Tag: Loan

The Credit Card Secret That Could Boost Your Credit

A credit score plays a very big role in your daily life. The credit score can determine the interest rate when you opt for a loan or any financial product. Even if you have a good credit score which is suffice for taking a loan, there is no harm in boosting your credit score a bit before going for the loan. If you have 700 hundred as a credit score which is excellent but gaining an extra twenty will do you no harm.

But how do we achieve it in short span of time?

So here are some credit cards secrets on how you can boost your credit score from good to excellent which will save you a lot of money.

Don’t keep your credit utilization zero, use it wisely.

It is suggested by experts that one should use some limit of their credit card instead of not using them. We Indians have the tendency to opt for a credit card just for backup purposes and never use it, but this will affect your score more severely rather than using it. Use your credit card for grocery shopping or so which most of the people tend to do it via cash. This practice will not only help you boost your credit score but you also get award points. Determine your usage limit every month.

Pay your bills on time

Once you have used your determined credit limit, do make sure you pay your credit card dues on time. A we all know we need to make payment every 50 days of the limit used, the more regular you are on making payments the more your credit rating boosts. Use your credit card wisely and make payments time to time.  Vice versa if you do not make the payment on time the credit score goes for a toss and then it’s a long way to go.

Don’t close unused credit cards.

If you get a credit card try making small transactions on a regular basis and do not close the credit card account. If you make a decision that you do no need a credit card and paid all the dues related to the same this will affect our credit score. Always keep your credit card open and make small transactions on a regular basis but do not close it.

Don’t get a new credit card unless you need it

Don’t go for a new credit card unless you need one. Getting a new credit card means you will have to use it and sometimes the credit card converts from need to luxury. As you start making luxury expenses, you realize you are paying more than what you expected on the credit card bills. Again you will be stuck with overdue and will find no way out of this.

 

Check for errors on your credit report

Not only you need to pay your dues on time but also check on your cibil report from time to time. You can opt for a free cibil report from various online portals and check for errors, just don’t go through any banks to check your cibil score, so it will indicate that you were applying for a loan and were getting rejected on the same. Get a proper idea about your credit score ups and downs.

This is a few things you can control about credit scores and take it to your advantage. It’s easy to own a credit card, but you can avail the benefits of it if you use it wisely and know the hidden features upfront.

How to choose the right home finance company?

Owing to the rising prices of property, availing a home loan is one of the crucial steps when you plan to build your dream home. A lot of comparative analysis goes around when you consider factors governing the decision to choose the right bank or financial institution.

While you finalise a residential property and search for a lender to back your purchase, it is equally important to have a clear picture of your financial state in your mind. Your CIBIL score undeniably plays a significant role in your loan approval. In case you find that, your cibil score is low; the first step would be to search for a home finance company that offers home loan despite poor credit history.

While there is no denying the fact that you should compare the deals by different lenders before making the decision, there are several other aspects you need to keep in mind.

Loan Amount: With robust credit score you can avail loan for up to 85 percent of the property cost. The lender would consider your disposable income, property value, age, occupation, credit history, and number of dependants before finalising the loan amount. The more the lender approves, the lesser would be your down payment, but it would attract a higher EMI. If higher EMI is not a concern and you do not want to spend too much from your pocket as down payment; choose the lender that approves a higher loan amount.

Rate of Interest: Home loan interest rate is something that would influence your monthly instalments. Conduct a methodical online survey for rates and select the most competitive one. Have a proper understanding of the Retail Prime Lending Rate (RPLR) before sealing the deal. For banks, the lending is higher than or at the base rate as they cannot lend lower than the base rate. The housing finance companies give a discount on the RPLR. Understand it carefully and pick the right lender.

Consider the hidden costs: Most of the times applicants overlook the hidden costs like processing charges, document charges, administrative fees, repayment charges, switch fees and verification charges. It is important to collect all information about the charges before choosing the HFC.

Property type and location: There are HFCs that do not fund in specific localities and they even do not fund every property type. Confirm if the lender you finalize authorises loan in the locality of your choice.

Loan span: To increase your eligibility, banks offer home loans for up to 30 years. Housing Finance Companies generally do not grant a 30yrs loan.  Confirm the loan span while applying.

Disbursal & Processing Speed: It is important that you choose a Housing Finance Company which rule out the possibilities of delays when it comes to approving a home loan application. With right documents and verification reports, it should not take more than 10 working days to process the home loan application. An additional 3 working days generally for the disbursal of the sanctioned amount.

Reliability of the HFC: Home Loan is a long term commitment. Furthermore, you have your title deed mortgaged with the lender. It is, therefore, exceedingly essential that you choose a reliable lender. Reliable HFCs would always offer good customer support and flexibility. Confirm the dependability of the financial institution if you do not have a preceding relationship with the organization.

Credit history and records

It would be to some extent difficult to get hold of a housing loan in case your credit history is not up to the mark. Searching loan for low Cibil score is always a challenge. However, all doors are not closed. There are few housing finance companies that agree to offer housing loans despite your poor credit record. If you have a poor score first try to improve it so that it doesn’t affect the interest rate. Banks are too demanding in authorizing housing loan to an individual with poor credit history. The loan for low Cibil score not only attracts high interest rates but lenders put restrictions on loan period and guarantors.

You are recommended to go through all these aspects and keep these pointers in mind as you move forward to choose the best lender for your home loan. Do not hurry things up. Remember repaying a housing loan is a big liability and you should do your homework carefully beforehand to keep away from future hassles.

How will you get best deal on Personal Loan?

A personal loan is the best credit instrument to meet the short term requirement on funds. What a borrower would want while applying for a personal loan is the interest rate. What does one want while applying for a personal loan? First the rate of interest being charged and second the speed of disbursal.

The banks and lending institutions keep advertising the attractive rate of interest rates but when one actually applies the reality hits hard. One may not be able to get the interest rate that was presumed. Now when the application has already been processed and there is a genuine need, one may not be left with much option but to accept the higher rate of interest. This may leave one with the thought of having got a raw deal. What should then one be doing to ensure that he is able to get the best deal on personal loan?

 

Awareness about the interest rates

First and foremost one must realize that the rates advertised by the banks are not a blanket interest rate to be extended to every borrower. The rates can vary drastically for two different borrowers within the same bank. The interest rates are an outcome of various factors including income, age, expenses ratio, city of stay etc. Other than this one’s credit profile which is also popularly known as CIBIL score calculation has a major impact on the interest rates being charged on the personal loan.

Check your credit report

Since the CIBIL score of an individual has an important role to play in the underwriting process, it is only prudent to be obtaining the CIBIL report before applying for a loan. It takes only few minutes to get the report. Check out if all your accounts have been updated properly and there are no anomalies. Since a study by Credit Sudhaar states that one of four reports has errors, there could be a chance of your score getting impacted for an error. Generally a score of 750 and above is deemed to be a healthy score and if your score is above 750, you are good to go for applying for that personal loan.

Check on your income expense ratio

This is again of high importance. Please be aware that generally the banks take 50% of one’s income as monthly expense towards living. The other part can be dedicated to servicing of the EMIs. Put together the existing loan and credit card obligations and the EMI of proposed loan, the amount cannot be more than 50% of the income. So calculating it before applying will only help in faster access.

Pay off credit card balance or close a loan

In case your EMI obligation is going beyond the 50% ratio, you may be required to pay the credit card outstanding or close an existing loan. This will help in you getting the approval.

Hunt for the best deal

It is recommended to get offers from multiple lending institutions before applying for the loan. This will give one the power of bargaining and getting the best deal. Generally, the bank where one has a relationship is where the loan is applied. But it is not necessary to get the best deal with one’s own bank. So checking out with others will only help.

The key would be to give all required details but not to actually apply. Every time one applies the lender runs an inquiry on the credit bureau and multiple inquiries can bring down your credit score. Also, this may get perceived as credit hunger by the underwriter and may be one of the reasons for shooting up the rate of interest on the loan.

Check on the offers

There are times when there are offers from the manufacturers and the banks where one can get a better deal in terms of the overall cost. Say for example, one is looking at buying new furniture or electronics items, do check out with the manufacturer or the retail store if there is an offer from any of the banks. There are special offer running during festive seasons that may make the deal over all quite attractive even if a marginal higher rate gets charged.

Negotiate for charges

Interest rate is not the only component. There are other charges that one needs to watch out for. Processing fee, pre-payment penalties, lock in period are few such charges that shoot up the cost of borrowing. Negotiate for a lower processing fee since it will save on the upfront charges. In case you wish to prepay the loan, a lower foreclosure charges will help. Similarly, reduction of lock in period can only help you saving money being paid as interest should you decide to close the account earlier.