Tag: Improve cibil score

How your credit management can impact your job!

It is known that your cibil score determines your eligibility for securing a loan or a financial product, but it is also important while securing a Job.

These days if you are trying to get employed there are various company norms in terms of background verification to secure a job that is address, Education, Employment, etc. majority of top corporates also are indulging themselves in finance background checks for any Cibil defaults or Loan defaults. This process helps companies to understand if the person is financially sound and also takes his payment integrity seriously


Reasons why Cibil Defaults Worries Employers

There are numbers of reasons why you have defaulted a loan and it would make it difficult for you to secure a job.

The very first thing what bothers an employer to hire a Loan default is the question, can the candidate make a good employee if he has been offered a mid-level or higher level Job which  demands a lot of integrity and dedication. A bad Cibil score is led due to loan defaults, payment issues which obviously mean the candidate was not serious about making the payments on time. If a Candidate is unable to cope up and manage their own incomes and loses, how is the person expected to be contributing to the growth of the company.

A loan default can lead to difficult life circumstances. For example, if you don’t pay your EMI’s on time that will lead to a bad Cibil score which leads to different penalties, that means you have to shell out more money than usual, which means you have to dig more in your pocket and cut on your other expenses which can lead to mental disturbance and depression which will automatically hamper your work and no employer would take the risk of hiring such employee.

If you have are going neck to neck with another candidate for a similar position in an interview, a great cibil rating as a tie breaker will help you secure the job over the other candidate.


Employers Invest in Permanence

Employers always want to hire employees who are evident that they are made for a long run. They want people who can manage themselves in terms of money; stature etc. now a person who cannot manage his Loan defaults will obviously make a bad employee and hence will be not given employment options.

How to Prevent Cibil Defaults

Check your Cibil report:

Check your Cibil report on a frequent basis, in particulars to your EMIs and credit card payments. Check to ensure there are no late payments incorrectly listed on your account and if you find one, do reports it with necessary proofs.

Manage Incomes:

Manage your incomes and gains so that you don’t default on paying your dues on time, this will ensure a good credit health; a good credit health means you can try getting a quick loan at unexpected hard times.

Say no to Credit Cards:

For some people credit cards are a matter of stature and spend unwillingly on the same, but when the time comes to pay the dues one understands the expenses were just not right. Maximum number of cibil defaults is because of excessive use of credit cards and not making the payments later.

Apply for what you need:

If you are applying for a loan, calculate first how much you need and then apply majority of the times people take loans just because they have opportunity to take one exceeding the actual amount needs. But when time comes to pay dues it becomes very much difficult to cope up with the EMIs.

Seek Professional Help:

If nothing is working out and you are out of ideas to prevent further damage on your cibil default, seek professional help. There are professional agencies who help you to overcome your loan defaults ad also help you secure a loan.


Lost your job? Take these steps to avoid CIBIL score plummeting

A sudden loss of job is a very stressful event especially if one is the sole breadwinner of the family. All your financial plans and dreams suddenly grind to a halt. Uncertainty about the future and anxiety about how you will handle your expenses and pay off your debts bogs you down. In fact it can be quite overwhelming to think about the consequences of not meeting your financial commitments in time. Will unemployment affect your credit score? Let’s explore.

The fact that you are unemployed does not show up on your credit report. The credit bureaus do not factor in your employment status during the credit score calculation. Hence losing one’s job does not directly affect one’s credit score. But if you fall behind on your EMIs and credit card payments because of loss of income, it is sure to have a negative effect on your credit profile. Payments over 30 days late get reported to the bureaus and lower your score.

It all boils down to how you tackle the situation and deal with your debts during the period of unemployment. By being proactive you can ensure that your credit rating is protected even during this hardship. Here are a few important things that you should consider to deal with the situation.

Dip into your emergency fund- If you’ve saved enough money to cover for at least 6 months of your monthly expenses, then you need not worry too much. These funds are meant for such situations, as they help you stay on top of your payments while you search for a new job. But if the savings are not enough to cover your bills do not turn to credit cards, loans or cash advances to make ends meet. High interests on credit card balances and debt amounts will put additional strain on your finances and damage your credit score. Opening new loan accounts will reduce the average age of accounts and bring your score down.


Instead take the following steps. Not only will it help in avoiding the credit score plummeting but will help you improve CIBIL score.

Make a budget- The budget you made while you were employed won’t fit the current circumstances. Once you lose your primary source of income you need to cut down on unnecessary expenses. Eliminate all the spending that you can do without, and rework your budget. For example postponing holidays, cancelling subscriptions, cutting down on movies, dinner outings and salon visits will free up some extra cash and give you some breathing room while you figure out how to meet your debt payments. Factor in alternate sources of income like your spouse’s income, emergency funds, severance or part time income that you can rely on during this period.

Balance transfer- Consider transferring your credit card balance to a new card with an introductory offer of 0% APR. By paying no interest on your balance you can save a significant amount. Resist the urge to continue spending on credit cards. Start paying for your expenses by cash. This way you will be more disciplined in the way you spend.

Prioritize your debts- If you still fall short then you need to prioritize your debts. Figure out which debts are most important for you to service. Secured loans where you run the risk of losing your asset on non-payment should be the top priority. Unsecured loans, credit card bills can be lower priority debts. You can conserve your cash by making only the minimum payment on the credit card. Though rolling over balances will attract high interest charges sometimes you have to make tough choices to avoid defaults. Make sure you do not miss any payment and pay at least the minimum amount on time. If you delay or fall behind your payment, your credit score will be impacted.

Talk to your lenders- If you have a budget shortfall, defaulting on payments is not the only option. Remember, if your account goes into collections your credit score will take a serious hit. So it is always better to talk to your lenders and openly explain them about your financial difficulties. Express your desire to meet the obligations and ask them if they have any financial hardship programs. At times lenders agree to lower interest rates or set up more affordable repayment plans during the period of unemployment. You may even request for forbearance which will allow you to defer the payment schedule for a set period of time. Suspending payments will give you more room in your budget while you look for a new job.

Dealing with debt and maintaining your credit score is tough when you are out of job, but not impossible. Adjust your budget, talk to your lenders, use your emergency funds and resist the temptation of new debt. Careful planning and re-evaluation of goals will help you sail through this period.


The Must-Know Changes in Second Home Loan Tax Benefits

Many people buy second home to earn money in the form of rent collected from the tenants. However, the Finance Bill 2017 is going to hit hard as it comes with a variety of changes that can make things difficult for such people.

According to the Finance Bill 2017 the tax benefit on loan repayment of a second house is to be limited to only Rs. 2 lakh per annum.  Earlier, a home buyer was allowed to deduct the entire interest amount paid on the second home loan.

Let’s consider an example how this new rule will affect you if you bought a second property with a home loan. So, say you bought a house for which your interest outgo in the first year alone is Rs. 10 lakh. Let’s assume that you are earning a total rent of Rs. 4 lakh every year. In this case, you will be allowed to adjust the difference of Rs. 6 lakh (the amount remaining after deducting 4 lakh from the 10 lakh interest) against any head of income. However, in the second financial year you can enjoy deduction only up to Rs. 2 lakh. The Rs. 4 lakh that remains how will be carried forward up to eight financial years, and adjusted later.

According to Amit Maheshwari, who is a partner at Ashok Maheshwary & Associates LLP, this new rule will greatly affect the real estate business. This is because the people who buy properties on leverage to benefit from real estate losses on account of big difference in the interest rates and rental yields will suffer greatly. The capping implemented is too low, although it was implemented to discourage purchasing of real estate for investment reasons.

What now?

The Finance Bill 2017 has certainly raised some hurdles for the real estate investors. However, this shouldn’t discourage you from investing in a second home. It still has many advantages.

While the interest deduction will stay capped at Rs. 2,00,000 for a self-occupied property, if you will let it out or leave it vacant you can claim as much interest payment for tax benefits. You won’t have to pay the wealth tax (if you have more than one house in your name) if you will let out the second house. However, to enjoy these benefits you will have to let the house out for a minimum period of 300 days in a year. If you want even greater tax reduction you can treat your property with a high annual value as self-occupied.

Applying for a second home loan

Home loans are not easily sanctioned by banks and other financial institutions. Here are some good tips on how you can get your second home loan approved easily:

  • Enhance Credit Score: Almost every single loan applicant has to pass the test of credit check. Your credit score has to be high enough to make the lender confident in your creditworthiness. So, be sure to check your score before you apply. Make sure that your score is above average and your name is not on the CIBIL defaulters list.
  • Get a Guarantor or a Co-Applicant: If your loan application is rejected then you can get a guarantor or a co-applicant to apply for the loan along with you. This will greatly increase your chances of approval, especially if the other person has a good credit score.
  • Show a Reliable Income: A reliable and stable income is a good way to convince a bank to approve a loan for a second home. If you are a budding entrepreneur or have a small income then the lender might find your profile risky.
  • Provide Assets: If you don’t have a high income then also you can convince your lender by disclosing your assets. They can give the lender some confidence in you, especially if you are willing to use these assets as collateral.

The home loan interest rates are increasing every year. So, if you want to invest in property then today is as good time as any. Be sure that when you apply for the loan you calculate the EMIs, etc. with a home loans EMI calculator to get an idea how it will affect your monthly expenses. Also, do whatever possible to increase CIBIL score as it will make it easier to get a loan.