it.
Credit Sudhaar is India’s first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy