How cost of borrowing is related to credit score?

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, which is held by agency called CIBIL.
              

• 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. 

Source: Secondary

Points to remember about credit ratings.

The world of credit ratings is rife with misinformation and misunderstanding - even some national newspapers have got it wrong on occasion. Much of it's because lenders don't want it understood, and SO CALLED credit repair agents want you to think it works a certain way so they can sell you extra products based on your fear. Here's what you really need to know to debunk the myths...

1. You DON'T have a universal credit rating

There's no such thing as a blacklist. This is a myth. In the INDIA, there's no universal credit rating or score, and there's no blacklist of banned people.

Each lender or banks or NBFCs scores you differently and secretly.

This means just because one bank has rejected you, it doesn't automatically mean others will. Though after a rejection, it's always important to check your credit report before applying again.


Of course, if you've got a poor credit history, or had problems, it can feel like you're blacklisted. Credit scoring is intuitive - would you lend to someone with a history of not repaying?


However, on occasion there are some NBFCs or private firms that specialise in lending to those who have had past problems - though they then charge a whacking rate of interest.


The tools banks use to decide aren't universal either. As well as your credit report , they also look at application information and any past dealings they've had with you, and use the three sources of information to build up a picture of you.
                         
2. Credit scoring is about trying to predict your future behaviour


This is not easy if you've little credit history. When you apply for a product, a 'credit check' is done. In practice, this means lenders pour all the data they have on you into a complicated algorithm. It's an attempt to predict your future behaviour based on what you've done in the past.

While a poor history counts against you, so does having little credit history as it makes predictions less certain.

Imagine you are lending someone money. On the surface, they may appear trustworthy. But if you don't have much information about them, then you probably want to know more, just to be sure.

3. It's as much about 'will you make the lender money' as it is about risk
Many people mail or call to us incensed after rejection of loans or credit card - " I've never missed a payment, why on earth did they reject me?"

This is based on a misunderstanding. Many people think lenders are credit scoring to see if you are a good or bad risk. They're not. They are credit scoring to see if you match up to a wishlist of what makes a profitable customer. Of course, someone who is a bad risk is likely to be scored out as unprofitable by most banks, but risk is not the be all and end all.

Credit card companies may reject you for always repaying cards in full.

You might feel like a dream punter, but for credit card companies you're a nightmare. If they spot this trend, you're likely to be rejected. The most profitable customers are those perpetually in debt, never defaulting, but always meeting the minimum repayment.

Pay off in full every month, don't use your cards enough, or always shift debt to 0% cards, and if they can spot you (it isn't always that easy) some may reject you.

Banks score you based on products they'd like to sell you in the future.

Imagine a bank wants new mortgage customers. That's a costly sell. Instead, it offers a current account paying a high rate of interest on a small amount kept in it. Yet, when you apply, rather than scoring you as a bank account customer, it could actually be scoring to see if you're likely to be a profitable mortgage borrower in the future - you might face rejection if you aren't.

The secretive nature of credit scoring makes this difficult to ever truly know.


4. What banks really know about you?


It's important to be aware of exactly what banks know when you apply, so you can present yourself in the best light. Importantly, it's more than just what's on your credit file.
The application form.
In many ways this is the most important. Here, lenders obtain the crucial details of your pin code, salary, family size, reason for the loan and whether you're a home owner or tenant .
Make sure you fill in the forms carefully. One slight slip, such as a "10,000" salary rather than a "1,00,000" one, can kibosh any application.
Be consistent too, scoring firms filter applications and if there are many inconsistencies - such as changing your job title each time or different phone numbers, it can cause a problem that you may not be told about.
Past dealings you've had with the Bank.

Companies use any data on previous dealings they've had with you to feed into the credit score. This means those with limited credit history may find their own bank more likely to lend to them than others.
Of course, those who've had problems with a bank in the past may find it more difficult to get accepted there too.

CIBIL score with credit report
CIBIL is credit reference agencies compile information, allowing them to send data on any INDIAN individual to prospective banks which are members of the CIBIL. All bankss use alsways cibil credit report when assessing your file. This data comes from existing banks only whihc includes your payment habits with the relevant banks.


5.Your credit score dictates the product and the rate you'll get


In the past couple of years the credit landscape has almost completely shifted towards 'rate for risk'. This means almost every Loan Provider on the market uses your credit score to not only dictate whether they'll provide you with credit, but also what rate you'll get.
The most obvious way this manifests itself is in representative rates on loans. Ofcourse still banks want to business with your with lower score they will charge more rate of interest by taking calculated risk.

Source: Secondary

Are you using many credit cards?

A credit card is a loan with a difference. Here, you get credit while you go spending or paying bills. However, the interest rates on credit cards are much higher than that on other loans. The more credit cards you have, the more you may be tempted to spend and the more difficult it will become to keep a tab of how much you have spent and when the repayments are due. Do remember that credit cards are the most expensive types of loans available in the market, and whether you miss your payment deadlines due to an oversight or because you have inadequate funds, you will have to pay heavily.

Credit card cautions

If you plan wisely to use each card to its advantage, but also keep a check on the rising charges so that the debt remained under control. Maintain your credit score over a period of time so that you could remain in the good books of the credit card companies. This is exactly what multiple credit cards holders should do to disentangle yourself from debt. However, if you cannot religiously keep a track on your spending or monitor each card prudently, then multiple credit cards can become a hindrance rather than an aid to money management, so step with caution depending on the kind of spending habits you possess!

Impact on credit report

While credit cards are extremely handy pieces of plastic, ideally, banks in India haven’t set any obligations on the number of cards you can carry. In India, you can easily find customers using four credit cards and the ones that don’t even have a single card. Due to the fact, your CIBIL credit score could be strained due to irrational credit card usage. In actuality, you must keep the number of credit cards which you can afford. Avoid using more than one card if you don’t have a good monthly income source.

Monitor your credit limit religiously

Your lenders will see you as a high risk candidate if you have high amount of outstanding balance to be paid. In fact, credit cards are the easiest way to fall into a debt trap that is a situation in which you borrow just to maintain your existing borrowings. So, to be on the safer side, you need to keep your outstanding balance about 10% to 30% of the overall credit limit. By doing this, you’ll get some relief and will also able to borrow more funds, if the need arises.

Never close your old card

Your oldest credit card age will do a significant role when the banks decide to open a new account under your name. In such cases, you can earn more points for keeping a long-established relation with the bank. The credit history of your old card is always better; and for taking loans, you could use your old credit card. If you wish, you could keep another card also for several other references and shopping online. Don’t ever close down your good old credit cards, even if you’re not using them frequently because they will definitely work towards building your good credit history.

Opt for right Credit Card

The credit card market in India is overwhelmed with attractive offers and deals that are quite tempting for the customers. As per the needs, every sensible card user can acquire several credit cards frequently. If you’re a constant traveller, then you could go for a travel credit card. Petro cards and special cards for getting discounts on restaurant bills are also highly popular in India. Whoever looking forward to multiple card options can decide buying these credit cards for a suitable experience.

Ideally, cards should be used as a temporary substitute for carrying cash. And, if that is the only motive you have when you carry a credit card, you will find that having one or at most two is quite sufficient.

Source- Secondary

Tips for new home buyers

Are you hunting for a home? A home loan helps you achieve peace of mind by providing you with one of the basic necessities of life – a roof over your head. But if you don’t exercise prudence wisely and take extra care while going through the process, a home loan can rob you of that very peace of mind. Here are a few quick tips that you should know before climbing onto the property ladder. These key tips could assist you choose the right home loan and save some money at the same time.

Market Research – Searching for the perfect home loan may seem hard work but if you do your homework and take your time, the whole thing will be a lot easier. Those hoping to climb onto the property ladder may be in for a bit of a shock – loan options are vast and can at first seem a little overwhelming. The key to getting the best deal on your loan – and that means the most sensible option, as well as the cheapest – is being armed with as much information as possible… so be prepared! Clear your doubts regarding the loan scheme before finalizing on anything.

Calculate the EMI – Estimate the amount of EMI that you can afford beforehand. Keep in mind your income and financial commitments to determine the amount of EMI you can pay before applying for a loan. Don’t make abrupt decisions on this one because if you get delayed on making repayments on time then it could be burdensome for you to pay penalties if you don’t have a stable income source. So, keep in mind the other aspects also that are worth to consider before you agree to take up the new loan and you’re your decision wisely.

Eligibility criterion – Having documents ready before you apply for a loan can speed up loan approval. A lender will consider your credit history; you must make sure you have paid all your credit cards and other loans timely to score good on eligibility. And if you have a clean record in your credit history for making payments on time, then you can use it as an asset when applying for a loan. Also, scrutinize the duration of your loan. If you prefer a long tenure loan then interest rate would be comparatively high and you will be bound to pay more overall.

Borrowing costs – When you apply for a loan, it’s mandatory to know about other additional charges that the lenders would add to the current home loan schemes. The lender may impose a range of administrative and service charges or processing fees. These additional charges will be considered under the sanctioned amount in your name and not considered under the amount that you take home. Before you agree any deal, you should examine the other charges that the lenders put into the scheme.

Study the fine print – Make sure you thoroughly read the home loan agreement documents with your bank or financial institutions. The lenders may acknowledge certain points to you but whatever is written on the paper will only be considered at the end. So, it would be appreciated to contribute some time on reading the documents to avoid any hassles later on. Get your queries cleared, if any, related to terms and conditions mentioned in the loan before signing your documents.

Learn more about credit history and its impact on your credit score at www.cibilconsultants.com

Source- Secondary

Joining a co-applicant in a home loan!

Are you aiming to avail a home loan? Will you like to relish substantial profits from it? Here’s your answer – joining hands for a bigger home loan. You can instantly apply for joint home loan by simply adding a co-applicant or co-borrower in your application of home loan. Let’s explore some terms about these loans which banks specify when co-applicants are added.

Loan eligibility

All banks allow two or more persons to jointly apply for a home loan. By applying along with a co-applicant, your eligibility increases and as a result, you can avail a higher loan amount. However, banks specify that only people with certain specified relationships like father and son, husband and wife, brothers are permitted to apply as co-applicants. Beyond these, other relationships are not permitted as co-applicants. Moreover, the co-applicant needs to have a regular source of income.

Between a co-owner and co-applicant

Co-applicant is a person who applies along with the borrower for a loan. A co-borrower along with the primary borrower accepts responsibility for repaying a debt. Infact, from a bank perspective, co-owners of a property should necessarily be co-applicants.

Husband and wife

One can include one’s spouse as a co-applicant for a home loan. His or her income will be added for determining the loan eligibility. The maximum tenure of the loan is determined based on the retirement age of the older partner. As per bank aspects, this is an ideal situation to have the husband/wife as co-applicant.

Father and son

The terms relevant to a father and son being co-applicants are thoroughly clear, if the applicant is the only son, he can jointly apply with his father with both the incomes being considered. The property should be in their names jointly and it does not matter who the main owner is. This is because in any case the son is the legal heir of the father’s property.

In case a person has two or more sons and if he wants to apply jointly with one of them, he should not be the main owner of the property. This is because, on his death, his children should inherit the property jointly and may cause an inheritance dispute. The father may only be taken as co-applicant and his income may be considered for the loan. He may be a co-owner or not own the property at all.

Unmarried daughter and father

An unmarried daughter can apply jointly with her father. However, the property should only be in the name of the daughter and the income of the father should not be considered. This is to avoid any legal complications on the subsequent marriage of the applicant.

Brothers and sisters

An applicant may apply with his brother provided they are currently staying together, and intend to do so in the new property as well. However, a brother cannot apply with his sister. Also, an applicant cannot have her sister as a co-applicant.

Documents

The documents needed for joint home loans are the same as any other home loan. The only difference is that here documents are needed from both applicant and co-applicant. General home loan documents needed are identity proof, address proof, salary slips and bank statements.

Taxation benefits

We all use home loans to save tax. Joint home loan tax benefits are an extension to the tax exemptions provided by home loans. In the case of joint home loans, applicant as well as co-applicant can enjoy tax benefit for the contributions towards the loan.

Visit www.cibilconsultants.com

Source-secondary

Find your credit score

Do you know your credit score as per Credit Information Bureau (India) Limited (CIBIL)? If not, find out immediately and if yes, use it to your advantage. When you apply for a product, a ‘credit check’ is done. It’s an attempt to predict your future behaviour based on what you’ve done in the past. In a nutshell, your credit score can determine if a loan application you make will be approved or turned down.

CIBIL implications on you

Banks, especially public sector banks, consider the credit score of an individual before sanctioning loans. Regardless of either you need a large or small loan, review your CIBIL Transunion score and Credit Information Report before filing your loan application with the lender. This could acquire you a fast and simple loan processing. In accordance with CIBIL reports, a Transunion score is a 3-digit numeric brief of your credit history which symbolizes your financial and credit strength. Your score is emerged from credit history which ranges from 300 to 900 points as specified in the Credit Information report. This score is calculated based on your history with financial institutions such as banks and credit card companies. The CIBIL CIR is given to you conjointly with your score considering that the grounds on which your credit score is developed. The lender undergoes your credit report and score to determine your repayment capacity. If you score higher, your success rate of getting your loan application approval could be better.

Low your interest outflow with good score

If you have been diligently paying your credit card dues and other loan EMIs, you will have a good credit score as per the information collected and displayed by CIBIL. However, if you have settled your outstanding credit card dues by making partial payment, it will reflect in your credit score. This can affect your chances of getting a loan, as many banks consider your credit score as per CIBIL together with other factors such as your age, income, occupation, prior relationship (if any) with the bank, etc. before sanctioning the loan.

Here’s a table to give you an idea of percentage of new loans sanctioned to people with different credit scores:

Credit score	Percentage of new loans sanctioned
<650	4.7%
650-699	5.2%
700-749	9.7%
750-599	22.8%
>=800	57.6%
source: cibil.com

Hence, if you are looking for a loan, be it a home loan, personal loan or car loan, you must know your CIBIL rating. Armed with a good score, you can get a better deal by negotiating the interest rate on the loan or get other related charges waived off. You can lower your interest rate which goes a long way in reducing your EMIs.

A good score allows you to avail a wide spectrum of credit from various lenders. It also means that you will be able to easily secure a new credit card or get a loan at more favourable terms because of the choice of lenders. On the other hand, if you don’t have a good score then you will have to make do with either no borrowing or borrowing at a very high cost.

Source-secondary

Own your dream home!

Buying a house or making an investment, more so in a city, is a challenging task. It involves a huge sum of money. When you have painstakingly found a house that broadly suits your budget and most of your other criteria, put down the token. Getting over-optimistic about external factors changing could rob you of the chance to purchase your dream home. Here are some precautions which you need to follow as you navigate the purchase of any real estate property.

Before you Shop for the deal

Examine record of your finances. Before switching lender or contacting a real estate agent or window shopping for a new home, figure out what you can spend. Know your credit card limits and review your usage to prevent a potential approval pitfall.

First proceed with financing. Attaining pre-approval for a loan will make the loan approval process and process of negotiation smoother from the start.

Switch lender for better benefits. Try to get a professional who is both familiar with the area you’re considering and its home values – and who is well versed in the laws, timelines and deadlines. It allows you to lower the risk of ruining the dream of purchasing your own house.

Over the process of negotiation

Reading the fine print. If there is one piece of expert advice we hear often for consumers, it’s that it is always good to read the fine print before taking the ultimate buying decision. Fine print often lays down the terms and conditions for what generally the large print promises. Get the clarity on the matter to avoid any troubles in the future.

Keep everything in written. If you negotiate any extras make sure that they’re documented in writing and that all parties sign off on the extras.

Disclose the hidden expenses. Due to these expenses the total cost of your product gets hiked by a considerable amount; definitely more than you have calculated earlier. It’s better to know about hidden costs as these vary from one financial entity in the market to another. So, read these carefully and then take your decision accordingly.

Bargain to gain a better deal. Every financial institution has its own interest rates and fees structure for customers which provide some scope for you to negotiate for a better deal. You can also leverage your past record to good use while negotiating as banks normally don’t want to lose out on old customers.

Conclusion

Don’t take your self-decision. While seeking advice on purchasing a house, it is best to consult an experienced financial advisor. It’s always better to counter-check the suggestions of your advisors with others. It can safeguard you from making expensive mistakes.
Visit: www.cibilconsultants.com
Source: Secondary

CIBIL: Banks are lending wider and smarter

NAGPUR: After being tight-fisted following the slowdown of 2008, banks have once again begun actively lending on retail front, doling out personal loans and new credit cards, says a survey by Credit Information Bureau(India) Ltd (CIBIL). Since 2010, retail lending has jumped 150%. As many as 63% of the new borrowers are people below 35 years of age, says CIBIL data.

CIBIL has also made a state-wise comparison of age profile of borrowers. This shows Maharashtra has 21% of borrowers below the age of 26 years and 42% between 26 and 35 years, which is the highest number of young borrowers. The national average is 11% and 38% in these age categories respectively. Borrowers above 60 years make just 5% nationally.

CIBIL maintains the borrowers' repayment details which is referred to by the banks while processing loan cases. If a borrower had delayed payment or defaulted on any of the loans, a different bank processing his case can know this by referring to the CIBIL data.

Another comparison of 2008 with 2013 data shows the banks have preferred giving retail loans to only consumers with better credit record. CIBIL awards points to indicate the credit worthiness which has been taken as the parameter in the comparison. However, CIBIL has compared data related to 2008 and 2013 only and not for intervening years.

"Those having 700 points and above out of a total 900 are in the best category. Below 700 leads towards the doubtful to worse categories," said Harashala Chandorkar, senior vice-president of CIBIL. She was in the city to hold a meeting as a part of CIBIL's awareness drive.

            

In 2008, the loans granted to borrowers with a score over 800 were 26% of total retail lending. But in 2013, it went up to 62%. Those with a score between 750 to 799, made 57% of total borrowers in 2008 and it came down to 24.8% in 2013. At the same time, the worst category of less than 550 points formed 6.1% of the retail loans in 2008, which further came down to 2.5% in 2013.

A borrower can have access to his CIBIL score. Though repayment of loan in time is the only measure of awarding the points, the exact method of evaluation is not shared by CIBIL.
Visit- www.cibilconsultants.com
Source: Secondary

Home Loan from Housing Finance Company

1. Higher Loan to Value Ratio: This is the biggest plus point for a Housing Finance Company. As HFC is not governed by RBI therefore they can include stamp duty and registration charges towards the cost of the property. Let’s understand from an example if a person is buying a property worth Rs 100. The stamp duty and registration cost of the property are Rs 6 i.e. 6% (Average). In this case, total cost of the property is Rs 106. Depending on my Home Loan Eligibility, Bank will approve LTV of 80% on Rs 100 i.e. Rs 80 as bank will not include Rs 6 towards the cost of a property. In short, he avail loan from a bank, he have to pool in Rs 26 from his pocket and his effective loan to value ratio is 75.47%.

Considering, he avail Home Loan from Housing Finance Company. In this case cost of property for Home Loan will be considered as Rs 106 and Loan to Value ratio of 80% effectively means that he can avail Home Loan of 80% of Rs 106 i.e. Rs 84.8. In this case, he have to pool only Rs 21.2 from my pocket. For simplicity purpose, he explained with an example of Rs 100 but it will be substantial amount considering the High Value of Home Loan. To summarize, Own contribution in case of Home Loan from Housing Finance Company is lower compared to bank thus higher home loan value.

2. Tie up with builders: Builders also deserve equal credit for the success of Housing Finance Company. It’s a win-win situation for both the parties as HFC’s offer higher commission to builders, are bit lenient on the legal process and most importantly, offer subvention schemes. Banks cannot offer subvention schemes due to strict RBI guidelines. Builders push loan from HFC very hard especially small  builders. USP is Pre Approved Project, therefore, minimum documentation and hassle free processing. Buyer is not able to understand the disadvantages of this trap. Builders de-sell, banks or Home loan providers who have not approved his project. As a thumb rule, you should never invest in a project which is not approved by at least 5-6 Home Loan Providers including 2-3 Banks. Buyers fail to understand that HFC’s are very lenient on Legal Check process therefore they have to be careful. Any project which is not approved by any of the banks and only by HFC/s is a big NO. The strategy of the builder is to get the project pre-approved at the time of launch and then there is a large scale deviation from approved layout plan. Banks don’t approve such projects.

3. Higher Home Loan Eligibility: A Housing Finance Company is a bit lenient in fixing the Home Loan Eligibility depending on the income, liabilities, risk assessment etc. As mentioned there is high pressure to re-deploy the funds due to high cost. Moreover, they have to compete with big boys. As a thumb rule, you can expect 10% more Home Loan Eligibility through Housing Finance Company compared to Banks. It’s a big incentive for the borrower as it means less burden on their pocket.

4. Self Employed & Businessmen: In India, we suffer from the colonial mindset of being a Servant. In Hindi, Private Job is called “Naukri” and though we don’t like but an employee is “Naukar”. We prefer “Naukri” over entrepreneurship because of steady income. The same mindset is a roadblock at the time of availing loan. It is very difficult for self-employed and small businessman to avail Home Loan. Loan requirements are stringent compared to Salaried class. At the same time, Housing Finance Company is a bit lenient in terms of calculation and consideration towards business income of non-salaried class. It is observed that non-salaried class i.e. self-employed and small businessman prefers Housing Finance Company for Home Loan requirement.

5. Low weightage to CIBIL Score: A Housing Finance Company especially small HFC’s are lenient on CIBIL score consideration. Seen cases wherein people with CIBIL Score of 700 received Home Loan approval. Whereas with banks score of less than 775 means end of the dream to own a house. This point is very subjective and depends on case to case basis. There is no general rule, but normally HFC’s are also bit lenient on CIBIL Score requirement. The only word of caution is that Many people with low CIBIL score paid a commission of 5% – 10% of Home Loan value to DSA to get Home Loan approved. It’s an unethical practice. Please note that DSA’s of HFC’s take undue advantage of the borrowers. They can’t influence even 0.1% of Home Loan Process. Always deal with a responsible employee of Bank / Housing Finance Company to process Home Loan. You may utilize the services of DSA only for the operational part.

To summarize, Selection between Bank and Housing Finance Company is a sort of prisoner’s dilemma. By being lenient on Home Loan process, a Housing Finance Company is doing more harm to a borrower than good. Whereas borrower perceive it otherwise. Because of this reason, you may observe that Home Loan default is more common among HFC’s Borrower compared to Big banks. Risk Assessment of a borrower should be non-negotiable. From borrower’s perspective, it better that Loan is rejected at initial stages instead of EMI default at later stages. It is always suggest buying a property with min 40% self-contribution.

Visit- http://www.cibilconsultants.com

Source-secondary

Compare credit card offers this way

“The credit card business is super-competitive right now . “People are spending again. Banks are lending again. That’s all led to better deals for credit card customers willing to do their homework.”
Rather than getting a credit card from your bank, or accepting the first credit card offer you receive in the mail,  getting out there and actively searching for the best deals for you. “Go online and see what’s out there. There are plenty of deals to be had,” he continues.

How to find the right credit card for you

Comparing credit card offers isn’t just about looking for certain criteria. The first step is understanding yourself and your needs. “Why do you want the card?” he says. “Are you looking for rewards? Are you trying to rebuild your credit? Do you want a balance transfer?”
The use to which you plan to put the card should be the first consideration when comparing credit card offers. “Knowing what you want from the card is the key to getting the most from your card. “If you never fly anywhere, you probably shouldn’t bother with an airline card.” Start out by comparing cards that meet your needs, and don’t waste your time with cards that don’t fulfill a purpose in your overall financial plan.
Once you know what matters most to you from your card, it’s time to look at other factors. “Pay close attention to the costs associated with the card. Some of the costs of credit cards include:

• APR
• Annual fee
• Balance transfer fees
• Foreign transaction fees

These fees vary widely, according, and you should realize what you’re getting into. If you know that you will occasionally carry a balance, the APR is very important. You should also consider how many rewards you are likely to earn in a year from regular purchases you make. An annual fee might not be a big deal if you have the potential to earn higher rewards that aren’t capped. With the right strategy, your rewards can offset your annual fee and still help you come out ahead in rewards than what you would have earned with a card without an annual fee.
If you are getting a card for a balance transfer, one of the considerations is how long the transfer period lasts. A card with a promotional period of 18 months can be of greater benefit to you than a card with a nine-month intro period. If you know you can pay off the balance in 18 months, it isn’t as important that the regular APR is higher on that card if the nine-month card will start charging you interest much earlier.

Consideration of  the perks is also recommended that come with a credit card. If you are choosing between cards that have similar costs and requirements, turn to the perks to help you make a decisions. “Is there a signup bonus? Does it come with a free credit score? Will the issuer allow you one late payment without charging a fee? Are there special perks such as a concierge and travel discounts?”
                                     

What to do if you are rejected

Of course, applying for a credit card doesn’t automatically mean that you will be approved. “If you get rejected, there’s no need to panic.” “You should try to find out why it happened.”
He suggests reading the rejection letter. You can even call the bank for more information. The rejection letter should include information about why you were turned down, whether it was because you don’t have a long enough credit history or whether your credit utilization is too high. Sometimes the reason given points to a mistake on your credit application or in your credit report. “Fix those problems, and if there are larger issues, commit yourself to putting in the work to build your credit in the coming months.”

You might want to apply for another card if you are rejected, but it’s a delicate balance. “Applying for one card after getting rejected for another is fine. “Applying for five others is not a good idea. It can hurt your credit, and issuers can view it as desperate.”
The process of applying for a new credit card isn’t just about trying to get something you want. You also need to consider the implications of your move, since your credit will be impacted by your inquiry. If you don’t qualify for the card you want, take the time to evaluate your situation and work toward getting your credit in good shape so you qualify next time. “It’s best to take a more strategic, measured approach to credit card applications.”

Visit: www.cibilconsultants.com
Source: Secondary