Category: CIBIL score

What is credit counselling? How does it help to recover low cibil score?

We must have heard or read many things about credit score, credit report, types of credit and much more. But what is credit counselling? Is it something like a therapy? Do we have to go to any psychiatrist or psychologist? Is this related to mental health? So many questions would shoot up with this. We have an inquisitive nature when it comes to knowing a new term. With the internet being done easily available and at our fingertips, things have been easier. The information provided by various websites really help us conquering knowledge. However, it is advisable that when things are very delicate, it’s better to be particularly sure so that no mishap occurs.

What is credit counselling?

The word counselling means to get an assistance and guidance resolving any problems or issues. So credit counselling means getting the assistance and the guidance to resolve any problems or issues related to your credit. Specifically, credit score and credit report related problems.

Meeta, a very sincere and not so outspoken girl, was facing major issues. When she did a CIBIL score check, her score was 610. She was confused that how can that happen? She tried all her methods by which she could get her score up for almost 6-8 months. But nothing worked. She was in a mess and wanted to solve this mystery. But how would she do that? She did all that she could? Now there was a need for some professional help. But who helps in such cases? Was her main question. As per her not so outspoken nature, she was feeling too odd to seek any help from people around her. Then, from somewhere, she came to know about credit counsellors.

She researched it and knew in detail about what does credit counsellors do? How does the whole process work? When one has a bad score or the score is in the red zone, in simple language if the score is below 750 or 700 and even after trying in all directions, the score is not going up, one has to approach the professionals who would help you in that. These are the credit councillors. The one who has knowledge in credit advisory. They are certified and experienced individuals who help customers like Meeta.

When you have low CIBIL score, do not feel helpless. Their certified counsellors are trained on what all the client should do in order to get the credit score back to track. They see the credit report in detail, know the customer’s behaviour, his / her reasons for not been able to pay the EMIs on time. They also have the tie-up with banks and it’s manager who could actually help that cutomer in settling the defaulted accounts. Also, they have tie-ups with banks and NBFCs who could help the customer get the loan even after having low credit score in order to repay the old defaults.

They give step by step assistance on regular bases i.e. one in every week. They help the customer understand the importance of credit score, why not make the default, the consequences and the solutions. As the councillors are certified and experienced, they know what solution will work for that particular customer. It is never generic. If to one person they suggested giving a advice of taking a small secured loan to get the score up, does not necessarily they would suggest the same to another customer. There is always a reason and pattern to how the score had dipped. The curve always differs and hence even the solution differs.

The credit advisory like Credit Sudhaar has certified councillors who are certified under NACCC – National Association of Credit Counselling Certification which is nationwide or ACCC which is Association or Credit Counselling Certification. Once the councillor has cleared the certification, it’s not that from very next day he/she becomes a credit advisory. It takes months of training and polishing and understanding to make a credit counsellor who can help the customer work on their low CIBIL score.

So, if you score is low and nothing is happening while you tried, do not feel hesitant. Just as mental or physical health is important, Financial health is equally important. Stay credit healthy, And don’t let you score ruin your loan approvals.

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3 best ways to improve your credit score

Credit score is the most important financial number in today’s times. It determines your ability to borrow money as well as the interest rate that you pay on these borrowings. An excellent credit score helps you get the most favourable interest rate and reduces your cost of borrowing. If you are planning to take a home loan in near future, you must make sure that your credit profile is in good shape. Difference of even half a percentage of interest rate translates into thousands of rupees over the lifetime of the home loan, which usually has a long tenure.

If you haven’t paid much attention to this magical number till now, and do not have a very good score, don’t despair. There are ways in which bad credit can be repaired. But it requires dedication and patience, since it takes a while before you can start seeing results of your efforts. Here are 3 best ways to improve CIBIL score.

Start making payments on time

One of the most important factor that constitutes your score is the payment history. The credit bureau keeps a detailed record of whether you’ve been making on time payments or not. It has all the information of accounts that are past due as well as those that went for collection. All this information goes in the making of your CIBIL score. Hence the perfect way to get your credit score back on track is to make sure that you make payments for all your financial obligations on time. Recent positive activity will help in offsetting the previous negative remarks. Prepare a monthly budget and stick to it, so that you stay on track with the payments. If there are way too many bills that you can manage, consider consolidating your debts. Set payment reminders.

If you do not have sufficient funds to honour your obligations in a particular month, talk to your creditor in advance. If you have a genuine reason, your creditor might shift the payment due date by a few days or months. This will help in avoiding a late payment black mark on your credit report. Remember even a single missed or late payment can bring your score down.

Apart from the future payments, try to bring all your open accounts current. Deal with your past due bills before they go into collections. Payments that are more than 90 days late and accounts that are sold to a collection agency will bring a sharp reduction in the CIBIL score.

Keep a check on your credit card balances

Apart from payment history, another factor that has a major impact on the CIBIL score is the credit utilization ratio. This ratio is calculated by dividing the credit card balances by the total credit limit. People who max out their card limit have a high ratio and tend to be high risk borrowers who may default on their payments. The lower the ratio, the better it is for the credit score. By paying down your credit card balances you help in keeping this ratio low and improve CIBIL score.

If you have huge credit card debts, consider taking a personal loan to consolidate them. You may get a lower interest rate than what you might be paying on your card balances. Moreover, by freeing up your credit limit you will reduce your utilization ratio and help improve CIBIL score.

Though it is necessary to have some credit card activity each month in order to have a good score, do not charge more than 30% of your credit limit. Also remember, even if you do not carry your balances to the next month and pay your bill in full, you may still have a high utilization ratio. That is because most bureaus use the statement balance to calculate the credit utilization ratio. If you use your credit card for most of your purchases, consider paying the credit card balance twice a month. This will help in keeping the utilization levels low.

 

Fix mistakes on credit report

Mistakes in credit reports can also be responsible for bringing your score down. For example if a payment that you made on time is recorded as late, it will affect your score negatively. Clerical errors, identity theft issues are other reasons why there may be errors on the report. That is why it is always recommended to check your CIBIL report regularly and analyse the information to make sure that the records are correct. If you find any discrepancy, you must dispute it with the bureau. Report the mistake to the bureau, and also talk to the concerned lender. Provide necessary proof to validate your claim. Once incorrect information is knocked off your credit report it helps to improve CIBIL score.

So get your free report from the credit bureaus and start working on your credit score.

 

Will You Get You Get Your Dad’s Credit Score?

Death of loved ones, especially a parent can be traumatic. However devastated and sad one might be, there are various obligations and duties that need to be taken care of both financially and other wise after a parent’s demise. The family members have to necessary action regarding various bank accounts, securities, properties and assets that may be held in the deceased person’s name and so on. While bank holding, assets and property are governed by inheritance rules, this rule does not apply to credit scores.

Will You Get You Get Your Dad’s Credit Score?

Before answering the question it is important that we understand a little about credit report. Credit reports reflect how a person has treated his/her debt in the past and what his levels of debt are; depending on various factors included in the report and individual’s credit score is calculated. Thus a score reflects an individual’s credit worthiness based on his credit history.  So when a person expires his/her credit score is not passed on to the family members as it reflects an individual’s creditworthiness which has no bearing on his children. So, if your dad passed away you will not get his score.

Your dad would have had loans and cards in his name and when the person expires there are specific rules to be followed to deal with them. Just like if you have loans and cards in your name they reflect your credit history and how responsible or irresponsible you are towards debt and not somebody else’s attitude. So if you default it will be reflected only in your report and not any other family member’s report. So while you can inherit your father’s property you will not get his score.

What happens to the Credit Report of the Deceased?

So, now we know that when the parent expires the credit report is not passed on to the children but what happens to the credit report of the deceased. It is important that the family member get the report of the person to get an idea about the open loans, cards etc that a person has in order to get a clear estimate of what is owed to lenders. The family members then need to inform the concerned lenders and credit card companies about the demise of the borrower or the card holder; a valid death certificate needs to be attached along with the application that is submitted to various FIs.

Depending on the type of loan there would be various formalities that will have to be completed but the lender will inform the credit agency that the person in question is no more and a deceased indicator is attached to the credit report of the person. This prevents any identity theft or fraud that may happen by misusing the identity of the deceased. The process of surrendering the card or closing a loan may take time but in the meantime, it is important the report be marked as that of deceased.

There might be instances when there may be joint home loans that the deceased may have taken with their kids, in such a scenario the fate of the loan impacts the score of all the applicants. After the demise of one applicant, who in this case is the father, the surviving applicant/s will have to make sure that they inform the financial institution about the situation and continue to pay the EMIs in order to avoid defaults and penalties.

So while you will not get your dad’s score after he expires there are a host of things that you may need to do which includes informing the concerned lenders and also take appropriate action in case of joint loans.