Can a car loan be rejected?

In today’s modern life, every individual thinks to have the best for himself and his family. To give his family the best of everything, they work day and night. An individual first tries to get a safe shelter for his family and then other luxuries. Now luxury includes good interior, expensive clothing and of course a means of transportation i.e. a car.

In the present time car has become necessary for every individual, rather be a salaried person or a businessman. Every individual wish to provide an easy mean of transportation for his family. Earlier it was quite tough for every individual to get a car, but now a days due to easy financing options provided by financial companies have made it easy for the individuals to get their vehicle easily.
 
But can a car loan be rejected? Does an individual have low credit score affect his decision to get a car loan?
 
Yes, even a car loan can be rejected. Mr. Ajay, a salaried individual applied for a car loan and it got rejected.
 
Mr. Ajay is IT professional. Being an IT professional had a decent salary. As he had taken a home loan which was currently continued, could not get a car by full payment. So he applied for a car loan. Looking at his salary, it was easy for Mr. Ajay to get approved for a car loan. But he was shocked to know that the financial institutions had rejected his loan.

But even after having a decent salary, why was the loan application of Mr. Ajay rejected. The reason behind denial of loan stated by the financial institutions was “Credit score of Mr. Ajay was low, due to which the loan application was being denied.”
 
Credit Score? Mr. Ajay had never heard of such word. But can this credit score be the reason for denial of a loan?
 
Credit score is basically a three digit numerical figure which ranges from 300 to 900. This score is generally rates an individual as per his credit history. Generally a credit score of 700 and above is considered as a good score.
 
Credit history is the snapshot of past and current credit relationship of an individual. It states whether the individual has been consistent in making all his payments. Credit history nowadays has become an important part of finance. But people are not much responsible as they should be which can make their credit history poor.

These credit scores and credit history of an individual are calculated by credit bureaus. The banks and the financial institutions provide all the information of every individual to these bureaus to check their creditworthiness. The major credit bureaus in India are CIBIL, Experian, Equifax and High Mark. Every bureau has a different method of calculating their score. Based on the score calculated by the bureaus, banks and other financial institutions check the creditworthiness of individual.
 
After knowing everything about credit score and credit history, Mr. Ajay felt that all these are very important aspects of finance for every individual.
 
Mr. Ajay realised the truth that individuals with bad score and poor history would face rejection in their each financial attempt. Banks and financial institution will be able to provide financial help to such individuals. As these individuals will gain trust of these institutions as their history is poor.
 
Now where there are many individuals who have low credit score and poor credit history, these people need someone who can assist them to get out of such situation and improve their finances. Credit repair companies are those institutions are those companies whose aim is to help all the people to restore their finances.

Credit card cancellation affect your CIBIL score !

The decision to cancel a credit card usually comes in mind when we want to avoid excessive spending or if the terms of the credit card are not friendly anymore but you have to make sure to do it in such a way that it gives the least damage to your CIBIL score.

Choose which credit card to cancel wisely:
If you are carrying multiple credit cards, always make sure, never to close all your credit cards at the same time. Your credit score may be badly reflected if you close too many cards at once, it may also hamper your chances of getting a credit card or a loan in the future. Credit card cancellation must go according to the terms of the banks exit policy or it will go on to reflect a very bad credit score. Try to compare the rewards and schemes the card gives, the interest rates and the other details and then choose which card will give the best advantage. Also, remember that is better to close the credit cards which have been attained recently than the older credit cards to avoid any dip in the credit score.

Pay off any pending balances:
The bank will cancel your credit card only if it does not have any pending balances due to the bank. Pay off the balances on the card in full, or transfer the balance to a balance transfer card if you have found one with better terms. If you don’t want any more dues till the time you pay off your earlier dues, you can get your card frozen till the time you clear the balance and close off your card. If you want to close your credit card accounts without impacting your credit score then you need to make sure that you have zero balances on your CIBIL report for all your active cards.

Keep checking your CIBIL score for updates:
When you close a credit card it reduces your credit limit, which eventually gets reflected in your credit score. Keep checking on your CIBIL report after you cancel your credit card. This will allow you to keep an eye on how much damage the cancellation of the credit card had on your credit score. The credit utilization ratio goes down after the cancellation of each of your cards, thus hurting your credit score temporarily. Also remember that is easier to improve your bad credit score than to fight off the huge debt traps of the dues on your credit card.

Credit card utilization is an important factor in determining your credit score so deal with it efficiently and effectively.
For Assistance regarding credit score optimization visit www.cibilconsultants.com

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Bad credit score can harm your chances of car loan approval !

It is wrong to think that with a bad credit you won’t ever be able to buy a car, but this also doesn’t mean that you think you’ll get a car loan as per your own terms and within your monthly budget. Getting a car loan with bad credit is not impossible; it is possible but not always on your terms. You’ll have to compromise on some of the terms of the loan. It also depends on how bad your credit is, like if it borderline some lenders might still see you as a prospect and would be willing to take the risk.

Checking your credit report: 

It is not uncommon to have errors in your credit reports. So it is better to check your reports beforehand to see if there are any errors which may have reduced your score. If there are any errors, correct them before you apply for a loan. This can save you time as well as money.

Improve your credit score:

Some people are on the borderline of good credit and bad credit. In such situations it is better to wait and improve your score before applying for a loan.

Have realistic expectations:

You have to realize that though you’ll be able to get a loan, you are likely to pay more due to higher interest rates than a person with a higher credit rating. Accept your situation and aim for cars which are not out of your financial situation. Also, accept that since you have a bad credit, you are obviously going to miss on some attractive loan offers so it is advisable to go for less expensive cars which are in your budget and wouldn't lessen your chances of getting a loan.

Payments paid off:

Having unpaid payments is always a bad idea before applying for a loan. Even though the lender is willing to give you a loan despite your bad credit, the unpaid payments won’t go well with him. So, pay off almost all in the months preceding your loan application. Your payments records should be clean at least for 6 months before you apply for a loan.

Check your options:

Since, you are not so well with your credit, you are obviously going to get loans with higher rates but accepting and settling with the dealer financing your loan without looking at options may prove to be harmful. Yes, the dealer does want to sell his car but he may also be looking for profit in the financing you are likely to get a higher rate with the dealer. Check out with financial institutions, credit unions, your bank and the loans they offer. Compare their interest rates and other terms and choose which would suit you the best. It is better to secure your finance in advance, before you go to the showroom for car.

Get a CAR (Cibil Analysis Report) from www.cibilconsultants.com and then own a car !

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Can you get house on rent if you have bad credit score ?

Nowadays, many people face the problem of bad credit. And with bad credit comes several problems from getting a job to financial transactions, to renting a home rather than buying a house. Credit score is not just looked at when you go for buying a loan but also when you go out to rent a house. But unlike when you go for buying a house, renting a house with bad credit is still manageable, if you know what you are up against.

For getting qualified to rent a house, you need to prove to the owner that your bad credit in no way would disqualify you as a bad tenant. So make sure that you prepare your credit before applying for renting a house.

Be prepared beforehand:
Try to clear up your credit as much as you can. Try to give the lender as much documentation you can to show you are now trying to improve your credit score. Try to establish a record of regular bill payments.

In the market for a long time:
Try to search for a house which has been in the market for a long time. These properties are usually in low demand for them being not in good localities or they are in need of renovation. Such low demand properties have less strict terms for renting and you can lend them easily.

Be honest about your bad credit status:
Naturally, we think that our bad credit won’t let us get accepted for the tenancy but there is no point in hiding your financial past for this, it would only backfire. If, later, the owner finds out about your bad credit, he may look at you like you are a risk since you are hiding stuff. Be honest to the owner that you have a bad credit but try to make him believe that you are now changing and striving to improve your credit score.

Large Deposit:
Always save beforehand for a large deposit. Since you have a bad credit, the lender might see you as a lender’s risk and ask for a hefty deposit. If not, you can use the same amount to make him take the decision in your favour. You can also use this deposit as a few months advance rent.

Research & Reference:
Search for an owner who doesn't run a credit score check. You’ll usually find such landlords in local classifieds as they are private and not big management companies. Get references from your previous landowners who could write good feedback about you and then you credit score won’t matter much. If the present owner sees good feedback about the duration of you stay, your payment record, then it would add value to your rent application despite the bad credit.

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Commonly asked questions about Cibil score !!

To have an impeccable credit history is of utmost importance these days. The way you handle your finances will impact your Cibil report and Cibil score. While a good Cibil score is your ticket to easy access to loans when you are in need of it, irresponsible credit behaviour and thereby a bad Cibil score may even harm the prospects of you attaining your dream job! Confused as to how that might transpire? Read on to find out more.

• What is a Cibil score?

Cibil Score is a numerical expression that predicts the likelihood of default of a person in the next 12 months. It is mainly influenced by your past repayment track record captured in your Cibil report. This means, if you have made payments on time on all your loans on or before the due date, it is very likely that you have a good credit score, and hence banks look at you as a good customer.

• Why is my Cibil score important?

When you apply for a new loan or a credit card, it is now mandatory for a bank to access your Cibil score to assess how creditworthy you are. A good Cibil score (above 750 out of 900) puts you in a vantage position as lenders would vye amongst themselves to offer you the best interest rates. This is because your Cibil score conveys that the chances of your turning delinquent are nearly nil. On the other hand, a poor Cibil score may lead to the rejection of your loan application altogether.

That's not all. Your Cibil score also has an important role to play if you happen to apply for certain jobs, especially in banking and finance sector, ITsector and other multinational companies as well. It has been found that those who are financially disciplined make diligent and disciplined employees in their workplace as well. Therefore, while performing a background check on you, your employer may ask you to submit your Cibil report among other documents. If your prospective employer finds that your credit behaviour is unsatisfactory, you may even be rejected as a candidate outright. It may be noted that if you are trying to find a job in a bank, a Cibil score of less than 750 will not do. However, if you approach the bank as a customer, the same bank may still consider giving you a loan if your score is between 700-750.

• What determines my Cibil score?

Your Cibil score is based on the information in your Cibil credit report. There are primarly five factors that go into the composition of your credit score. In order of their importance they are, your repayment history, utilization of credit , average age of credit accounts , your mix of credit and the number of inquiries that lenders make each time you apply for a new loan or a credit card. To maintain a good Cibil score, make all repayments of your loans and credit card outstanding on time, keep the balances on your credit cards low, keep the overall utilization of credit below 30% on your credit cards, have a healthy mix of secured and unsecured credit and finally apply for credit only when you are in dire need of it. 

• How can I access my Cibil score?

Your Cibil score is literally just a click away. You need to log on to www.cibilconsultants.com and follow the simple instructions to procure your score. You will need to fill out your personal details, make a payment thereof and authenticate your identity. Once your authentication is complete, your Cibil score will be generated.

• Does checking my own Cibil score impact my score negatively?

No. When you request for your own credit report it is considered a "soft" inquiry as opposed to that of a lender's inquiry which is considered a "hard" inquiry. Too many loans applied for in quick succession will lead to many hard inquiries which will then lead to negative impact on your Cibil score.

• How often should I access my Cibil credit score?

As a prudent practice it is good to check your Cibil score and Cibil report at least once every year. If you haven't done so, make sure you access your Cibil score and report at least six months prior to applying for a new loan. This is to ensure that your Cibil score is satisfactory and your Cibil report is free of any discrepancies.

Now that you know how important your Cibil score is and the way in which it impacts your life, it is highly recommended that you keep a check on your financial health by accessing your Cibil score periodically. Always bear in mind that it is not your income level that  important to maintain a good Cibil score, but your attitude towards handling credit! 

For availing credit related services contact us at www.cibilconsultants.com

Let us understand the CREDIT SCORE !

In the world of finance, credit plays an important role in meeting our wishes. Be it the dream of owning a big car or a house . But getting loans easily is not true anymore. Lenders no more look at your earning capacity alone but also factor in your past repayment track record in the form of a credit score before making any kind of decision. In such a scenario associating one's name with a bad credit score may prove to be disastrous.

Are you planning a loan to buy a house of your dreams or replace your old car with a new sedan? These days it is a precursor if you are planning on a loan in the near future unless you want to be shocked with an end moment rejection. Credit score takes into account the credit history of the individual and predicts his willingness to repay the loan on time. Banks and lenders evaluate customers based on their ability to pay and their willingness to pay. Ability is your pay cheque, while willingness is your credit report and score. A higher score implies better chances of getting credit from the lenders.

Other than CIBIL,there are other credit bureaus also who provide credit scores. Of now almost all credit bureaus provide score ranging from 300 to 900. 
Higher the score, the better it is. Though this is definitely true, it's up to individual lenders to decide their acceptable level of risk. Depending on their risk appetite, they decide their credit score cut-off for accepting a customer's loan application. Also, what may be considered as a bad credit by one lender may be perfectly acceptable to another. For instance, a loan approval by one lender, might require the minimum score to be 750. Another lender might require 700 or lower. Therefore, if one lender does not accept your application on the basis of your credit score it is advisable to check with another one who might accept it. However, remember, lenders offering loans at lower credit scores, generally offer loans at a higher rate of interest. Hence a lower credit score may still get you a loan but it could work out to be a costly affair.

At present, the lenders report the credit history of their customers to all the four credit bureaus but they access only the Cibil report to make the decision. You must be wondering why? Cibil was launched in 2004 and has credit data on individuals from then on, while the others started operations in 2010 and do not have that advantage. If your credit score is high across bureau, it will act as a double confirmation that you are a disciplined and a good customer and therefore worthy of a loan at an attractive rate of interest. The good news is that you can raise a dispute resolution with CIBIL in case you come across any discrepancy in the report generated by it.

So, what are you waiting for? Get hold of your credit score from credit bureau and fulfill your wishes more economically.
Visit www.cibilconsultants.com

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Develop great habits for an excellent credit score !!

Don't let your financial dreams suffer due to low credit score. Maintaining cibil score is a necessity so as to avoid loan application rejection.

Here are some great credit habits you should follow:

Spend less that you earn

"Never spend money until you have earned it" - Thomas Jefferson

You have heard your parents and grandparents give this advice often enough. It is the simple truth of being credit-wise. Living within your means and spending only what you have earned not more than that. This does not mean that you do not spend on credit cards or do not take a loan but limit the amount to one you will be able to repay according to your current spending capacity. For instance, if you are taking a home loan ensure that the loan size and EMIs that will follow are manageable and do not end up putting you in debt.

Put credit to work but do not rely it

"Expectation is the root of all evil" - William Shakespeare

While credit is necessary for asset building, it should a tool in control, Credit is not cash, It is loan that has to be repaid. While shopping it is all too easy to whip out the credit card and pay. However, the fact remains that the bill will need to be paid at the end of the credit period which is usually a few days away.

Keep paperwork in order

"I am a believer that orderliness begets wealth" - SuzeOrman

Make sure your financial information and records are organized and up to date. Set up alerts on your calendar to ensure that do not miss a payment even if the bill does not come on time.

Have an emergency fund

"By failing to prepare you are preparing to fail" - Benjamin Franklin

An emergency fund keeps you afloat in tough times when there is an abnormally high need for funds or even when there is a gap in earning. It is like a safety net that prevents you from falling into debt. Without an emergency fund, you would fall behind in your regular payments resulting in a poor credit score.

On time, every time

"The bad news is time flies. The good news is you're the pilot."-Michael Altshuler

It is important to make your repayments on time not just most of the time but each and every time. Even one late repayment will have an adverse effect on your Cibil score. One of the easiest ways to ensure timely payments is to set up an auto debit system linking your bill payments to your credit card.

Renew, Revamp and Retain your CIBIL credit score with our power packed service packages !!
Book an appointment and get desired services with an ease.
visit www.cibilconsultants.com

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Financial decisions impacting your credit score !!

It is not just your investments but also your spending habits that impact your financial future. Most of us are worried about the investments we make and are least bothered about the EMIs that go out of our pay cheque on a monthly basis. It is important to take care of your liabilities as much as you take care of your assets and here is why -

Locking away credit cards: If you have overused your credit card during holiday season so now live a  "cash only lifestyle" for some months and pay minimum amount due on the cards.

Our verdict: Poor! - High interest payments and high utilization. Though on the surface the move to pay minimum amount due looks good, but you need to realize that credit card is the most expensive form of debt and not only you pay huge amount of interest payments, you also have a high utilization on your cards and it can hurt Cibil score. However, locking away your credit cards is definitely a smart financial move!

Using debit card for purchases: Just decide that from now on if you were to make a purchase, use only debit card - Be aware that purchases on debit cards weren't reported to the bureau.

Our verdict: Good! - Yes, the debit cards are not reported to the bureau.Make a smart financial lifestyle choice by using debit card to make a purchase, and be aware that the debit card purchases weren't reported to the bureau. Only your liability accounts - accounts where you are borrowing money from the banks such as - credit cards, home loan, personal loan, overdrafts etc. get reported to the Cibil or other bureaus in India.

Enquiring too often for loan application: The first time you got your loan application rejected,  anxiety took over and you applied to three other financial institutions through a third party. The third parties guaranteed you that they would get home loan approved.

Our verdict: Poor! - No third party can get a home loan when you are not qualified to get one. When you got your home loan application rejected from the leading private bank, you should have looked into the cause of application rejection rather than trying your luck elsewhere. Like everything else in life, the easy route is never successful. You should have approached the bank, gotten a copy of your Cibil Report and taken corrective measures before approaching a different bank.

 we find many customers struggling with their loan application rejection. Don't wait till you are impacted because of your low Cibil Score. Get it repaired with the service packages we offer at our website www.cibilconsultants.com.
Hurry book an appointment now !!

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How Does Student Loan Debt Affect Your Credit?

Can student loans lower your credit scores? Well, yes—but how much depends largely on how you handle those debts. One thing’s for sure: the amount of student loan debt owed has increased pretty dramatically in just the last seven years.

How is Student Loan Debt Treated by Credit Bureaus?

Student loan debt is treated on your credit reports and scores as an “instalment loan”. That is to say, a specific loan that’s been structured over a period of time. Whether it’s a government loan or a private loan also doesn't matter.

The important thing is whether or not it’s paid-off on time, within the agreed-upon framework.

These kinds of debts are weighed less heavily than, say, credit card debt. This is where you might’ve heard the terms “good debt” and “bad debt.” Basically, student loan debt is good debt—it’s an investment in your future. With the money you’ve taken out to pay for education, ideally, you’ve increased your capacity for higher earnings over coming years.

What interests the credit bureaus most are your payment habits—not that you have debt, but how you manage the debt you have.

Of course, defaulting on a student loan will appear on your credit report—and stay there—for seven long years. Student loan payments that have gone unpaid for 270 days are considered to be in default. However, it is possible to make arrangements with lenders to avoid this. 

Ultimately, just like everything else relating to your credit, you want to demonstrate your trustworthiness and reliability. Don’t be afraid of improving yourself with a student loan, but make sure you’re ready to keep up with the payments as they come due.

For more details visit our website - www.cibilconsultants.com
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Planning on availing a loan?

Not all loans are bad. If the loan is used to create an asset and is productive in nature, it can be termed as a good loan. Home, business and educational loans fall in this category. On the other hand, if the loan creates no asset or is of very little productive use, it can be termed as a bad loan. A personal loan to go on a vacation or a heavy credit card swipe to buy an asset that would depreciate and an auto loan will fall in the bad loan category.

Financial knowledge and discipline goes a long way in preventing people from getting into debt traps. It is important to educate people on loans, bad Cibil credit score and other issues in the personal finance space. While personal loan or any other form of non-collateral loan seem to be the most convenient option, not everyone knows the gravity of the problems one might get into, if it is not taken for the right reasons.

The following table explains the different types of loans and also weighs your pros and cons:

Type of loan	Purpose	Collateral needed?	Pros and Cons	Good or bad?
Home Loan	Fund home  buying or  construction  a house on  a plot	Yes	- Has a positive impact on Cibil Score. - Gives longevity to your Cibil Score - Shows intent to repay the loans - This loan is to fund asset acquisition that is bound to appreciate	Good
Business Loan	Fund business expansion plans	Yes	- Has a positive impact on Cibil score. It is being funded to either create a new asset (factory or a new location for a company) or expand an existing asset. - This can be either a long term or a short-term loan. - Creates more assets for the company and hence proportionate returns and profitability	Good
Personal loan	No need to specify a purpose	No	- It does not have a very positive impact on Cibil score - The term depends on the capacity of borrower - In most cases the asset (if any) could be a depreciating one - Most convenient option when compared to borrowing money from inquisitive friends and painful relatives, albeit at a cost	Bad
Credit card	No need to specify a purpose	No	- Every swipe that happens on your card is considered as a loan - It can have a positive impact if you make your payments on time and keep your credit utilisation low. Else it will have a negative impact - It has benefits like cash back, rewards, loyalty points which bring in some freebies -It has very high interest. So if you do not pay in time, you might fall into a debt trap	Bad
Auto Loan	To buy a vehicle	Yes	- While this could have a positive impact on your  Cibil score if payments are made on time, it could get you into real trouble if you don't pay your EMIs on time. - The goodness of this loan is debatable. It is taken to fund an asset that depreciates over time  - If the vehicle is being bought for to aide in your business, many lenders consider it as a good reason	Good/Bad     Depends    on the   purpose buying the vehicle

           

The following are good practices to manage finance better:

• Save and then splurge:'Pay yourself first', in other words, make the habit of saving a part of your income before spending. This goes a long way in keeping debts at bay.
• Budget:If you go into debt, it's an indication that you are living beyond your means. Without planning, it can be hard to know just when you are overspending. Drafting a budget for short, medium and long term expenses and tracking it allows you to see in black-and-white where your money goes.  Trim your expenses so that the total outflow is less than the income.
• Use debit cards:  Debit cards are tied directly to your bank account. If you don't have money you can't spend on your debit card. Since no credit is extended, you can't go into debt using your debit card.
• Pay off balances monthly:  One way to avoid overcharging on your credit card is to allocate money from your bank account before you make any charges. As soon as the charges hit, use the reserved money to pay them off.
• Invest smartly:  A well researched investment can yield great returns. Keeping abreast with the latest happenings in the financial world also helps one to make smart investments.

By following the above explained methods, people with bad financial habits can plan to get out of debt traps. By constantly educating oneself and by inculcating financial discipline one can successfully prevent falling into debts. But it is entirely our choice, the way we handle our money, by spending wisely or by being a spendthrift which makes us wonder as to who is smarter, we or our money?
For any assistance log on to : www.cibilconsultants.com
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Effect of credit score on cost of borrowing !!

If you want to qualify for the most competitive loan and credit card rates then you need a good credit score. What’s more, you need it to stay that way. 

• How lenders decide whether to lend to you ?

Banks and credit card companies use a variety of different information to give you a credit score, which determines whether they will lend to you and at what interest rate.
Credit scoring works by awarding points based on the information you provide on your application form.The lender may already have about you, based on previous accounts you have with them, and on your credit report.

• You’ll also get a better credit score if you:

own your own home and/or have lived at the same address for at least a year ,have a good credit history by repaying other credit agreements on time, for example your credit card, auto loan, gold loan, personal loan , overdraft , Cash credit facility, Consumer loan  or Housing  loan.Have evidence of stability – for example you are employed rather than self-employed, you’ve lived at the same address, worked for the same company and had the same bank account for a long time are not connected financially, through your mortgage or joint bank account, to people with a bad credit score.

• How a poor credit score affects your ability to borrow ?

A poor credit score can mean you’re  rejected with any credit facility or loan or  charged higher interest rates, given a smaller credit limit. A lenders or banks or NBFC doesn't have to give you the interest rate they are advertising or that you see in best buy tables on comparison websites.  You may be offered an interest rate that’s higher – this is what’s called your personal APR. 

For more details visit www.cibilconsultants.com
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