Tagged: Unsecured Loans

ATM :: How to keep your CIBIL score of 750+: Top 5 points to know

In order to get a loan at competitive interest rates, it is mandatory to have a CIBIL score of 750 and above.
By: CreditVidya | October 5, 2015 3:32 PM | Financial Express


In order to get a loan at competitive interest rates, it is mandatory to have a CIBIL score of 750 and above. This is a fact that most people are unaware of despite the information overload about credit score and its impact. There are a lot of articles online and offline about how it is mandatory to keep your CIBIL score high. Your CIBIL score is a measure of your credit worthiness. In other words, banks look at your CIBIL score to find out how you have handled your finances and whether or not you have behaved responsibly with the credit you have already availed of in the past. But the fact is, that people are still unclear about what exactly should they do to maintain a high CIBIL score. If you too are among those who are still confused as to what really impacts your CIBIL score, here is the lowdown on what really matters:

1. Make timely payments – The one top trick to pump up your CIBIL score is to make all your payments on time – very basic requirement, indeed. This is applicable to all the credit you already have. This includes credit card outstandings and EMIs on loans. Also make sure you make other payments such as insurance premiums etc on time, though it does not fall under the credit bracket. Even a single late payment on a home loan or an unpaid outstanding on your credit card, will bring your CIBIL score tumbling down and be a blemish on your CIBIL report.

2. The total amount of credit you have availed of – Credit is something that is easily available today. You therefore probably have at least two or three credit cards that you are using simultaneously, along with a home or a vehicle loan. While you are particular about repaying EMIs, you think its OK to pile on the debt on your credit card, because you are far from your credit limit. If you are under any such impression, stop right there! The amount you owe to your lenders makes a large impact on your credit score. The closer you are to your credit limit, the worse its gets! Ideally you should not be using more than 30% of your total credit limit at any given time.

3. For how long you have had credit – “Credit history” as it is called in financial parlance has a large impact on your CIBIL score. If you have availed of credit for a long time and have serviced it well, it certainly fetches you brownie points to increase your CIBIL score. A good credit history gives a prospective lender the confidence to lend to you.

4. Too much credit in a short period of time – If you apply for too many credit cards or loans close to each other, it sets the alarm bell ringing for any bank. As for your CIBIL score, it inches lower each time you apply for a new loan. Every time you apply for a new credit card or loan, there is a “hard enquiry” made on your CIBIL score and CIBIL report, bringing down the score a few notches lower each time.

5. Good and bad debt – Believe it or not, the kind of debt you avail of, makes an impact on your CIBIL score. While home, vehicle and student loans fall under the category of good debt because they are “secured” in nature, “unsecured” loans such as too many credit cards or personal loans spell trouble and bring your CIBIL score down.

Source : http://goo.gl/yqf81M

ATM :: Here’s how mortgage betters your CIBIL score

RAJIV RAJ | JUN 17, 2015, 05.25 PM | BusinessInsider.in


Property purchase is a stressful affair, and for any salaried person it can be a life-altering decision. But most people are unaware of the fact that a property purchase is the best way to improve their CIBIL score. A mortgage has the biggest impact on one’s CIBIL score as it’s the largest piece of debt that one carries. Although your CIBIL score may drop a few notches when you apply for a home loan intially, it will go up over time as you make timely mortgage repayments. Let us take a close look at how your mortgage impacts your CIBIL score.

A mortgage indicates you are credit responsible
Mortgage has huge significance on your CIBIL score as it indicates that you have been responsible with your financial dealings so far. And if you maintain a good CIBIL score of 750 and above, your bank considers you loanworthy in the very first place itself.

A mortgage is good debt
A mortgage is also considered as good debt because it is tied to a physical asset (your home). This is opposite to credit card debt or a personal loan that is unsecured and does not have any asset backing in a physical form.

Your mortgage impacts your credit mix positively
Around 10% of your CIBIL score is on account of the credit mix you have. The credit mix refers to the types of credit you have availed of. If you have a mortgage along with some other unsecured credit, it is indicative of the fact that you have maintained a good credit mix. This in turn, impacts your CIBIL score positively.

Your CIBIL score increases over time on account of your mortgage
You have obviously opted to take up a home loan because you have the confidence that you will be able to make timely repayments on the same. When you make repayments on time over a prolonged period, your CIBIL score goes up gradually. This is because it exudes your dedication towards timely repayments. So, service your home loan well to give a boost to your CIBIL score.

You do not become credit hungry
If you are a salaried individual, repaying your home loan is going to eat into a substantial part of your salary. As a result, you may not apply for other forms of debt ( such as too many credit cards or other unsecured loans). This will not just keep your CIBIL score intact, rather you will not be viewed as credit hungry individual.

The negative impact that a mortgage may have
Just as it’s good to be positive about life, sometimes life can dish out nasty surprises as well. If things go awry and you skip a repayment or two on your mortgage schedule, it can bring down your CIBIL score drastically. As we mentioned earlier, a mortgage has the largest bearing on your CIBIL score. Therefore, the negative impact can be just as heavy as the positive impact of timely repayments. So to avoid landing in such a situation, it’s advisable to maintain an emergency fund at all times. And ensure that the amount saved in this fund is sufficient to meet your regular expenses (including your mortgage) for at least the next three months.

Therefore, ensure that you repay your mortgage on time and enjoy the benefits of a high CIBIL score throughout your loan tenure.

Source : http://goo.gl/1d0h4t

ATM :: 11 easy steps to get out and stay out of debt

K. Ramalingam | Updated On: August 05, 2013 11:52 (IST) | NDTV Profit


In spite of steady, regular income there are so many individuals who live paycheck to paycheck, carry their credit card outstanding, and fail to save anything for life after retirement. If you are one of them, now is the right time to take action to come out and stay out of debt.

It is not only possible but also very much achievable.

Discussed below are a few easy steps you can use to get out of debt:

1. Make a list of all your debts

You need to take a good look at all your loans. It could be credit card dues, personal loan, car loan, housing loan, education loan, loan from FD, loan from insurance policies, loan from your employer, hand loan, and so on. For each and every loan you need to note down basic details like how much you owe, the current interest rate, EMI amount, number of months (tenure) etc.

2. Negotiate for lower interest rates

If you could negotiate the interest rate and bring it down, you can come out of debt faster. Most of the credit card companies come forward for negotiation if you show interest in repaying. They need not run after you to collect the debt. They will be happy to negotiate as this will, in fact, reduce their expenses. Balance transfer offers from credit cards are also a good way to reduce your interest rate.

3. Refinancing and consolidation

Replacing a loan with another is known as refinancing. Getting a refinance should reduce your interest rate and bring down the time you are in debt. But people more often go for a refinancing option that provides them with lower EMIs, increasing, however, the time they stay in debt.

4. Categorise your debt

A house loan can increase your net worth over a period of time. This kind of loan gives you tax benefit also. For a businessman, car loan provides some tax benefit. Each one of your debts needs to be categorised based on such factors. This will help us in comparing different loans.

5. Prioritise your debts

After sorting out various loans, you can comfortably prioritise them. This will be based on the interest rates and tax benefits. At times paying off a small loan first can give you a lot of motivation to get out of your overall debt.

6. Creating and executing a debt payoff plan

You need to create a debt payoff plan with different scenarios, so that you can find out how some more savings or a different repayment order will help you to get out of debt faster. When creating a plan, you need to choose one which is comfortable to your attitude. Otherwise, you may not be able to execute it properly.

7. Keep yourself from taking fresh loans

You need to make a vow that you will not be adding any fresh loans until you come out of all your debts completely. Think, for a moment, how you will feel when you become debt free as this will give you a lot of positive energy to come out and stay out of debt.

8. Postpone buying major assets

Buying property or any other major asset needs to be postponed until you get rid of your debt. With your new ownership comes the new – probably large – and unpredictable expense. This can make you deviate from your debt payoff plan and, at times, make you bear unpleasant and uncontrollable consequences.

9. Stop using your credit card

When it comes to using credit cards, there are broadly two kinds of people: 1) who use credit cards responsibly; and 2) who don’t. Poeple of the responsible kind repay their credit card dues in full on receiving the bill. The other kind, however, would pay the minimum due amount and carry forward the remaining sum.

If you belong to the second group, you need to stop using credit cards – at least – temporarily. Take out and put your credit cards in a locker. You can start using them again once your financial situation and buying habits improve.

10. Change your spending habits

Being in debt obviously means that you have been living beyond your means. The solution is very simple: spend less and you will get out of all your debt soon. You need to change your spending habits. If you buy things you don’t need, you soon end up selling things that you do need. Don’t save what is left after spending; instead, spend what is left after saving.

11. Involve your family members

You need to inform all your family members and dependents about your debt status. This way, you will be able to take decisions with much more clarity. Moreover, if your family members know about your debt, they will also change their spending habits and support you in getting out of debt faster.

Consider the example of a postage stamp. The usefulness of a postage stamp lies in the fact that it sticks to one thing till it reaches its destination. Similarly, you need to stick to your debt pay off plan till you get out of it.

K. Ramalingam is a certified financial planner and the founder and director of Holistic Investment Planners. The opinions expressed here are the personal opinions of the author. NDTV is not responsible for the accuracy, completeness, suitability or validity of any information given here. All information is provided on an as-is basis. The information, facts or opinions appearing on the blog do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.

Source : http://goo.gl/hsmKSL

ATM :: CIBIL Score: 4 influencing factors and how to interpret it

By Nitin Vyakaranam, Founder & CEO, ArthaYantra.com| Jun 03, 2013, 12.49 PM IST| moneycontrol.com|

Every enquiry for a credit card or loan will be updated in CIBIL records. Whenever a request is placed by the individual for a credit card or loan, the financial institutions contacts CIBIL to assess the credit worthiness of the individual.

CIBIL score is gaining its prominence among financial institutions as a source to understand credit worthiness of a customer. Let’s understand how CIBIL actually works: CIBIL (Credit Information Bureau of India Limited) acts like an information data base of customers of different banks. If one has credit card or loan against their name, the respective lending authority will update the same to CIBIL. CIBIL maintains analyzes the record of how efficiently the payments were made. Every enquiry for a credit card or loan will be updated in CIBIL records. Whenever a request is placed by the individual for a credit card or loan, the financial institutions contacts CIBIL to assess the credit worthiness of the individual.

Factors which Influence your CIBIL Score:

1. Payment History: The payment history of an individual represents the financial state of an individual. As per CIBIL’s assessment, if the payments are made as per the schedule and in the given time lines, it is considered as a positive sign. Late payments or defaults on the loans and credit cards indicate the financial troubles of the individual.

2. Usage of credit limits: This factor is highly pertinent to credit card usage. It is considered as a negative sign if an individual consistently consumes 80-90 percent of the card limit. Increase in the current balance of the credit card over a time period is a sign of increased repayment burden.

3. Number of loans and credit cards: Home loans and car loans are considered as secured loans and credit cards and personal loans are considered as unsecured loans. While higher number of secured loans impacts the CIBIL score positively, higher number of unsecured loans impacts it negatively.

4. Credit Hungry: Repeated applications for credit cards or loans signify the credit hungriness of an individual. Every enquiry made for any form of credit is reported to CIBIL. The lenders maintain caution in case of such individuals who are repeatedly trying for some or other form credit.

How to Interpret your CIBIL Score

CIBIL Score can be broadly classified into three categories:

1. NA or NH

The individuals who are categorized under this section :

Do not have a credit history.
Do not have sufficient credit history to rate them.
Do not have any credit activity in the past two years prior to enquiry.
The individuals who fall in this category typically have no credit history and may have add-on credit cards. Even for the individuals who have cleared all their loans or not used their credit cards in the past two years, NA or NH rating is assigned. These scores do not signify any negative credit worthiness of any individual. However, some of the lenders have a credit policy which restrains them from providing loans to individuals under this category.

2. Risk grading Index : 1-5

This risk grading index is used for individuals who have a credit history of less than 6 months. The chances of loan approval and better interest rates are directly proportional to the risk index score. The risk grading scale ranges from 1 to 5. The risk grade of 1 and 2 signifies a high risk, 3 stands for medium risk, 4 and 5 stand for low risk. So higher index score is considered good in the terms of lender’s perspective.

3. CIBIL Score: 300-900

For the individuals who have a credit history of over 6 months, the CIBIL score ranges from 300 900. The score denotes the credit worthiness of an individual. This is how the lenders read the credit score: ”Higher the credit score, lower the chances of credit default by individual”. Majority of the new loans are issued to the individuals with a CIBIL score greater than 700. CIBIL score not only governs the loan approval, it also governs the interest rate on the loan. Higher CIBIL score can help individuals fetch best interest rates on their loans.

Source: http://goo.gl/bdfON

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