Fintech startup Wishfin has partnered with Transunion Cibil to provide credit scores through WhatsApp
Shaikh Zoaib Saleem | Last Published: Thu, Jun 28 2018. 11 15 AM IST | LiveMint.com
Over the past couple of years, credit information companies or credit bureaus operational in India—TransUnion Cibil, Equifax Credit Information Services Pvt. Ltd, Experian Credit Information Co. of India Pvt. Ltd and CRIF High Mark Credit Information Services Pvt. Ltd— have tied up with several fintech companies to provide customers credit scores, credit reports as well as monthly updates, on request.
Fintech startup Wishfin has gone a step ahead and partnered with Transunion Cibil to provide credit scores through WhatsApp.
A credit score is based on your credit history, like repayment of EMIs and credit card dues. A good credit score can boost your bargaining power when you go for a loan, especially big-ticket loans like a home loan. Some banks even offer lower rates to individuals with high scores.
How to get credit score on WhatsApp?
You are required to either give a missed call on 8287151151 or enter your mobile number on Wishfin’s website. Following this, you will get a WhatsApp message from a verified business account “Wishfin CIBIL Score”. You are required to follow the instructions and share your name, date of birth, gender, address, permanent account number or PAN and email.
Mint tried the service, and got the credit score instantly. To get a detailed report, however, you need to log in to Wishfin’s website.
You can get your report, and 12 monthly updates free of cost as of now.
How to get credit reports from other channels?
From credit bureaus: The Reserve Bank of India has mandated credit bureaus operational in India to provide one free full credit report in a year to every individual who requests for it. This will contain all the details that will be reflected in a report that a bank would get when you request for a fresh loan. You can access these reports through the websites of credit bureaus.
From fintech platforms: Fintech companies have tie-ups with credit bureaus to provide reports, mostly free of cost. In return, they get consumer data they use to cross-market products. Some fintech platforms also ask for details like salary and current employer.
Rachel Chitra | TNN | Updated: May 16, 2018, 09:51 IST | Times of India
BENGALURU : Are banks gearing up to reward you for good behaviour? After Bank of India (BoI) and Bank of Baroda (BoB) announced such measures, IDBI Bank on Tuesday said that it will reward good borrowers by giving them differential pricing on their home loan interest rates based on their Cibil scores.
According to Cibil COO Harshala Chandorkar, this could point to a larger trend of “loan interests more aligned towards a carrot-and-stick policy – where good borrowers can reap the benefits of their financial prudence and bad borrowers get weeded out or have to pay steeper rates”.
With all four credit bureaus in India – Cibil, Equifax, Experian and CRIF Highmark – looking at wider coverage and criteria, from whether you paid your electricity bill on time to whether your parents paid off for the bike they got you in college, this score could affect your loan prospects.
In the last few years, with non-banking financial companies (NBFCs) and micro-finance institutions also sending information on borrowers to credit bureaus, lenders now have a wider and more comprehensive data set to assess. This could further widen as Cibil is currently in talks with telecom regulator Trai for access to data on prepaid recharges, and other agencies for utility bill payment history.
Banking analyst Hemindra Hazari said, “The whole point of Cibil assessing a customer’s data is that at some point it should translate into benefits. Corporates are always being graded on their term loans, unsecured debt and convertibles, AAA or BB++ rating, and that gives a better picture of their credit worthiness.”
In IDBI Bank’s case, it will be offering loans at 5-15bps (1 percentage point = 100 basis points, or bps) cheaper for customers whose Cibil score is above 700. A credit score normally ranges between 300 and 900 – based on credit behaviour and repayment history. Therefore, the higher the score, the more the chances of securing a fresh loan. IDBI Bank ED Jorty Chacko said, “We are keen to provide all aspiring consumers with access to credit. But while doing so, it is important to reward those consumers who have exhibited consistent credit discipline through timely payments and responsible credit management.”
But with many customers unaware of the role credit bureaus play and whether decisions taken earlier in life can come back to haunt one, Hazari said, “I am concerned about the privacy of our data. In India, there is a very low premium on methods employed for data collection and aggregation. And also, many a time, your consent is not required before financial institutions share additional sets of information over and above what is mandated.”
Lenders prefer to offer home loans to individuals who have a credit score in excess of 750.
Nikhil Walavalkar | May 16, 2018 09:46 PM IST | Source: Moneycontrol.com
Issuance of a credit card marks the entry into the world of credit for most millennials. The journey that starts with a credit card generally peaks when one opts for a home loan, thanks to sky-high home prices. Obtaining a home loan at an attractive rate is a task for many. But they forget that if one uses a credit card prudently, it can help strike a better home loan deal. Here is how it works.
Lenders prefer to offer home loans to individuals that have a credit score in excess of 750. This score is not built overnight. If a borrower has been repaying the loan on time, it can help build a credit score over a period of time. Here is how your credit card usage aids in building a credit score and obtain a home loan at an attractive rate of interest.
Timely repayment of outstanding
Credit cards allow you to access funds without interest for a stipulated period of time, if you pay the entire bill before the due date. “Failure to pay the bill in full attracts interest but also harms your credit score,” Satyam Kumar, co-founder and CEO of LoanTap Financial Technologies, said.
He advises paying all credit card dues in full before the due date to ensure that the credit score goes up. If possible use standing instructions on your saving bank account, so that the lender debits the bill from your account. If you pay the minimum amount due, even though the banker is not treating it as a default, credit score companies do not take it positively.
If you miss your bill payment once in a while by a couple of days, it may not kill your credit score. But avoid repeating such instances a few months before applying for a home loan.
Credit utilisation ratio
“Keep your credit utilisation ratio low at around 30 percent,” Kumar stated. For beginners, it stands for how much credit one uses out of the allotted limit. It is calculated for each card separately as well as jointly for all cards. For example, if you have two credit cards – A and B – with a credit limit of Rs 1 lakh each. and spend Rs 60,000 and Rs 2,000 on these cards, respectively. Then the credit utilisation ratio for Card A and B stands at 60 percent and two percent, respectively. Jointly it stands at 31 percent. Had the user spread this expenses equally on both cards he would have been closer to the 30 percent mark.
Once in a while this number may go up. But consistently high numbers shows a credit hungry behaviour. If you are using a credit card with low limits, it makes sense to ask your banker to increase the credit limit on the credit card. This will ensure that your credit utilisation ratio falls, if you keep spending a similar amount.
Longevity of your credit card accounts
Credit score gives more weightage to older credit accounts. Longer the repayment history, better is the credit score. Avoid closing your old credit card accounts. Keep using the old credit card and repaying it before the due date helps the credit score.
Personal loans on credit cards
Many prefer to avail personal loans on their credit card to avoid paying a high rate of interest. This move blocks their credit card limit. The borrower is also expected to repay the loan on time. Late payments or defaults on these loans also pull down one’s credit score.
“Be diligent while repaying these personal loans as they are high-cost credit compared to other secured loan options. Also, failure to repay leads to a fall in credit score,” Vishal Dhawan, Founder and Chief Financial Planner at Plan Ahead Wealth Managers, said.
If there is a dispute with the lender pertaining to a transaction or charge on the credit card, do not ignore it. “Sometimes individuals tear the credit card as they are unhappy with the service. However, it does not help. One has to ensure there is no outstanding and formally close it,” Dhawan added.
Opting for a one-time settlement or not paying it up will lead to adverse remarks in your credit report. “If you spot a disputed transaction or a charge on your credit card, it makes sense to speak with the card issuer and follow up for an amicable resolution,” Kumar said.
If you use your credit card prudently, there is a high possibility that your credit score will remain good and you will be offered a better deal.
By Preeti Kulkarni, ET Bureau | May 14, 2018, 06.30 AM IST | Economic Times
Are you feeling tempted to access your credit report for free? Before you rush to share your personal details with a little-known third party in return for the free report, remember you can get it directly from the credit information companies (CIC). You are entitled to receive one report per year from each CIC— TransUnion CIBIL, Equifax, Experian and High Mark. However, third-party fintech portals such as Paisabazaar, Bankbazaar, Creditmantri, etc. offer customers access to more than one free credit report in a year, along with some other services.
“Some fintech firms help consumers understand their credit situation and guide them to improve their credit score. Others help compare and find the best credit card and loan offers based on one’s credit score,” says Manu Sehgal, Head, Business Development and Strategy, Equifax. These are the services that CICs do not offer. Also, as third-party portals do not have any restrictions on how many times you access the credit report, you can take corrective steps quickly, if needed, to improve your credit score.
“Even a small discrepancy in the records or a single day’s default in EMIs or credit card bills has an impact on your credit score. Easier access to credit report allows you to quickly initiate steps with CICs/banks to correct mistakes,” says Navin Chandani, Chief Business Development Officer, BankBazaar.
Approach with caution
Given the recent reports of data leaks and its misuse, should one part with personal information in exchange for free services? Third-parties typically seek PAN, identification, address, mobile number and email details. Also, you will have to give your consent before CICs can share your credit history with a third-party. “We can share credit reports with portals we have partnered with only if the customer consents to it,” says Harshala Chandorkar, COO, TransUnion CIBIL.
Once you give consent, you cannot hold the CIC responsible for any misuse of your information by a third party—so be careful whom you give consent. “If the customer is not diligent and gets lured into giving out his information—PAN, date of birth, mobile—required to get the credit score, he risks misuse of his credit history and other information in the report,” says Chandani.
Additionally, sharing personal details with third parties may invite spam calls and emails. “Read the terms and conditions when accessing the services of these portals and avail services of only the betterknown fintech portals,” says Sehgal.
Before you share your details, verify if the portal has a tie-up with a credit bureau. “The portal should mention the name of the bureau offering the credit report and it should also provide consumers the option to unsubscribe or delete their details from the platform,” says Radhika Binani, Chief Products Officer, Paisabazaar.
Bank of India will offer preferential pricing rates to borrowers with good credit scores for home loans of Rs 30 lakh and above, the state-run lender said.
By: PTI | New Delhi | Published: May 7, 2018 7:35 PM | Financial Express
Bank of India will offer preferential pricing rates to borrowers with good credit scores for home loans of Rs 30 lakh and above, the state-run lender said. Customers with CIBIL score of 760 and above will be offered loan at the minimum home loan interest rate or the marginal cost of lending rate (MCLR) for an year, the bank said in a statement. MCLR is the minimum interest rate of a bank below which it cannot lend. Those with a score of 759 and less, the rate of interest for loans of Rs 30 lakh and above will come at MCLR plus 0.10 basis points for a year.
One basis points is 100th of a percentage point. Bank of India said borrowers availing home loans of over Rs 30 lakh will be benefited from the reduced rate of interest. A consumer’s CIBIL score is a three-digit numeric summary of the credit information report (CIR) — summarising the past credit behaviour and repayment history — and ranges from 300 to 900.
The higher the score, the better are the chances of loan approval. Most banks check a consumer’s CIBIL score and report before approving a loan. “Consumers with a good credit discipline should be rewarded, as it helps propagate the importance and need to maintain a good financial history. Our preferential pricing model aims to reward high-scoring home-loan aspirants with competitive ROI, thereby helping them making their dream home a reality,” Bank of India said in a statement.
Credit information company TransUnion CIBIL’s Head of Direct to Consumers Interactive Hrushikesh Mehta said: “Bank of India’s CIBIL score-based incentive helps further highlight the need to monitor and build a positive credit profile through good credit habits.”
Aakanksha Mathur | 30 April, 2018 | MeriNews
China’s new “social credit scheme” which becomes mandatory for all citizens by 2020 is designed to involuntarily rate people based on their “commercial sincerity”, “social security”, “trust breaking” and “judicial credibility”.
But what does that imply for the 1.4 billion strong Chinese population? Well, almost 11 million Chinese are no longer allowed to fly and another 4 million are barred from taking a train owing to their low personal scores. Come next week, the programme will be implemented nationwide.
According to the Chinese government, its a system to “purify” society by rewarding trust-worthy people while at the same time punishing those who are not, says a report from CBS News.
Much unlike Credit Information Bureau of India Limited (CIBIL) score which we Indians are familiar with, this new Chinese social credit score system covers a much wider scope like whether you pay your taxes on time, follow traffic rules and even on what you post online. This means that trolling someone on Twitter could severely harm your score.
Liu Hui, a journalist by profession, was recently denied an air ticket because his name featured in the list of untrustworthy people. He was asked by a court to apologize for a series of tweets that he had made and later told that his apology had been rejected on the grounds of sincerity.
“I can’t buy property. My child can’t go to a private school. You feel you’re being controlled by the list all the time,” Liu was quoted by CBS News as saying.
While getting involved in community service and buying domestically manufactured products can increase your score, indulging in acts like fraud, tax evasion and smoking in public make it drop. A low social credit score translates into the fact that you are banned from let alone buying plain or trains tickets, even a high-speed internet connection.
What makes this social credit rating system work is China’s robust network of an estimated 176 million surveillance cameras which the country plans to increase to 600 million by 2020.
In fact, in several big cities of China like Shanghai, cameras are used for tracking and catching hold of jaywalkers. The cameras first record the offence and then the recording is played on the nearby video screen to publicly shame the offender.
However, the downside of this behaviour monitoring system is that is can be abused by the government, feels Ken DeWoskin, who has studied China’s economic and political culture for over three decades.
“Well, I think that the government and the people running the plan would like it to go as deeply as possible… to determine how to allocate benefits and also how to impact and shape their behaviour,” DeWoskin told CBS News.
Not minding the collateral damage, since you were born in a communist country, being rated “trustworthy” by the government does come with fringe benefits like lower bank interest rates, discounts on energy bills and also that China’s largest online dating site reportedly even boosts the profiles of people with good credit scores.
STAFF REPORTER | MADURAI | UPDATED: APRIL 22, 2018 04:14 IST | The Hindu
Coming to the aid of a law student who sought an educational loan from a nationalised bank, the Madurai Bench of Madras High Court has directed the bank to consider the loan application and disburse the loan within two weeks.
Justice M.S. Ramesh, hearing the plea, observed that nationalised banks had time and again rejected loan applications based on the CIBIL reports of family members.
The student being the principal borrower, the status of parents and family members could not be a criteria for rejecting the application. CIBIL score should not be a ground for rejection of an application. It was a wilful disobedience of various orders passed by the court in this regard, making this case liable for contempt of court orders. The Head of Indian Bank, which had rejected the loan, was directed to issue necessary directions to all its branches in the State to refrain from rejecting educational loan applications on such grounds.
The court was hearing the case of M.Hariharasudhan, a law student of Prist University, Thanjavur, who had sought an educational loan of Rs. 70,000 from the Indian Bank. He moved the High Court after his application was rejected based on his father’s low CIBIL score.
S Murlidharan | Mar 12, 2018 14:38:24 IST | First Post
Individuals are supposed to fret and agonise over their credit score awarded by CIBIL (Credit Information Bureau (India) Limited) so that they are not in disfavour with the lending banks and institutions. All payments made by them are passed on to CIBIL which together with three other companies in the same business keeps a running score of the credit behavior of individuals. While the efficacy of the regime is debatable, for which this is not the occasion, what raises eyebrows is the absence of a similar regime for corporates who are by far the heaviest borrowers and defaulters.
What CIBIL does is brought out in its blurb: “TransUnion CIBIL is India’s leading credit information company and maintains one of the largest collections of consumer information globally. We have over 2,400 members–including all leading banks, financial institutions, non-banking financial companies and housing finance companies–and maintain credit records of over 550 million individuals and businesses. Our mission is to create information solutions that enable businesses to grow and give consumers faster, cheaper access to credit and other services.”
To be sure, there is a regime for corporates as well—CRISIL—but that is extremely limited. CRISIL (Credit Rating Information Services of India) and its competitors are credit rating agencies whose services are used by corporates episodically, i.e. when they issue bonds, invite deposits or mobilise funds through commercial papers. To be sure again, it is not as if once these episodic events take place, the role of the credit rating agency is over; it does keep a vigil on the credit behavior of the borrower till the instrument through which funds were mobilized is redeemed or discharged. But the vigil kept by the credit rating agency is not as comprehensive, continuous and all-encompassing as it is for individuals under the CIBIL regime.
Time has come for the banking regulator, the Reserve Bank of India (RBI) to mandate constant monitoring of corporate banking behavior that if anything is more rigorous and thorough than the one for individuals given the enormous stakes involved.
The Punjab National Bank (PNB) fraud perhaps might have been pre-empted had there been a regime such as the one outlined above. Why did PNB scam happen? It happened because Nirav Modi had banking dealings with PNB and not with Axis or Union Bank, to wit. And the RBI has said banks should not entertain requests for Letters of Credit (LoC) unless the borrower had banking relationship with them.
Thus arose the need for an intermediary instrument—letters of undertaking (LoU). LoU assures the stranger-banks, as it were, that the familiar-bank vouchsafes for the creditworthiness of the unknown credit-seeker. Modi got the requisite LOUs forged in collusion with two corrupt Mumbai branch employees of PNB and got the credit from a clutch of Indian banks having foreign branches including Axis and Union Bank. The charade of LOU need not have been enacted had the banks had a CIBIL-like regime under which the banking behavior of Modi with PNB would have been shared with Axis and Union Bank.
Banks in India do come together and share vital information when they form themselves as a syndicate when the loan asked for is too big for their boots in terms of funding required and risks involved. But what is required is a more transparent, general and accessible information regimea la CIBIL.
The comprehensive CIBIL regime for individuals in juxtaposition with absence of a similar regime for corporates smacks of penny-wise pound foolish behaviour. It also gives credence to the long-held view that when you borrow in thousands you are in trouble with the bank but when you borrow in millions or billions, the bank is in trouble. Banks can correct this skew by putting in place a robust monitoring regime of corporate financial behavior that is accessible on real-time basis by everyone having a skin in the game.
(The writer is a senior columnist. He tweets @SMurlidharan)
A high credit score certainly boosts the chances of your loan approval. However, if you fail to qualify on other parameters, even your high credit score will not help.
Published: March 14, 2018 4:37 PM | Financial Express
A high credit score certainly boosts the chances of your loan approval. However, it doesn’t guarantee it. Credit score is just one of many parameters used for credit approval by lenders. If you fail to qualify on other parameters, even your high credit score will not help. Here are the some of the most common reason why loan applications are rejected despite a good credit score:
1. Minimum income eligibility: Most lending products have minimum income criteria for loan applicants. Lenders may also set varying income eligibility criteria depending on your location, i.e. metro, urban, semi-urban and rural areas. As this is often the first filter that lenders apply for processing loan applications, those who fail to meet this criterion are usually rejected outright, even without the consideration of other eligibility factors, such as credit score and EMI affordability. As this criterion may vary across lenders, visit online lending marketplaces to find out the loan options available to you basis your monthly income.
2. Age: Most lenders cap the age of loan applicants at 60 years. This is because monthly incomes usually dip after retirement, which increases of the risk of default. Some credit products may also cap the age by which the repayment has to be completed. For example, most lenders require the borrowers to complete their home loan and loan against property repayment before they turn 70. Those who fail to meet these requirements may have their loan applications rejected. If you too are approaching your retirement age, improve the chances of loan approval by making your spouse or employed children your co-applicants.
3. Frequent job changes: Nowadays it is quite common to frequently change jobs for better career prospects and higher income. However, frequent job changes is considered as a sign of an unstable career and hence, job hoppers are regarded as less creditworthy, especially for longer tenured loans like home loans and loan against property. If you too are planning to avail a longer tenured loan, avoid job changes for some time.
4. Guarantor of other loan: Whenever you become a guarantor to someone else’s loan, you become equally liable for its repayment. Hence, during fresh loan application, lenders will reduce your loan eligibility by the amount of outstanding loan guaranteed. This might lead to the rejection of your loan application. As banks do not allow changes in guarantor(s) unless requested by the borrower himself, ask the primary applicant of the loan to find another guarantor as your replacement.
5. High FOIR: Fixed obligation to income ratio (FOIR) is the proportion of your total income which goes out as EMIs (including the EMI for the new loan application) and other repayment obligations like house rent, insurance premiums, etc. As lenders prefer to lend to those with FOIR of 40-50% or lower, those exceeding it may have their loan application rejected. Hence, those with higher FOIR should prepay their existing loans in whole or part to increase their loan eligibility. Alternatively, opt for lower EMI for the new loan if that contains your FOIR within 40-50%.
6. Job and employer’s profile: Many lenders also consider your job description and/or your employer’s profile while processing your loan application. Lenders prefer government employees and those working with top corporates and MNCs the most due to their higher job certainty, whereas those working with lesser-known or financially-strained companies are less preferred. Employees with hazardous job profile have lower loan approval chances. Consider loans from NBFCs if banks reject your loan application due to your job or employer’s profile.
(By Naveen Kukreja, CEO & Co-founder, Paisabazaar.com)
By Arshad Khan | Express News Service | Published: 04th March 2018 04:45 AM |
NEW DELHI: In the wake of Punjab National Bank scam and numerous other banking frauds detected in the days followed, it became clear that the process of granting loans to borrowers differs for different class of borrowers. While it becomes a nightmare of paper work for borrowers falling in the CBIL minus and CIBIL category, banks mends its ways for the people falling in the CIBIL plus category.
Banking experts say the approach of granting loan to everyone needs to be standardised. Ranjeet Mudholkar, vice-chairman and CEO, Financial Planning Standards Board India, said that banks need to make Cibil score of corporate bodies, mainly the listed ones, public, for the betterment of account and share holders. “Imagine a situation when you know in advance the credit score for Kingfisher, it will not only help rationalise the stock movement of the share holder but also bring a lot of stability in the system. The account holders will also know where their money is going,” Mudholkar said.
He adds that banks will have to become transparent in their working and there is a need to promote financial literacy among account holders. However, the two immediate requirements for a better banking system are far from international standards. In developed nations, accounts holders are much more aware as what is happening with their money, beside having easy available of CIBIL scores.
Another stark contrast is that many account holder in the India are not necessarily its share holder, hence they don’t see a need to know their bank’s working. Financial institutions, too, differentiate between an account holder and a share holder when it comes to revealing information. Even though, account holders are less likely to lose their deposit money in the whole scam episode, there is always a fear that there earning might get impacted, which, has an impact on every stake holder.
It was reported that post the illegal transfer of around $1.8 billion of taxpayers’ money from a single PNB branch in Mumbai, many account holders of the bank closed their fixed deposits in fear of the bank shutting down and they losing their money. A PNB clerk in a Delhi branch said the number of new account openings has seen sharp decline. Share price, too, continues to touch new lows.
But will things change in the way banks function. Mudholkar says that things are pretty much in place for middle class borrowers but for UHNIs, he hasn’t seen change in Bank’s approach yet. “Not taking ratings into consideration while granting loan to corporate bodies should stop and certain guidelines should be followed by banking official. In the absence of this, there will always be a crook who will try to take advantage of an outdated system,” he said.
When checked with a banking official whether they follow the standard norms while dealing while HNIs, she said sometimes they break limited norms while dealing with them as they are ‘valuable’ customers.
“A trust is built between them and bank. At the end of the day we do business and in most cases we know that the money is secured but problem comes in when there are wrong intentions,” she said.
RADHIKA MERWIN Interview with Harshala Chandorkar, COO, TransUnion CIBIL
Published on February 25, 2018 | The Hindu Business Line
Arguably no single data point determines your credit-worthiness, or your prospect as an entity worthy of a consumer loan or a business loan, as your credit score. TransUnion CIBIL is one of four credit bureaus in India that assess you for that. There are currently about 37 crore retail borrowers and about 1.3 crore commercial borrowers on the TransUnion CIBIL Consumer and Commercial bureau. That portfolio also gives it a vantage view of the banking and economic landscape. Excerpts from an interview with Harshala Chandorkar, Chief Operating Officer, Transunion CIBIL:
What is your sense of corporate lending trends, which appear to be recovering?
The NPA woes of the banking industry in the commercial lending space indicate that the mid-corporate and larger SME segments have taken the biggest hit. TransUnion CIBIL Commercial Data analysis highlights a significant chunk of accounts that are bad in one bank but not bad in another. The latest FIBAC report on Productivity in Indian Banking states that a significant part of latent NPAs could slip in the next few quarters. The revenue pool of mid and large corporates will probably stay subdued for the next 4-5 years due to stress in the portfolio.
The banking industry needs to invest in new credit models for commercial customers that rely on commercial credit information from TransUnion CIBIL and analytics to complement banks’ capabilities in credit assessment and detecting early warning signals.
What’s the outlook on retail credit? Consumer loans seem to be driving overall lending.
With the availability of credit information and progressive policies on financial inclusion, retail lending has grown profitably. Over the past five years, there has been an estimated 16 per cent annual growth in disbursement and over 30 per cent annual growth in bureau enquiries. At the same time NPAs and delinquencies on retail lending have been historically low.
The nature of retail credit is changing rapidly in India as the share of products in new accounts opened has evolved, with gold loans and consumer durables gaining significant volumes and accounting for almost 50 per cent of all new accounts opened. This growth has been accompanied by a significant drop in ticket sizes as financial institutions are becoming more and more willing to extend low-value loans. With certain other retail products, the ticket sizes have actually increased, prominent among them being personal loans — indicative of the increasing credit-willingness of the Indian borrower and a supply-side push — and home loans and auto/two-wheeler loans – indicative of the overall increase in the values of the underlying assets funded. In addition, the share of youth in retail credit is growing: millennials’ share of accounts opened has increased to 40 per cent.
How do you see the bureau evolving in the near future?
The next stage of evolution of India’s credit information infrastructure will be the usage of credit information data, insights and solutions for further expanding access to credit, driving credit penetration and financial inclusion.
Demonetisation has paved the way for a cashless and digitised economy. Bureau solutions for instant verification and ‘decisioning’ are paving the path for driving digitised, quick, easy and affordable access to finance. Verification solution enables credit institutions to authenticate the identity of the consumer in real time at the point of application. As a result consumers are able to get the loan approval within minutes of applying. Yet another advantage is cost-effectiveness while establishing a consumer’s identity. Bringing down this cost can help banks and credit institutions make lending decisions quickly, at cheaper KYC costs, and thereby increase business growth and credit penetration.
The potential of alternative data usage for credit decisions is another significant domain. To expand and increase the breadth of information for making lending decisions even more comprehensive, we are in discussions with regulators to allow for contribution of ‘post-paid’ information on telecom customers. Several World Bank studies have indicated that inclusion of reporting of non-financial payment data (alternative data) proves extremely beneficial for making lending decisions, specifically for the segment that does not have access to credit. With access to affordable credit, new credit consumers are able to build assets. Those financially underserved consumers who have a positive payment records in non-financial obligations like telecom will have the ability to access affordable credit.
The extension of the credit information bureau to cover a larger population will enable a majority of Indians who are self-employed, or employed in the unorganised sector, to get a credit history and enhance their eligibility for credit from banks. Incorporation of telecom and electricity bill payment records into the credit information bureau can unleash this enormous potential to extend the penetration of banking in India. There is compelling business logic for utility and telecommunications firms to begin fully reporting customer payment data to credit bureaus.
But only a few banks use credit score to offer differentiated rates to customers.
Risk-based pricing in still at a nascent stage in our country. Both in the commercial as well as retail segments, pricing offers an opportunity to strengthen performance in the short term. Some progressive lenders have initiated a disciplined approach to risk-based pricing and this could improve banking profitability by 20-30 basis points. Further, at the bank level, banks need to deploy models to estimate customer price elasticity to introduce value-based pricing.
Risk-based pricing of loans helps both the lenders and borrowers alike: the lender can assess the risk value of a customer before deciding to offer a loan at a particular rate, while customers with a higher CIBIL score benefit by getting lower rates as compared to customers with a low scores. The benefits thus ensure that customers work towards keeping their scores and credit-worthiness high.
Paytm will give a rating to users on its platform based on their digital transactions online.
M Devan | Monday, February 26, 2018 – 09:04 | The News Minute
The Digital India push may receive a fillip through the efforts by Paytm to launch its own credit score Paytm Score, very much on the lines of the CIBIL credit rating that has been the only parameter on which the Indian banking system has been approving loan applications.
The record of digital transactions users have carried out within the digital payments major’s ecosystem will be the basis on which it will make the evaluation of creditworthiness of an individual. Paytm has its e-wallet, Paytm Mall and also the booking platform across which customers use their digital payment modes to make payments.
These transactions will form the basic data which will be fed into the appraisal system and the ratings given. These ratings can then be shared by Paytm with lending agencies with whom it has already entered into partnerships and it has already added to its stable, a lending vertical Creditmate, which it acquired organically a few months ago.
Apart from this, Paytm has an agreement with ICICI Bank for offering short-term credits on an interest-free basis and these loans are sanctioned without any delay.
The credit rating program may itself become a financial product for Paytm and it is learnt that it has offered this to some online lending agencies and NBFCs interested in moving away from CIBIL.
The demonetization move by the Indian government, in late 2016, has helped Paytm expand its business and that has, in turn, brought in high profile investors, such as SoftBank. With that backing, the company is now able to focus its attention on growing all the verticals under its management.
With Paytm Mall and Paytm Payments Bank already doing well Paytm has expanded into new segments such as insurance, online grocery delivery with BigBasket, online ticket booking, initiatives to set up a money market fund, the partnership with PVR and more. The firm might want to evolve into a large conglomerate of services.
It helps to know exactly how a single missed payment can affect your finances and your CIBIL Score.
By Hrushikesh Mehta | Feb 23, 2018 10:10 AM IST | Source: Moneycontrol.com
If you ever wondered whether a single failed credit card payment can pull down your entire credit score, the answer is YES. While a failed payment may be a mistake or the inability to pay (we all go through financial difficulties), lenders view this negatively and it can impact your access to credit in the future. Note that this doesn’t just apply to your credit cards; it holds true for add-on cards, where you’re accountable for others’ spending habits.
Impact on your finances and your CIBIL Score
It helps to know exactly how a single missed payment can affect your finances and your CIBIL Score.
Firstly, always remember that the interest on your missed payments (including the late payment fee) is compounded daily. Monthly interest rates on credit cards can range from 3-4% per month on the outstanding balance (principal, interest and late fees). So, even though you think you missed your payment by a day or a week, your interest liability may be larger than you anticipated. Paying just the minimum due or not paying for a few months will see your amount due balloon significantly.
Let’s take an example of only paying the minimum due for 6 months. On May 1, you make a purchase of Rs. 1,000 on your credit card that has a 3% per month interest rate. You then choose to only make minimum payments due (5% of the outstanding amount at the end of the month) for the next 6 months and spend no additional money on that credit card.
When clearing your balance at the end of 6 months (December), you will end up paying Rs. 1,560 — 56% more than the original amount spent.
Even without making any more purchases on the card, opting for minimum payments will stretch your repayment period to almost 9 years!
If you choose not to pay minimums, not only will you be delinquent and affect your CIBIL Score, but you will end up paying more than double the amount you had spent.
This is why it’s critical to read the fine print whenever you avail of a credit card, and it’s even more important to always pay on time.
On the other hand, your CIBIL Score is calculated based on the last 24 months of your credit history, and the four major factors that can affect your Score are as follows:
A missed payment can impact your score for as far ahead as the next two years. While it will remain visible on your credit report for 36 months, remember that it will always be a part of your credit history. This is why a credit score is like a reputation that takes years of discipline and patience to build, and just a single instant to get impacted.
Rebuilding your Score
There are ways to get back on the road to good credit health. Here are two ways to help build your credit score:
1. Ensure you clear outstanding dues on credit cards fully. Part-payments or minimum payments indicate difficulties in repaying dues. What’s more, if your amount overdue snowballs it will not only negatively affect your CIBIL Score but you also risk falling into a debt trap. Also, if a pending credit card payment is reported as “Settled” or “Written off”, this will affect your access to credit in the future.
2. If you have amounts pending on multiple cards, taking a personal loan at a lower interest rate to pay off your cumulative dues can be an economical option to avoid ballooning debt balances. Alternatively, you can borrow money against your gold, take a loan against your fixed deposit (without breaking it), or even get a loan of 50-80% of your asset value from investments in LIC, mutual funds and securities. The lower interest rate will make for more manageable monthly payments without the problem of an exponentially ballooning debt burden.
While these measures help rebuild your credit health after missed payments, adopting a proactive approach to financial discipline is always more prudent:
1. Make sure you always pay on time.
2. Don’t take on more debt than you can reasonably afford.
Why maintaining a high CIBIL Score is important
A higher credit score can lead to better loan offers at competitive interest rates primarily because lenders are keen to reward consumers who have demonstrated financial discipline. In addition, emergencies don’t always announce themselves before they arrive and having a high CIBIL Score will ensure that you are able to secure funding quickly (especially in a medical emergency). So, while missed payments can negatively affect your score, regular payments and credit-healthy habits can improve it.
The writer is VP & Head – Direct to Consumer Interactive of TransUnion CIBIL
There are many easy ways to quickly improve your credit history and score. But if you are not careful, these measures may even jeopardise your financial security
Shaikh Zoaib Saleem | First Published: Mon, Nov 27 2017. 12 37 AM IST | Livemint.com
If you need a loan to buy something you cannot fund immediately, you approach a financial institution—typically a bank or a non-banking financial company (NBFC). When you do that, the financial institution runs a background check on you, from its own database (if you are an existing customer) and also from a credit information bureau. The credit information bureau is authorized by the Reserve Bank of India (RBI) to gather information on loans and borrowers from banks and analyse it to arrive at a score of creditworthiness of an individual. If your creditworthiness is good, you would get a loan relatively easily and at better terms. If not, either the loan will be rejected or you will be charged a higher interest rate. This is especially true in case of personal loans. The institutions’ decision to lend is based in large measure on the credit score and the credit report.
What is a credit score?
It is a number based on your credit report, which is a summary of your past and current borrowing and repayment history. If you were regular with repaying loans, including your credit card bills, your credit score is likely to be higher. This score helps banks assess your loan repayment capacity and your chances of defaulting on it. “Credit score is derived from the credit history of an individual. A consumer needs to have a minimum of 6 months of repayment track record on a loan or credit card or closed credit accounts less than 2 years old before a credit bureau can generate a credit score,” said Hrushikesh Mehta, vice-president and head of direct-to-consumer business, TransUnion CIBIL. A credit score is created as your lending and repayment relationship with financial institutions evolves. However, if you are new to credit, here are some ways you can quickly start to build a credit score.
Credit cards or personal loans
If you are new in the workforce, you can start by getting a low-limit credit card from the bank where you have a salary account, said Sumit Bali, senior executive vice president and head-personal assets, Kotak Mahindra Bank Ltd. “Based on their income, banks can give them a card with low limit. Use that card sensibly and build a credit history,” he said.
In the past, people considered taking personal loans to build their credit score. However, with a personal loan you will necessarily have to spend your money in paying the interest, whereas with credit card repayments within the stipulated time, you do not have to shell out extra money. For slightly older professionals, about 35 years old, credit history is not much of a worry if their bank account status and average balance are good, and investments and tax returns are in place. They “don’t really need a credit card to prove credit worthiness. Any bank would sensibly look at it and take a call,” Bali said.
Peer-to-peer (P2P) lending platforms are an emerging option for creating and enhancing your credit history. The RBI has recognized these platforms as special category NBFCs and has mandated them to share lending data with credit information bureaus. “Once the P2P lenders receive their licence, they will be able to begin data submission. Once that happens, P2P lending will become a viable option in helping one build a credit score,” said Mehta. However, in this case too, you will have to pay an interest on the borrowed amount.
In some cases, especially where customers have a long relationship with their bank, the banks may also look at own data to determine creditworthiness, Bali added. “Credit score by and large is a good indicator but it may not be the only indicator,” he said.
Alternative credit scoring
Evaluating someone who has never taken a loan can be difficult. This is where alternative credit scoring comes in. Here, instead of relying on a credit score, lenders consider your transactions and behavioural data like bill payments, online buying behaviour and information from your social media platforms to understand your repayment capacity.
“Often people are refused big-ticket loans like a home loan for the lack of credit history, even if their finances are in order,” said Abhishek Agarwal, chief executive officer and co-founder, CreditVidya, a credit advisory that also works on alternative credit scores.
While the RBI-regulated credit bureaus are currently not allowed to use alternative data for credit scoring; in other developed markets parameters like utility bill payments, insurance premium payments have been used for credit scoring (read more on it here.
However, financial institutions including top public and private sector banks and NBFCs in India, have started using alternative data in multiple verifications and validations across the credit value chain, Agarwal said. “Innovative offerings like pre-approved offers or instant loans are leveraging alternative data from multiple sources to provide seamless customer experience,” he said, adding that leveraging alternative data for credit risk assessment of secured loans is still distant. Banks use the alternative scores “in conjunction with other things, like data that you have about the customer. This is happening for personal consumption products like credit cards and salaried personal loans. We are putting it to use but what is the outcome from that, it is too early to say,” Bali said.
While credit cards and loans help to build a credit history and score, caution needs to be exercised. If used carelessly, these can put you in a debt trap, and ruin your credit history too.
Not just that, you should also keep your digital and transactional behaviour in check, as going forward more and more data could be used to assign you a credit score.
Source : https://goo.gl/m7Ns7g
Ahmedabad Mirror | Updated: Oct 17, 2017, 02.00 AM IST
This is something every Amdavadi would dread — misuse of your IT return, Aadhar card and PAN card. The email account of an officer in a private company was hacked and his IT return, Aadhar and PAN cards were recovered. Using copies of the documents, impostors tried to secure car loans from various banks in the city. The cheating came to light after an alert banker called up the officer to verify the documents.
Rajesh Panchal (33) filed an FIR at Navrangpura police station against three persons under IT Act and for misusing his documents. Panchal who resides at Sagar Apartment, near Bhavsar Hostel in New Vadaj, has been working as a team leader at a private company in Chandkheda for the past seven years. On October 7, Panchal received a call from Cosmos bank trying to verify his role as guarantor for someone seeking a car loan. A shocked Panchal said he had not stood as guarantor for anyone. Bank manager Sandeep Shah called Panchal to the bank and showed him copies of his Aadhar card, PAN card and two years’ IT returns.
The documents belonged to Rajesh but the photo and signatures on it were of another person. A person named Kaushik Shukla had applied for a car loan and had provided Panchal’s documents as his guarantor. From the bank, Panchal called up the police control room. At the time Kaushik’s friend Mahendra Chopra was also present at the bank. The bank manager, Panchal and Chopra were taken to the Navrangpura police station, where Chopra promised to produce the person named Rajesh who provided the documents.
Thereafter Panchal checked his online CIBIL score and came to know that his documents were used to secure loans from seven other banks. Panchal also found Shukla had used his name to acquire possession and allotment letter of a house, besides opening a bank account. Panchal filed an FIR with Navrangpura police against the unknown person named Rajeshkumar (resident of Amardeep Residency in Nana Chiloda), Mahendra Chopra (resident of Sayona City in Ghatlodia) and Kaushik Shukla (resident of Kulin tenament in Vasna).
Navrangpura PI R V Desai said, “On the basis of Rajesh Panchal’s complaint we have filed the offence and begun probe. Mahendra Chopra has been arrested in the past in Navrangpura and Rajasthan in a case of cheating.” Panchal said, “As my sister is a bank employee she had advised me to check my CIBIL. From there I got to know that loans under my name had been sought from seven banks. The documents had reached the bank manager which had the accused’s name and phone number on it. But the con came to light as the bank manager called on the number mentioned on the IT return documents. I believe this is the work of a gang. My documents were obtained by hacking my email id and password.”
By Vandana Ramnani | Sep 14, 2017 03:54 PM IST | Source: Moneycontrol.com
Jaypee home buyers want interim relief from court that they should be allowed to stop paying EMIs until flats are delivered to them as they have no hope yet
More than 100 homebuyers, who have invested their hard-earned money in Jaypee projects, are planning to move court to grant them interim relief to allow them to stop paying their equated monthly instalments (EMIs) until completed residential units are delivered to them.
“Why should we pay EMI for a non-existent property? What is the monetary relief we are getting from the September 11 SC order? We are not asking for suspension of EMIs – we are only asking for deferment of our EMIs until the insolvency resolution professional (IRP) comes up with a resolution plan and preferably possession of the flat is given to us without any interest or penalty to ensure that we are not charged or penalised for the delay in paying EMIs,” says Shilpa Vij, a buyer who bought a house under the subvention scheme in 2011and started paying EMI in 2013 in the hope of getting her house in 2014.
“We want an interim relief. EMIs and monthly rents are draining us and there is no hope yet that we will get a flat,” she says.
Ramakant Rai, Trilegal, who is advising Jaypee home buyers, says that buyers have two options – one, they can write to RBI or the National Housing Bank concerning their problems and two they can file a writ petition either in the High Court or the Supreme Court concerning the issue.
“Many buyers have already sent complaints to RBI and NHB. RBI can act on the basis of these complaints. Also, in case the issue is raised through a writ petition before the Supreme Court, the SC on grounds of equity to protect the interests of home buyers can issue directions to RBI, NHB or directly to banks to allow them to hold EMIs until units are fully developed,” he says.
Homebuyers have alleged that banks did not do their due diligence and disbursed loans even when project approvals were not in place and that banks had given pre-approved loans for the project.
“We have filed RTIs with the Noida Authority and received a response from them that approvals were sanctioned only in 2012 whereas projects have been sold since 2008. The requisite permissions were not in place at the time of the project launch. There was lack of due diligence on the part of banks as they had disbursed loans even when plans were not in place,” says Pramod Rawat, a buyer.
S K Suri, a home buyer, who has filed RTIs with the authorities for information regarding dates of applications made by the developer and final approval of plans, says that he has been given copies of approval letters for seven Jaypee projects, details of the builder filing an application for approval and the date of the authority granting approval.
“Most of the approvals were received only after 2011 whereas most bookings/loan disbursements started way back in 2008,” he says, adding it took him nearly four months to get a response to his RTIs and several rounds to the authority’s office. One response is still awaited.
Most homebuyers have decided against not paying their monthly EMIs for fear that their CIBIL score and future credit history may get impacted. But legal experts say that in case the court intervenes in this matter, it can direct CIBIL to not touch their scores. “Also, buyers are not asking for a refund, they are only asking not to pay EMIs until they get possession of the flats which has been delayed by almost five to eight years,” they say.
Legal experts also say that the September 11 SC order puts a moratorium on all cases against Jaypee. ‘All suits and proceeding instituted against JIL shall in terms of Section 14(1)(a) remain stayed as we have directed the IRP to remain in Management,’ says the order. “Homebuyers can argue that this is a uni-dimensional order as homebuyers cannot file cases against the builder in other courts such as NCDRC or RERA. It should also protect home buyers and allow them to stop paying EMIs and banks should not proceed against buyers until the time homes are delivered,” they say.
“The only possible way that home buyers have recourse to the bank is if the deal has been brokered by the bank’s real estate arm or if the bank has disbursed the full amount rather than construction-linked progress payment. Even in such cases they should issue a notice to the bank first claiming damages before taking any precipitate action such as stopping pre- EMI interest payment,” says CA Harsh Roongta, a fee only investment adviser.
Some simple and straight rules to not fall in the vicious cycle of debt and high interest payments
Retrieved on 20th July 2017 | Moneycontrol.com
Shopping or paying with cards is one of the easiest things these days. Thanks to the magic of all the apps and payment gateways, using a credit card is as simple as a few dabs on the mobile screen.
But even with all the ease and convenience, paying your credit card bills requires real money. The reason many people fall into a debt trap is because they do not realise that however long the credit cycle might be, one always has to pay every penny (often times more) that you spend.
To not fall in the vicious cycle of debt and high interest payments, there are some simple and straight rules that one can follow.
Be prompt with payments
There’s a reason why credit cards are called credit, because you owe the money spent on the card to the lender. Hence, don’t expect as leeway or grace when it comes to making payments. Credit card companies are very stringent about any delays and promptly impose late payment fees, etc. Also, any delay or missing payment is also reported to credit rating agencies like CIBIL or Equifax and impact the credit score. Hence, the need to make timely payments cannot be truly overstated.
Don’t burn the credit limit
So, your card gives you a high credit limit, say 1 lakh. Why bother with the spend? Burn it all and pay later? That is surely not a good idea, namely because the percentage of credit limit consumed every month is a parameter in accounting the credit score. Hence, you are not considered to be of sound profile, if you use up say 90% of your card every month. Also, in case you track up a big bill each month, there is a possibility that you might land in financial tight spot.
Number of credit cards
People love to flaunt the cards. There’s a common belief that the more credit cards one has, the better financially networked he or she is. Well, nothing could be further from truth. The more the number of cards, the higher the possibility for over-spending. Also, each time, a credit card application is made; it is registered in the CIBIL records hence, it is best to have 2 or maximum 3 cards. In case, you desire upgrade your card to a higher one.
Typically, there is an interest-free period on credit card purchases, which can even go up to 45-plus days. To avail this benefit, the outstanding amount has to be nil. So, if you roll over certain amount to next month’s billing, there’s no interest-free period on the new purchases.
Cash withdrawals on your card do not come with an interest-free period. There could be a one-time fee plus interest charges that start from day one till you repay the amount. Given the interest rates charges and so on, withdrawing cash from credit cards should be strictly avoided, unless there is an urgency.
In the end, the simple mantra of happy credit-card-living is simple; spend less, pay all. With prompt payments and credit management, the credit card can be a nice tool that can aid you in everyday life, right from paying for your cabs or buying a new shirt. So, follow these steps and enjoy a stress free life.
A London based fintech company, RedGirraffe, is offering a facility to pay rent through credit card using its online platform “RentPay”.
Renu Yadav | New Delhi, June 15, 2017 | Business Today
Rent is generally one of the biggest component of the monthly expenditure that you make. Now, you can not only pay your rent through credit card but can also earn reward points on the amount paid. A London based fintech company, RedGirraffe, is offering a facility to pay rent through credit card using its online platform “RentPay”. For this, it has tied up with various banks including State Bank of India, ICICI Bank, HDFC Bank, IndusInd Bank, Axis Bank and Kotak Mahindra Bank. So, if you have a credit card from one of the banks that have collaborated with RedGirraffe, you can use it to pay rent.
How you can do it
To enroll for this facility you have to visit the website http://www.redgirraffe.com and create a RG Property ID by filling up the details of the rental property and attaching the rental agreement. The tenant will mention the bank account details of the landlord in the form. After submitting the form, a mail will be sent to the tenant’s mail id for giving standing instructions to the bank. After this one time registration, your monthly rent will be deducted automatically on a predetermined date.
“Bank and RedGirraffe.com have strong processes of inbuilt compliance and other tenant verification/reference checks. All the bank accounts remain automatically linked to Aadhaar and PAN details. In cases where the accounts are not linked, such customers are not allowed to transact via RentPay anyway. Apart from this level 1 verification mode, there are another 17 point checks (carried out between the bank and RedGirraffe.com) during each tenant onboarding. The verification happens over a period of 50 working days,” said Manoj Nair, Founder and CEO, RedGirafffe.com.
Why it is beneficial
The advantages of using this platform is you get 45-60 days of credit as your rent remains in your savings bank account and you earn returns on the amount. Also, if you use credit card, you can avail reward points depending on the offer that your bank is giving. “Since rent payments are typically large transactions, such spends enable customers to earn significant reward points. These points can be redeemed against the banks catalogue of over 200 options including products, gift vouchers, e-vouchers and air miles. Cardholders can even redeem points to pay their outstanding on the card,” adds Vijay Jasuja, CEO, SBI Cards. Apart from this it will also help the tenant build a good CIBIL score which can help him or her get loans at relatively better rates compared to a person with no or bad CIBIL score.
What are the charges?
A transaction fees of 0.39 per cent with a minimum of Rs 39 per transaction will be charged from the credit card holders of ICICI Bank, HDFC Bank, Kotak Mahindra Bank, Axis Bank and IndusInd Bank. Apart from this a service tax will be levied on it. So, for every Rs 10,000 rent paid the gross transaction fees including service tax comes to around Rs 45. However, in case of SBI Cards, an additional banking transaction charge of 1.75 per cent plus taxes shall be charged extra by the bank.
Retrived on 08/05/2017 | Creditseva.com
DPD in the CIBIL Report stands for Days Past Due. This term relates to the accounts section of the credit report. It basically explains the manner in which you have been clearing your outstanding dues related to your loans and credit cards. DPD clearly explains the number of days an instalment for an EMI or credit card bill has been missed or delayed. DPD indicates the number of days a bill or instalment payment has got on a delayed.
A DPD of ‘000’ depicts that there are no payments that are due by you. It basically means that you have cleared all your dues on a regular basis and on time.
A DPD of ‘XXX’ depicts that the lender has not recorded your information for the current month to CIBIL.
It is important to comprehend that if you have a DPD other that ‘000’ or ‘XXX’ on your CIBIL Report, then it is implied that you have not been able to pay the dues related to your credit cards and loans.
If you have been making all your outstanding payments on time regularly, then your DPD will be either “000” or “XXX”.
Impact of DPD on CIBIL Score
DPD impacts the CIBIL Score differently in different circumstances. If the DPD is “000”, then it has a positive impact on the CIBIL Score of an individual. If the DPD is “XXX”, then there is no impact of it on the CIBIL Score. If the DPD is some number instead of”000”, then there is a negative impact on the CIBIL Score.
Correction of DPD entries in CIBIL Report
Borrowers do not default their payments always with an intention to do so. It sometimes happens without any intention. This happens when some unforeseen circumstances arise. These unforeseen circumstances include layoff, divorce, and bankruptcy.
Example: If an individual has lost his job and due to this, he has made a default on the credit card payments that were due in his name. Usually, he would be recommended to close the account. But doing this is not the optimal solution for this problem. In such situation, the most feasible solution is to restructure the total amount that is related to the credit card.
It is very crucial to have a CIBIL report that is healthy so that you have a good track record along with a credit history that is good.
CIBIL Report FAQs:
1. What happens to the DPD value when there is a default on a payment?
In a case of a payment default, the DPD starts getting a negative number.
2. What is the DPD when a cheque gets bounced?
If a cheque has been bounced and when a loan payment has been missed, then there will be one entry of DPD for the respective month. This relates to a value that is 30 and it depicts that the dues for that month have not been cleared.
3. What happens when you have cleared the due payment in the next month?
If you have cleared your last months due payment, then the DPD value in the next month becomes normal.
4. What happens if the due payment is not made?
If an individual has not cleared the payments that are due, then a value of DPD will increase and reach 60. This signifies that you have not cleared your dues from the last 2 months.
5. Can the value of DPD be changed?
No, the DPD value cannot be changed at all. If your lender does not find your DPD to be good, then your loan or credit card application request will get rejected. In such a scenario, you need to wait for a certain period of time until some new information is added to your credit report.
Banks will pay fees to Cibil, while customers need not pay any charges
Priya Nair | Mumbai | March 31, 2017 Last Updated at 01:43 IST | Business Standard
TransUnion Cibil is now helping borrowers get the best loan available based on their credit scores and history, in possible competition with online retail loan aggregators or marketplaces.
The oldest credit information company in the country has started Cibil Marketplace, which is a formal way of helping individual consumers secure loans, said Hrushikesh Mehta, vice president and head, Direct to Consumer Interactive at TransUnion Cibil.
Banks will pay fees to Cibil, while customers need not pay any charges.
So far, Cibil has tied up with 13 banks to offer retail loans like personal loans, credit cards, loan against property, home loans and business loans.
The difference between Cibil and other marketplaces is that in the case of the latter the credit report is accessed after the customer clicks the loan offer, while in the case of Cibil the customer first checks the credit score and then applies for the loan.
When a borrower logs on to Cibil’s website to check the credit score, he has the option to apply for a loan. Then he has to submit his income and KYC details.
Based on the credit score and other criteria, the borrower will get a list of banks that are willing to give him a loan.
He can choose one bank and apply for the loan. The bank will then get in touch with the borrower to complete the processing of the loan.
“Chances of the loan getting approved are higher because banks will offer the loan only to eligible borrowers. For unsecured loans credit report plays a large part in approving the loan,” said Hrushikesh Mehta.
Other market places, too, will eventually move to the pre-screening model being followed by Cibil, he added.
While the service was launched in the pilot phase a couple of years back, Cibil has started focusing on it in the last few months after approval from the Reserve Bank of India and its stake holders, some of which are banks.
Since February, when Cibil started offering free credit score and report as per RBI guidelines, 40,000 consumers have availed the service. About 20-35 per cent of those who checked their reports and found they were overdue paid off their debts, Mehta said.
Your credit score indicates your financial health, thereby determining your creditworthiness. Credit scores are provided by institutions such as CIBIL, Experian etc., among which, CIBIL is the most popularly used mechanism for lending. Credit bureaus assign a score to you on the basis of evaluation of your loan repayment habits and credit card history.
By: Adhil Shetty | Published: March 24, 2017 12:46 PM | NDTV Profit
Your credit score indicates your financial health, thereby determining your creditworthiness. Credit scores are provided by institutions such as CIBIL, Experian etc., among which, CIBIL is the most popularly used mechanism for lending. Credit bureaus assign a score to you on the basis of evaluation of your loan repayment habits and credit card history.
How to read your credit score
The credit score is typically represented in a triple-digit number ranging between 300 and 900 points. While higher points reflect financial discipline and a good credit standing, lower credit scores reflect poor repayment habits—which, in turn, could reveal poor money management skills. Banks and lending institutions usually prefer a credit score of 750 and above for issuing a loan or credit card. A high credit score could help you get loans at the best interest rates available. For people who do not have a credit history, the credit score reflects to be -1.
What does your credit score say about you?
Let’s look at the various aspects of your financial life that your credit score throws light on.
Timeliness: A crucial component in computing your credit score is timeliness in repaying loans and credit card bills. CIBIL, for instance, gives timely repayment about 35% weightage in calculation of credit scores. If you pay your bills on time, you are considered to be disciplined and committed towards the repayment of your dues. While a one-off case of delay may be ignored by the credit card company, repeated delays would earn negative scores.
Trustworthiness: Banks and financial institutions consider you to be an eligible borrower if your credit score is robust, as it reflects trustworthiness. A poor score indicates increased dependence on credit and lack of timeliness in repayment, which after a point may reflect lack of integrity and therefore intent to pay back.
Credit hungriness: A credit report also indicates your dependence on credit. This is assessed in terms of your credit utilization ratio, which refers to the percentage of credit you use from what’s available. A high credit utilization ratio shows credit hungriness irrespective of when you repay it.
What if you don’t have a credit score?
It may be great to never have to take a loan. But from the point of view of developing a credit history, it’s important to have some form of credit, be it loans, credit cards, or EMI store purchases.
If you have never availed any form of credit, the credit bureaus and banks wouldn’t have a credit history to analyse you with. This could make things tricky for you if you approach a bank for loan in future.
So, how do you show a history of timely repayment? You can start with taking a secured loan or credit card and maintain a record of timely repayment to be on the good books of the banks.
(The writer is CEO, BankBazaar.com)
Source : https://goo.gl/RiZa4E
By Zee Media Bureau | Thursday, January 12, 2017 – 11:14 | ZeeNews.India.com
New Delhi: State-run Bank of Baroda recently reduced home loan rates by 70 basis points to the industry’s lowest level of 8.35 percent that will be applicable for customers having a strong Cibil scores.
BoB has reduced its marginal cost of fund based lending rates (MCLR) by 55-75 basis points across all tenors.
The highest home loan rate would be at 9.35 percent. The new rates would be applicable to all loans sanctioned with effective from January 7.
For the scores the bank will initially rely on credit scores of Credit Information Bureau of India (CIBIL)
The home loan rate is linked to their Cibil scores. A customer with a Cibil score of 760 and above will be offered the lowest rate of 8.35 percent.
Your Cibil score is decided by the factors of discipline that you maintain in repaying your existing loans.
If your credit score improves, you will have to pay less EMI, and the other way around.
Considering that you have a good Cibil score and you pay the lowest interest of 8.35 percent then on a home loan of Rs 50 lakh, it will translate into a saving Rs 2,496 a month and around Rs 9 lakh for a 30-year loan.
For the first-time borrowers, who don’t have any credit history with any credit information bureau, they will be charged 8.85% interest.
Source : https://goo.gl/bPCTD3
Adhil Shetty | Dec 19, 2016 | Deccan Herald
If you’re applying for a loan or a credit card, your lender would look into your credit history. A CIBIL score of 750 or more is considered desirable by most lenders. If you’ve been prompt in repaying your credit card bills and other loans, you should have a sturdy score.
But every now and then, people get a rude shock with their CIBIL score which prevents them from getting a loan product of their choosing. This means that their loan application may get rejected, or they may be offered a loan with a high interest rate.
Your CIBIL score could be low for broadly two reasons — Data in your CIBIL report is incorrect, and that you have defaulted on a loan or have been irregular with your repayments.
The first step towards ascertaining the details of your CIBIL report is to get a copy of it. You can do this for a fee of Rs 550 from the CIBIL website. Your report will be generated instantly and its details will be shared with you on your email.
Now, let’s dive deeper into these two issues.
Incorrect reporting of personal and credit history
*Check personal details: Your CIBIL report carries your personal details such as name, PAN number, contact information, employer’s address, employer information such as salary and occupation.
Next, it carries details of every credit card account or loan account you’ve opened with regulated entities such as banks and NBFCs. Any discrepancy in this data needs to be checked and challenged. Ascertain that the details in your report pertain to you and your own credit history. If you’ve mistakenly been assigned someone else’s credit history — especially an adverse credit history — your credit score would suffer.
*Check repayment details: Next in your report, go through the details of all the borrowing accounts you’ve opened: Credit cards, personal loans, home loans, car loans, etc. You also need to check the monthly repayment details of all these accounts. The CIBIL report would reflect any delays in repayments (as ‘days past due’), defaults, settlements, write-offs, value of collaterals offered, etc. Ascertain that all the details are correct and that these accounts actually belong to you. This data is reported to CIBIL by your lender. If any detail has been reported in a way that adversely impacts your borrowing history, your credit score would suffer.
*Raise a complaint: CIBIL allows you to challenge incorrect reporting through its website. You can also contact them through post. When you access the online copy of your report, you can go over your personal and financial details. Any details that you want to be corrected need to be reported to CIBIL, which will then contact your lending institution for amends. This process may take up to 30-45 days. If the lender accepts the corrections, they will reflect in your report. If the lender refuses to accept your corrections, you will have to get in touch with them directly. This is because CIBIL prepares your report from information received from your lender. Therefore, CIBIL cannot directly change the contents of your report.
Defaults, Delays In Repayments, Credit-Hungriness
If you have neglected repaying your loans, it would hurt your credit score hard. Let’s take a quick look at your options to address this problem:
*Repay loan balances on time: Whether you have loans or credit card dues, always aim to settle them as per your repayment plan. If there are difficulties in repayment, always keep your lender in the loop so that the lending terms may be made easier. With credit cards, always pay the full due amount rather than the minimum amount.
*Don’t be credit-hungry: Don’t apply for too many loans or credit cards, especially within a short time. With application, the lender will check your credit history. Too many queries into your credit history would reduce your credit score since you will be seen as a credit-hungry person. Also, having too many loans at the same time means you will have to manage several EMIs every month, which would adversely impact your liquidity and could lead to default.
*Increase credit limit on card: Try and spend no more than 20% of your credit card limit. For example, if your monthly spending limit is Rs 1,00,000, restrict your spending to Rs 20,000. It means that your credit utilisation ratio (CUR) is 20%, which is ideal. A frequently high CUR would portray you as being in constant need of short-term credit.
Asking your credit card provider to increase your spending limit, or having multiple credit cards, can help reduce your CUR. For example, your increased spending limit could be Rs 2,00,000, whereas your monthly spending is Rs 20,000, thus bringing your CUR to 10%. Also, if you have multiple credit cards, you could divide your spending between them, thus maintaining an optimum CUR on all cards rather than increasing the CUR on a single card.
*Don’t settle: If you’ve defaulted on your payments, your lender may offer you an option to ‘settle’ your loan. This means paying a percent of your principal and interest due, and considering the loan account closed. Taking this option would reflect in your CIBIL history and it would adversely impact your credit score. Any lenders you approach would see that you were unable to repay your loan. Therefore, do not take the settlement option if you can settle loans in full.
*Repay a mix of credit: You should have a history of repaying a mix of short-term or unsecured credit such as credit card balances and long-term or secured credit such as home loan. The timely repayment of a mix of credit instruments would reflect well on your credit history.
(The writer is CEO at http://www.BankBazaar.com)
Rajiv Raj, Co-Founder & Director, CreditVidya, CreditVidya | Mumbai | October 10, 2016, 11:58 IST | IndiaInfoline.com
Although, the mainstream banks are now totally relying on the CIBIL scores to give loans to the borrowers, those who have low or no credit score can still have some of the options left.
Having a bad credit score can severely limit your borrowing options. However, it is not necessarily the end of your ability to avail credit when required. Although, the mainstream banks are now totally relying on the CIBIL scores to give loans to the borrowers, those who have low or no credit score can still have some of the options left. Here are seven things you can do where you will not be pulled down by your credit score.
Get a Secured Credit Card
Getting a secured credit card is not only easy, even if you have low credit score; it is also highly effective strategy to rebuild your CIBIL score. The concept of secured credit card is very simple. You make a deposit in the bank and the bank issues you a credit card with the credit limit ranging between fifty to hundred percent of your total deposit. Once you have been issued a secured credit card, you can use it like any other credit card and start paying the dues on a monthly basis to build your credit score.
Get Add On Credit Card
If you do not have a credit score high enough to get a credit card, you can opt for the add-on credit card. Most of the banks offer add-on credit cards for the family members. These credit cards can be issued for spouses, children, parents and siblings. If any of your family members has a good credit score, they can apply for an add-on credit card which you can use. Many banks in India allow the credit card holder to apply for as many as four different add-on credit cards. However, these credit cards are only issued after carefully considering the repayment capacity of the credit card holder. Also, if you default on the credit card, it will hamper the credit score of the family member who has taken the card on your behalf.
Get a Prepaid Credit Card
Another option for those with bad credit score is to get a prepaid credit card. All the major banks in India offers prepaid credit cards to the users. These cards are convenient, flexible and reusable. However, unlike a secured credit card, they will not help you in building your credit score.
Loan against Collateral
Today the credit market has become extremely efficient to cater to the needs of all the borrowers. Even if you do not have a credit score, you can always opt for loan against collateral. The collateral can be gold jewellery, Fixed Deposits, shares, property, home etc. The bank or the financial institution doesn’t check your credit history as the risk is considerably lower. They can always sell off the collateral to recover the loan amount.
Get a Co-Borrower with Good Credit History
If you have a lower credit score, getting a co-borrower with excellent credit score can help you in availing the loan.
Peer to Peer Lending
Peer to Peer lending is an extensively used platform in many foreign countries which caters to the need of borrowers. The peer to peer lending platform allows the creditor and borrower to interact freely with each other without any mediator. The concept is steadily gaining popularity in India. You can avail small personal loans from these peer to peer lending websites.
Find the Financial Services Company that Offers Loan Even on Low Credit Score
Though the mainstream banks may not be so keen to provide you credit if you have a low or no credit score, many non banking financial institutions are more flexible in this regards. These financial institutions check a number of soft data to decide the creditworthiness of the borrower. For instance, if you have previously defaulted on your loan, but now you are working in a big company with steady income, the financial institutions can offer you credit.
RAJEEB DASH | October 8, 2016 | The Hindu BusinessLine
A property buying guide for millennials by Rajeeb Dash
For a millennial, the decision to buy a home can be a life-altering one.
For young individuals or couples, getting into a long-term debt commitment such as a home loan can be a daunting task.
However, as financial advisors would agree, buying your first home in your 20’s or early 30’s can be one of the smartest moves you can make financially, as it gives you a great head start in more ways than one.
Firstly, unlike rent payments, a mortgage payment (though it may seem overwhelming in the first few years), goes a long way in asset building and increases your home equity.
Secondly, it restricts you from making unnecessary purchases and keeps from accumulating credit card debt. Thirdly, a secured loan such as a home loan early in life and making timely repayments on the same gives your credit score a boost and paves your way for further access of credit when you require it.
Now that we have established the advantages of a millennial attempting purchase of property, here is a comprehensive guide for first-time home buyers:
1. Getting over the initial fear
Those who have just about completed hefty student loans may develop cold feet at the thought of skimping once again and preparing to take a home loan.
At this stage in your lives, it is important to see the bigger picture.
In a few years from now, a roof over your head that you can call your own before you reach your middle years will feel like a great achievement.
2. Invest with a specific goal
If you have firmed up your mind to purchase your first property, the first thing you must do is begin investing with this specific goal in mind.
Set a budget and pick an investment option that will help you meet your goal in a specific number of years.
While setting a budget, do not be too hard on yourself and try to stretch limits.
Your first home need not be your only home and you can always graduate to a bigger place when you can afford one.
While saving for your first home, equities may be your best bet as they offer you the best inflation adjusted returns as compared to other instruments despite the risk factor.
If you do not have the expertise or the time to invest in equities yourself, you can choose the systematic investment plan (SIP) route of mutual funds.
By investing in equities through the SIP option of mutual funds you also get the advantage of compounding, which means your returns are reinvested over the term you choose to remain invested in the fund, thus helping you achieve your financial goal of saving up enough for the down payment of the property.
3. Home loan options
Do enough research before you decide on a lender.
Many lenders want young and dynamic home owners as customers and have specific loan products that make it easier for you to make repayments in your initial years and increase the quantum with the rise in your career.
Checkout such options and read in between the lines to understand each nuance carefully.
4. Begin with clean credit records
One of the most important factors that will decide whether or not you are creditworthy, is your Credit Information Bureau (India) Limited (CIBIL) score.
Your CIBIL score is a three digit numeric between 300-900 that is assigned to you by India’s premier credit bureau.
This score is based on your credit behaviour or how you have serviced your credit lines you have availed of thus far.
In order to maintain a good CIBIL score (750 and above) it is necessary for you to have serviced debt regularly and well before applying for a fresh loan.
One of the best ways to ensure that your CIBIL score remains intact is by making a habit of not building up credit card debt.
Spending very small amount and ensuring that you make a habit of properly repaying your credit card bills before the end of each and every billing cycle is a good way to ensure that you do not get into a debt trap and also maintain a fairly good CIBIL score.
5. The quest for your first home
In this world dominated by the internet, the search for your first home must necessarily begin online.
There are a host of websites such as 99acres.com, magicbricks.com, indiaproperty.com, makaan.com that have made it easy to filter searches according to your requirements, budget and location preferences.
It is a good idea to go through all of these portals and shortlist properties that you would like to see personally.
Besides using such websites, make the best use of the internet and social media to reach out to actual buyers and check the reputation of the builder, the living experiences and the problem areas if any.
A thorough virtual search gives you a firm footing before you start visiting the properties personally and finally zero in on a choice that is best suited to your needs and budget.
6. Be aware of your rights
The real estate market can turn out to be a head spinner when you are out there on a house hunt.
It is important to be mindful of what your requirements are and be aware of your rights when seeking out a home.
7. The final step
Once you have taken possession of your new house, the first thing to do is store all your property documents.
Make a few photocopies and keep them in at least three different locations.
It is a good idea to get all your property documents digitized and locked in an e-safe.
Next, update all your official documents with your new address and finally transfer all property related paperwork such as water and electricity meters, society membership and property tax records in the local municipal body in your name.
Once you have taken possession, the first thing to do is store all your property documents safely.
The author is AVP-Marketing, Tata Housing
Source : https://goo.gl/W6aXJn
Adhil Shetty CEO, BankBazaar.com | Sep 26, 2016, 06.49 PM | Source: Moneycontrol.com
When you apply for a loan, the lender lodges an inquiry with the credit bureau to pull a copy of your credit report. This way, your credit score comes down by a few points.
Right now is a good time to dip your toes in the world of real estate. Home loan interest rates are the lowest they have been in a long time and expected to lower further in the near future. Demand in the real estate sector has been low, and developers have had to come up with incentives to attract buyers for their vast unsold inventories. Not just that, various legislations are coming in force to protect the rights of property buyers.
Assuming you’ve decided to buy property, and you’re happy with its paperwork and legality, chances are that you’ll seek a home loan to finance your purchase. If you’re buying a home loan offline, you may have to provide tonnes of documents pertaining to your income and taxes. It can be an overwhelming process for first timers.
While searching for the right loan, loan seekers wonder which lender they should go to. There are plenty of lenders providing home loans at attractive rates. How do they know which lenders would approve their application? In the process, loan seekers may apply to several lenders. Applying to multiple lenders for a home loan can, no doubt, multiply your available options should some lenders reject your application. But beware—doing this can adversely impact you.
Let us get acquainted with one of the most basic facets of applying for a housing loan, which is the ideal number of applications you should be making for a single housing requirement.
Affects credit score
When you apply for a loan, the lender lodges an inquiry with the credit bureau to pull a copy of your credit report. This way, your credit score comes down by a few points. The weightage of such inquiries in your CIBIL score is 10%. The higher the number of inquiries, the more credit-hungry you’ll appear to a lender inquiring about you. A large number of inquiries would reduce your credit score. If you’re on the borderline of the score of 750 which lenders find desirable, a small deduction could push you below that threshold, leaving you ineligible for many loan products.
Unwanted logistical hassles
Applying for a home loan offline involves complex paperwork. Replicating the same documents with multiple institutions can lead to unwanted logistical hassles of running around to gather documents and to submit them. Since most of the processes are time-sensitive, it makes sense to keep the number of applications minimal.
Home loan applications may not be free. You will be required to pay a processing fee up front for the handling of your paperwork during the application process. This fee is non-refundable in most cases. Therefore the more the number of your applications, the more you will pay in non-refundable costs.
What you should do
• Studying and understanding the loan product will do the trick for you. You can educate yourself by reading the product brochure available through multiple sources such as the internet or loan marketplaces.
• Go online to compare loan offers from various lenders, and short-list those loans that come closest to your requirements in terms of eligibility, costs, and tenure.
• To aid the above, use readily available online tools such as loan calculators to ascertain your loan eligibility, the maximum EMI you can pay, and how long a term is ideal for your requirements. A search online will reveal these calculators and help you process these numbers yourself so that when you go to a lender, you have a much better idea of how much loan you’re eligible for.
• Retrieve a copy of your credit report from a credit bureau like CIBIL and understand it thoroughly. Reports are instantly available online for a nominal fee.
• Now that you’re equipped with first-hand information, go ahead and do a dry run to check your eligibility. Speak to the representatives of a lending institution to ascertain if you will qualify for a loan and also inquire about the quantum you’re eligible for.
• If rejected or offered terms not as per your expectations, take feedback from the institution and make amends accordingly in subsequent applications.
• Applying for a loan at one or two lenders at a time helps you concentrate thoroughly on the intent to secure a loan with terms of your choice.
The bottom line
Apply for housing finance with not more than one or two banks at a time. Based on the outcome of those applications, you can decide to apply further. Using basic tools and resources such as checklists, calculators, and product brochures will aid your objective to snag the best loan deal. This way, you save yourself from unsolicited monetary and logistical hassles.
By Satyam Kumar – LoanTap | Sep 27, 2016, 04.34 PM | Source: Moneycontrol.com
Also known as credit card takeover loan, this can help you get rid of credit card debt.
One of the easiest ways we can choose to build a healthy financial future is to get a credit card and use it wisely and responsibly. Let’s say, for most people, a credit card offers their first opportunity to start building a credit history. While many credit card users pay off their credit bills in full every month, there are others who take the route of making minimum payments on their credit card bills and become too comfortable with the idea. But as easy as it may seem, it is just a delusion that making minimum payments is enough to prevent late fees and interest charges. Even banks and financial institutions are not likely to specify information on the damage minimum payments might cause in the long run. There are numerous consequences of failing to pay off your charges in full every month. The lack of awareness is causing credit card holders to lose money that they could easily save. Still not convinced? Here is your chance to learn more about minimum payments, how they might affect your financial health and the best possible solution available to you to undo the damage.
The minimum payment is a fraction of the total outstanding amount that is due. So, for instance, if the outstanding amount due on your credit card for a particular month is Rs 25,000, then the minimum payment would be Rs. 1,000. It is a common misconception among many people that banks will not charge interest on their credit card as long as they are making the minimum payment. Unfortunately this is not true. The only benefit that can be derived by making the minimum payment is that one will not have to pay late fees. Also, this will keep credit score in good shape but there would still be no respite from paying steep interest.
Relying on making minimum payments for an extended period can result in a huge debt that may even exceed one’s credit limit. This is because the higher the pending amount, the higher will be the interest amount. This might pose to be a challenging financial problem. This is when a credit card takeover (CCT) loan comes to the rescue. Many consumers aren’t aware of the benefits of a CCT loan and how it might help them in saving and maintaining their credit score.
Here are a few ways it can take care of a huge credit card debt:
1. A CCT loan offers low interest rates compared to credit card interest rates. The annual rate of interest is usually 18% lower than any credit card interest rate. This dramatically reduces your interest burden.
2. It is convenient for those who are financially not ready to pay the full outstanding amount that they have run up on their credit cards. One can only pay the interest amount initially and wait until they are in a better financial position to pay off the principal on quarterly or annually, which is easily affordable.
3. A CCT Loan can help in protecting your credit score. How? We all know that delayed credit card payments can have a negative impact on one’s credit score, which eventually lowers any chances of loan approvals later in life. In such cases, taking an EMI-free loan is the best way to save the CIBIL score.
4. A CCT loan can provide the opportunity to avoid late fees and penalties as the loan can be sanctioned within a small span of time. This eventually helps in saving up a lot of money in the long run.
People nowadays opt for flexibility in everything, whether it is their job or education. Loans like CCT or EMI Free is helping those sections of people by offering flexible options to repay credit card debt. Although one can use it for numerous purposes like buying a house, paying for education fees, or even for financing one’s marriage, its low interest rate makes it a viable option to pay off outstanding credit card debt that may be creeping up on your savings without your realizing its deleterious impact.
Rajiv Raj – CreditVidya | Aug 22, 2016, 02.26 PM | Source: Moneycontrol.com
Your CIBIL score is a measure of your own credit worthiness that does not get merged with your spouse’s after marriage. There are several myths about CIBIL score and some of them are related to marriage.
Marriage is a big decision that brings together two persons for life. Just like two individuals with completely different backgrounds with regards to education, lifestyle and career choices remain the same even after marriage, so does one’s CIBIL score. Your CIBIL score is a measure of your own credit worthiness that does not get merged with your spouse’s after marriage. There are several myths about CIBIL score and some of them are related to marriage. Today we will debunk some of these myths and also tell you when and where your spouse’s credit score matter.
Myth: CIBIL score drops after marriage
If you are marrying someone with a relatively less CIBIL score then it does not bring down your CIBIL score. Of course if you have taken a huge amount of debt on your credit card to fund a lavish wedding or an exotic honeymoon and are unable to repay it as stipulated, your CIBIL score may take a hit after the marriage, but that has to do with your credit behaviour and not with the act of getting married by itself.
Myth: CIBIL records get erased after marriage
If you are a lady who has decided to change your surname and take on your husband’s family name after your marriage, you do not need to worry as your CIBIL records do not get erased automatically if your name changes. Once you have changed your surname officially you make the changes to your official documents and pass on the information about the same to the bank. The bank in turn makes the changes internally and passes it on to CIBIL with your updated record. However, to be sure that the changes have been carried out as per your official documents, do check your CIBIL score and report after about a month or so of having updated your name change information with your lenders.
Myth: All your spouse’s debt becomes yours after marriage
Surely you have taken vows to be with each other through thick and thin, but getting married does not mean that all the debt burden that your husband or wife carries is automatically transferred on to you and you need to share his or her burden as it will impact your CIBIL score otherwise. The loans or credit card debt that your spouse is servicing continues to remain with him or her. Of course you may choose to assist him in meeting his debt commitments, but doing so does not have an impact on your own CIBIL score.
Where your spouse’s CIBIL score really matters
You only need to be concerned about your spouse’s credit score if you are making a joint home loan or any other loan application together. If either of you have a poor CIBIL score, the chances of your getting a loan may get thwarted as the bank will not look favourably upon one person shouldering all the load. Thus it is recommended that you work together to bring up both your scores to the level of 750 and keep it at that by maintaining good credit habits to prevent the rejection of a credit line when you are in need of it.
If you are newly married and have just come to know that the CIBIL score of your partner is not so flattering, do not fret as it has no impact on your own CIBIL score. Nevertheless, put your heads together to find out the problem areas and help each other to come up with solutions that will rectify the situation.
Your financial compatibility will be put to test through trying times. The basic thing is to stay put and work hand in hand to achieve a common goal of bringing up the CIBIL score. Just like with everything in life, being there for each other is what matters the most and that is what you should decide to do.
Source : http://goo.gl/4Xx0SL
Personal loan is an unsecured loan with one of the highest interest rates of all credit products. To avail one, an applicant must have a reliable credit rating. Do carefully consider the following points and assess which personal loan is the best for you.
By: Adhil Shetty | Published: August 23, 2016 6:04 AM | The Financial Express
Personal loan is an unsecured loan with one of the highest interest rates of all credit products. To avail one, an applicant must have a reliable credit rating. Do carefully consider the following points and assess which personal loan is the best for you.
The eligibility of a borrower varies from bank to bank. The primary criterion is the capability of loan repayment. Other criteria include your age, profile, place of work and lots more depending on the bank’s requirement.
In August, the interest rates of personal loans from some of the leading banks of India ranged between 11.15 and 22%. The better your credit score, the lower your interest rate would likely be while obtaining a loan. A CIBIL score of 750 or more will get you a favourable interest rate. You could also go to a bank with whom you have a long-term association, based on which you could get a bargain.
Tenure of loan
Typically, such loans are of a 12-60 month tenure. Long-term loans may carry higher interest rates than shorter ones, but you can have the option of paying smaller EMIs on a longer term. Evaluate your EMI burden and arrive at an amount you are comfortable with before settling on a tenure. Have the shortest possible tenure to avoid paying a lot on interest.
Flexibility of repayment
Check out if you have the option of making principal payments on your loan at no cost. Some lenders charge a prepayment fee for settling a loan before its tenure. You may want to skip lenders who have prepayment charges since they disincentivise the quick settling of loans.
The amount you would receive from the lender is tied to your income. The higher your disposable income, the bigger the loan you stand to receive. Often, lenders with whom you have a relationship such as a credit card or a savings account, would approach you with a ready-made offer of a personal loan. You should take a loan according to the size of your requirement. Make sure the borrowed amount is used productively and not squandered on expenses it wasn’t meant for.
Fees and charges
Besides rate of interest, banks also charge fees on documentation, processing and pre-closing the loan. Processing fees mostly range from 2% to 3% of the loan amount. The pre-closing fees also vary from 2-3% of the loan amount. If you are good at haggling, you can get the per cent of fees and charges reduced.
Finally, don’t go overboard
Avoid the temptation of applying to too many lenders for a loan. This would reveal you as credit-hungry. Too many inquiries into your credit history could also bring down your credit score, making it tougher and more expensive for you to avail a loan.
The writer is CEO of BankBazaar.com
Source : http://goo.gl/nzxiZe
Though most of us have heard about CIBIL score, there are so many things many individuals are not aware of.
Rajiv Raj Founder & Director, Creditvidya.com | Aug 01, 2016, 08.06 PM | Source: Moneycontrol.com
Awareness about credit score is quite low in India and the few who know about it also might not be aware of the finer details of the process of ascertaining the credit score or its importance and what impacts the credit score of an individual. As we move towards a more digital world, everything is more linked, which means that soon the importance of a CIBIL score will go up while taking a loan; it may impact employment prospects, insurance premiums and so on. Thus being aware of credit score nitty-gritty can be use full.
Q. Are credit report and credit score the same thing?
The first thing that we need to know is that credit report (CIR: Credit Information Report) and credit score are not synonymous. While the credit score is a three digit number or sometimes it can be NA/NH or -1, the credit report is a much more detailed document. The credit report carries the details of all the loans and credit card one holds, it lists personal information, contact and employment details, status of dues, credit enquiries etc. Lenders look at the report and not only the score to get a comprehensive picture about the debt status of an individual.
Q. Is CIBIL the only credit score company in India?
CIBIL is the oldest credit score agency for individuals in India. Since it was the first one and was the only one for a long time it is the most well known and almost synonymous to credit score in India. Apart from CIBIL there are three more agencies that provide credit score for individuals; they are Equifax Credit Information Services Private Limited, Experian Credit Information Company and High Mark Credit Information Services.
Q. Will my score across agencies be same?
No, the CIBIL score against various credit agencies will not be same. There may be a slight difference due to the scoring model of each agency. While the basics of calculating the credit score remains the same, each agency may use a different algorithm for calculating the score which can cause some variation. However if an individual follows the basic tenets of responsible borrowing then his/her score is expected to be good across all agencies.
Q. What impact does settling an account have on the Credit Score?
If one settles an overdue amount by paying a lesser amount then actually what was originally due then it will be reported in the CIR. How this is reported will impact the score either positively or negatively. If it is simply reported as paid then the impact will be positive as the overdue no longer exists. However if the lender reports it as “settled” then it could lower your score. While negotiating with the lender, make sure you clarify this aspect.
Q. Does checking your own score impact in negatively?
When a financial institution asks for the CIR of an individual it is known as a hard enquiry and impacts the score negatively. However, when an individual seeks his/her report it is known as a soft enquiry and has no impact on the credit score whatsoever.
Q. What does NA or NH mean?
A score of NA or 0 means that the individual has a credit history of less than six months which is not sufficient for a credit score for 300 to 900. NH or no history means there is no credit history so obviously no rating can be provided. Score of NA/NH is not a bad thing but may cause hiccups in trying to get a loan.
Q. At what CIBIL Score can I get a loan?
As per the CIBIL website 79% of the loans get approved for a score of 750 and above. Having said that there may be some flexibility as per the rules of the lender, the kind of loan, special tie-up with corporate and so on. Banks may be willing to consider a lower score for employees of a company with they have tie-up or some co-operative banks may be willing to lend at lowers score at higher interest. While a score of 750 and above is generally considered good, there is still some room for flexibility at lower scores and sometimes a score of 750 may also not be sufficient as the applicant may be overleveraged or there may be some negative comments in the report.
Hopefully the above discussion has helped you in getting better insight into the credit process. As stated earlier the importance of this statistical tool is increasing as we move towards a more credit driven and digital economy.
Source : http://goo.gl/a7sCtz