Tag: cibil report

3 Things You Can Do Once Your Credit Scores Are Up!

Its a real big task when it comes in improving your credit score and maintaing it once u achieve the benchmark. If the score is built nicely from very start, and maintained the same repayment schedules, it not possible only that one can not get the graphs up. It that case, one need not worry about anything.

But, if one is not responsible in the repayments, has been constantly irregular, the scores go on toss. It is then very difficult to get you graph up. However, it is difficult and not impossible. Once you have Low CIBIL Score, it is then your task to first investigate where you went wrong. Look into your detailed repoert and see where all have you made mistakes. Start from correcting the places where you have made mistakes. IF it looks difficult to understand, take help of some credit advisors. Speak with the banks. Make them understand what went wrong while your intention was to pay for the credits you had taken.

Start using your credit card wisely. Use as much as you can pay. Start repaying in small amounts. And clear the old debts. By this you will start replenishing the old debts. And start rebuilding the score. Its important to Improve CIBIL Score. Once your score is up, you can then plan things for which you planned but could not do. Lets look at main 3 things one can do once the credit score is up!

  1. Apply for a loan at lower interest rate.

While you were planning to apply for a home loan or a personal loan when your score was down, the banks or the NBFC must have charged you an expensive interest amount which would have surprised you! Once your scored are up, try applying for the same loan from the same bank and you would come to know that there us a huge difference between the interest amount then and interest amount now. Once the credit scores are up, it is a sign that you a responsible payer and would not be an liability for the financial institutions. And hence you get lower interest rate compared to earlier one.

  1. Get your loans sanctioned in no time

While your scores were low, you had to run and climb staircase of all the banks, you went, inquired but in the end what you had was just disappointment. You came back home everyday with sad face as no one was ready to sanction a loan for you. But as soon as you scores are up, you need not worry at all. Now as and when you will apply for loan, because your scores are up, you loans will will be sanctioned easily.

  1. Upgrade your credit card limit

Remember, while you wanted to get your credit card limit up, but were unable to it. Why? Because of credit score. Credit score determined your eligibility for many things. Specially it determines the credit worthiness. Hoe much credit worthy you are. What is credit worthiness? Credit worthiness is a phenomena which gives an idea about how much credit can you manage without any burden. So when your score is up now and you apply for a upgrade in the credit card limit, it will be approved in minutes.

When you try to improve CIBIL score, and you are successful, there will be many things which would be approved or sanctioned which you wanted to earlier and could not but now with a better score, it will no hurdle. Credit Score is a sensitive area, you need to work it very diligently in order to make things on perfect way. Stay credit healthy and keep you score good!

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Secured Or Unsecured Personal Loan: Which One Should You Go For?

If you are looking for a personal loan, you must have noticed that there are two types of personal loans- Secured and Unsecured. Let’s take a look at the prime differences between these two options and the factors based on which one can decide which one to go for.

The fundamental difference is what stands behind these loans. A secured loan is backed by a collateral. In this case you agree to give an asset that acts as a guarantee for the loan. It serves as a security for the lender and protects him from losses. In case you do not make the repayments, your asset is claimed and sold off to recover the debt amount you owed to the bank. Therefore before going with this option one must be sure of one’s ability to make the repayments.

Unsecured loans do not have any collateral. Hence you do not stand a risk of losing any of your asset even in case you default. The only assurance that the lender has that you will repay your debt is your word and your history of past credit behavior. Hence lenders carefully evaluate your personal information like income, current debts, CIBIL Score and report to assess the level of risk involved in lending you money.

Even though the borrower risks losing his asset, he may still go with a secured loan under following circumstances.

When you need a higher Loan Amount

The amount of loan that you can get sanctioned is usually higher in case of secured loans. Since unsecured loans are riskier for the lenders they do not approve very huge amounts.

When you have a low CIBIL Score

In order to qualify for an unsecured loan, one generally needs a high CIBIL score. A good credit standing helps in winning the trust of the lenders. But if your CIBIL score isn’t high enough to get easy approval for unsecured loan, you may apply for a secured loan. Since the risk of the lenders is lower in this case, they do not have strict rules of having a minimum score. Hence they are easier to qualify for.

When interest cost difference is substantial

Secured personal loan interest rates are usually lower than the unsecured ones. One gets better terms and conditions and a longer duration for repayments. A longer term means that the monthly repayments will be smaller. Hence, if you have an asset to put as a collateral and you are sure of your ability to repay the debt, it is a wise decision to opt for a secured loan to save on interest costs.

However, processing of a secured loan may take a little longer. The lender may want to get the collateral valued to make sure that it is enough to cover the borrowed amount. The processing fees and other charges would be higher too. An unsecured loan becomes a better choice under following circumstances

  • When one needs to borrow a small amount of money for a short period of time
  • When one has a stellar credit profile and an excellent CIBIL score that helps one to qualify for the best personal loan interest rates.
  • When you do not have any collateral to back your loan, or you do not want to put your assets at risk.

Defaulting on loans

Defaulting on secured as well as unsecured loans will affect your credit report and CIBIL score negatively. If you default on payments of a secured loan, the lender can legally take possession of the asset. The proceeds of the sale will be used to settle the debt. In case of unsecured loans, the bank cannot claim your property. But it can put your account into collections and take legal action to recover its debt. Late payments, Missed payments and account that go on collections will severely tarnish your credit profile. When potential lenders check your credit history, such remarks will deter them from lending you money.

Check your CIBIL score today, and find out whether you can qualify for the best loan interest rates. This will help you start your decision making process.

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.