Credit card cautions. Must read!

Credit cards have become a lifeline for everyone in modern times. However, this much-sought after boon can be a real bane to your finances if not used with care. Are you facing problems while managing your credit card balances? If so, don’t regret over it – you’re in the same boat as other consumers. Use these simple tips to stop adding to your existing credit card debt and start regaining control of your finances.

Don’t keep more than 1 or at the most 2 credit cards

The more credit cards you have, the more you may be tempted to spend and the more difficult it will become to keep a track 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. So, while credit cards are extremely handy pieces of plastic, ideally, they 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.

Beware of reward points
The rewards you can earn from credit cards, while a nice perk, are worth far less than the extra interest you’ll accrue if you can’t pay off the money you spend to earn such bonuses. Spending on your card just to gather reward points may not be very healthy. You will soon realise that even though you have high reward points on your card, you will have to pay hefty bills, sometimes even on useless items made unnecessarily.

Don’t use credit card for everyday expenses
Besides inadequate circumstances, you should have your budget under control enough that you can at least pay for your monthly necessities with your monthly income. By keeping required purchases like groceries and utility bills off of your credit card, you\’ll be taking a major step in the right direction to getting your spending under control. Always draw up your budget for such purchases and use your credit cards within this limit.

Pay more than the minimum balance

It’s convenient to pay off the minimum monthly payment when you are under financial duress. Try to avoid it as not only will you never pay off your bill, but the interest rates that credit card companies charge will actually keep your bill growing every month. Instead, send as large of a payment as you can afford to. Where possible, reduce your spending in other areas to focus on paying off your credit card debt.

Avoid cash advances.

To meet urgent needs, drawing money from an ATM through your credit card is an easy way to combat cash shortage; but have you realised the impact it will cause on your finances? Not only is the interest rate charged on the advanced amount, but this also gets charged from day one itself.
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Beware First-time home buyers!

Buying your dream home is a massive investment of one’s lifetime and requires tremendous research about the property, the builder, the policies etc. Taking a home loan is a long term commitment; it becomes crucial that the buyer doesn’t get carried away by lucrative deals and offers. You may end up paying more or getting inefficient service if you choose the wrong scheme or lender for your home loan. There are many mistakes committed by first-time home loan borrowers, which can prove to be destructive for their finances.

Here are the top 5 mistakes committed while taking a home loan:

Avoid selecting your lender first

Most people prefer to go to banks calculate their eligibility as per to know whether their finances will be adequate or not for a loan. Mostly, they are deceived, since the lenders may offer some thriving deals to make money. It’s beneficial to check your eligibility factor online and know easily how much approximate amount of loan you are eligible for.

Borrowing beyond means

Obtaining money more than their income source allows is another misstep which most people make. Banks grant the loan on the basis of your eligibility, income and liabilities, but they don’t scrutinize your existing expenses. However, if your current expenses are immense, despite of that, if you take a loan which results in high EMI payment, you may end up in a bad debt trap. It is always better to lower your budget if your current income and expenses levels are not favourable.

Opting a false loan scheme

In the current economy times, banks are initiating different overwhelming schemes for home loans. Remember, there are some loan schemes in which the rate of interest remains fixed for the initial years and thereafter the loan becomes a floating one, which is linked to the bank’s base rate or prime lending rate. People choosing such schemes should be careful to understand if they have the scope to keep the EMI or tenure changes that will be unveiled when the floating rates kick in, which can be considerably higher! A lack of understanding over a loan scheme or a lack of repaying capacity when higher interest rate kicks in can only result in difficulty in servicing the loan!

Ignoring to review cost

It is always advisable to bargain regarding the interest rates, EMIs, etc. Since, apart from your income and payment structure potential, your negotiation skills will also be considered. And as a prudent loaner, get all the information about the processing fees, legal charges and other hidden costs before deciding on the loan amount.

Neglecting insurance for your home loan

Most borrowers do not recognize this risk, in case, any demise happens to you unfortunately during the tenure of the loan. The home loan that you have taken should not be a burden on your family. By insuring your home loan with a life insurance and a critical illness policy you can benefit your family members with a home and not a home loan. In case of the death of the borrower, the life insurance cover can provide the family with a monetary cover. And for the critical illness policy, if in case the borrower is not able to earn due to any critical illness, this policy will provide financial assistance wherein the interest amounts can be paid.

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Down payment for buying an affordable house

The major step in a person’s life is to buy a home. It is often considered to be a significant achievement, a good investment and a celebratory occasion. However, the experience can take a negative turn if the transaction is not handled efficiently, and one of the most important factors that could affect the process is the amount that should be allocated towards your down payment.

Selecting home based on down payment: If you are able to make a large down payment towards your home purchase, you should consider whether it is wise to do so vs. buying a cheaper house. A large down payment on your dream home could mean larger mortgage payments, while choosing to use that same amount towards a home that is less than what you might consider your dream home could mean smaller mortgage payments and more money available to use to cover other expenses.

Don’t forget other expenses
One of the biggest mistakes that homebuyers make is to overlook their other expenses when calculating how much disposable income they will need each month. You can avoid making such a mistake by ensuring that your budget is up to date and includes all of your monthly expenses, such as utilities, other loan repayments, any car payments and insurance, and property taxes that will be owed on your new home.

If you currently live in a rented property, some of the expenses for home repairs and incidentals such as repairing a pipe to mending a fence might have been handled by the owner of the property. This means you should consider setting up a rainy day fund for these items. If the availability of financial resources could be an issue, buying a cheaper home might be a better choice.

Other positives of a cheaper home
Buying a cheaper home has other benefits in addition to the possibility of a lower down payment. .Consider, too, that lowers monthly payments and more disposable income means being able to add more money to long term savings, such as your retirement nest egg and college funds. Finally, it could mean the difference between being able to stay in your home vs. going into foreclosure if your financial status takes a negative turn.

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Whether to purchase a home with cash versus obtaining finance through mortgage.

To be a homeowner of your dream house is not merely a financial decision. It is an emotional decision too. That’s why in a number of cases, despite fixing a budget, most people tend to stretch themselves to own a house that is beyond their budget.  It’s probable to think that buying a home with cash – or sinking as much cash as possible into your home to avoid the enormous debt linked with a mortgage, is the wise choice for your good financial mileage.

But it involves a lot of consideration whether to purchase a home with cash versus obtaining finance through mortgage.

Purchasing a house with cash is a very legitimate productive investment as it eliminates the need to pay interest on the loan and closing costs. In a current market scenario, paying all can also make your purchase offer more attractive to sellers as they don’t have to concern about a buyer falling out due to financing being denied. A cash home purchase also has the flexibility of closing faster than one requiring financing, which could be attractive to a seller. Those benefits to the seller shouldn’t come without a price.  Also, a cash buyer’s home is not leveraged, which allows a homeowner to sell the house as per his convenience.

Shouldering responsibilities with mortgage

At some point you would like to own a house. Then why not do it now? Yes, buying a house on a home loan, if you can afford the EMIs, makes more sense than paying massive cash. How? There are obvious benefits. Firstly, by buying a house in which you live, you are creating an asset with the easy to pay EMIs that you pay; on the other hand, paying complete cash is painstakingly as it involves your entire life money and liquidating huge investments. Moreover, you can enjoy tax benefits on repayments of a home loan. But remember that no matter how tempting it may be, don’t liquidate all your investments to purchase that dream home. Once you moved in, you will still need to go on living; in fact, if you move into a better home, you may seek a better standard of living and therefore, need more regular spending money. Further, you still need to service your insurance policies and subscribe to tax saving investments. You may be needing money for unforeseen emergencies that are not covered by insurance.

The Conclusion

The best advice when considering which option makes the most sense is to opt for the choice that gives you the satisfaction for your entire life. Also, ask yourself which will provide the greater return on your investment.

If you decide to purchase a house with a loan, make sure you can easily afford the principal, interest, property taxes, homeowners insurance, homeowner association and other fees each month. And no matter how you pay for a house, make sure to have an emergency savings account of expenses in case your personal economy declines and you need a financial safeguard.
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Source:  Secondary

When not to use Credit Card

Life has become simpler with the convenience of credit cards and the uncountable benefits it caters. But it often comes at a price of making considerable section of borrowers falling into debt trap which is turning their life difficult. So how can you identify the best times to plunk down the plastic? Here are a few guidelines.

When to say ‘Yes’ to credit cards

Gaining reward points

So many popular credit cards offer reward programs, it’s hard to think of a good reason to carry a credit card that doesn’t. Some offer cash back on every purchase, others pay points. Consumers who qualify can earn hundreds, even thousands of rupees back each year on everyday household spending.

Owning warranty and purchase protection

A credit card can be a great way to protect a major purchase. Most card issuers offer purchase protection and an extended warranty for items bought with the card.

Security purpose while travelling

People who travel can be more vulnerable to fraud simply by virtue of the unfamiliarity of the local language or surroundings. Lost or stolen cash is gone forever, but a credit card can be shut down and replaced during one phone call.

Reaping benefits exclusive to card

Co-branded credit cards typically offer exclusive benefits specific to the brand. For example, some airline credit cards offer free checked bags to people travelling on tickets purchased with the card.

   Beyond your budget

It doesn’t matter if it’s a restaurant meal, a new outfit, the latest smartphone, or a vacation you really think you deserve. Big or small, if you can’t afford it, don’t buy it. Don’t let a credit card trick you into thinking you should have something when it is, in reality, something you can’t afford.

Acquiring mortgage

Mortgage underwriters don’t want to see any changes in your creditworthiness between the time you apply for a loan and the time it closes. If your credit card utilization suddenly goes up, your credit score could take a hit, leaving you unable to qualify for the loan.

Fees is chargeable 

If you’re thinking of paying your mortgage, health insurance premium or other recurring bill with a credit card in order to rack up reward points, think again. Even if the servicer allows credit card payments (many don’t), they’ll charge a fee that deflates or even outweighs the value of any reward.

Having a balance carried

If you have credit card debt, you can’t afford to use your cards. Instead, pay down the balance before you add any new charges to the mix, or you risk getting stuck in a cycle of debt.
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Source: Secondary

The right time to buy a house

If you’ve been considering buying a house but you’re still unsure, consider some of the personal and economic conditions that favor home purchases. If you find that a number of these signs ring true for you, it might be time to contact a real estate agent and start shopping.

Funds for down payment
Having a hefty down payment helps in the same way as finding a low interest rate. Ultimately, the less you owe, the less you’ll have to repay and the less you’ll have to tack on for interest. If you find yourself with a nice lump of cash, putting it toward a home purchase is definitely a solid financial investment. Just think, you’ll be building equity in your home which you’ll see again when you sell, and you’ll have somewhere to live in the meantime.

You’re ready to commit
Home ownership comes with a plethora of responsibilities, including home maintenance, property taxes and the process of selling the property when it comes time to move.

Legal fees, moving expenses, and all incidental costs associated with buying a home can really add up. To make the most of these costs, it’s best to plan on living in your new home for a stretch of time. Consider whether you have a stable job that will provide a solid income for a mortgage, and if there’s any chance you’ll have to relocate in the near future. If you feel you can commit to sticking with a home for at least five years, then it might be just the right time for you to buy.

Owning costs less than renting
If you’ve examined your  budget and realized that your monthly payments associated with buying a home are less than you’re currently paying in rent, it’s time to consider a home purchase. Talk to your bank and look at what your mortgage payments would be for a variety of different properties and gauge what you can afford. Factor in any additional costs you may have to pay, such as condominium fees or extra utility bills, and compare your total costs to what you’re paying in rent.

Buyer’s market
When demand for housing is low and there’s a wealth of properties on the market that aren’t moving too fast, that’s known as a buyer’s market. You’ll have a lot more bargaining power under these conditions than if you’re buying in a seller’s market, which is when demand for homes is high, resulting in few properties on the market that are selling fast. In a buyer’s market, chances are you’ll be able to negotiate a seller’s list price down – sometimes quite substantially – and save yourself a lot of money in the process.

Low interest rates
When interest rates are low, it’s a great time to look at buying a home. You will be able to get a reasonable interest rate on your mortgage loan, which can save you a lot of money in the long run. A home is generally the single largest purchase anyone makes, and the amount of interest tacked onto a mortgage really adds up over the years that you’re repaying the loan. Even a difference of a fraction of a percentage point can make a pretty big difference over the long term.
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Source: Secondary

No regular income? Then how to build a credit?

Credit is one of those things that we feel that we need to develop if we expect to succeed financially over any period of time. However, building credit can be difficult when your income is irregular. Whether you have a part-time job without a set schedule, or whether you are self-employed and you never know exactly when your next payday will be, getting credit can be difficult when your income varies.

“One of the biggest challenges of building credit on an irregular income is that your income fluctuates, making payments difficult".

Not only that, but your irregular income might make it difficult to qualify for certain loans, especially if documentation is wanted from lenders regarding your situation.

You don’t have to resign yourself to a thin credit file, however. It is possible to build credit even when you have an irregular income. Here are some of the things you can do: 

Get a credit card

Even for those with irregular incomes, one of the best ways to build credit is to start with a credit card.Keep things small. Get a small card and keep your balance and utilization low.

You might be able to qualify for a credit card with a low limit. As long as you use that card responsibly, you should be able to begin building credit. Make small purchases with the card, and pay them off. All of your purchases should be part of your regular budget so that you know you have the money to pay off the balance. As you regularly make payments on time and in full, your credit situation will improve. 

If you can’t get an unsecured card — even one with a low credit rating — you can consider a secured credit card. You will have to provide a security deposit as collateral for your secured credit card, but it will give you something you can start with. As with the unsecured card, it’s important to make small purchases and pay them off on time if you want to begin building your credit.

Another option, is to have someone add you as an “authorized user” to a card. If you have a spouse or a parent with a steady job, you can begin building some credit as an authorized user. However, being added as an authorized user isn’t the same thing as having the card. Some points are always good points, but it’s not the same amount of points as when you have your own card.you have to watch out if the credit card account owner maxes out the card, since it can impact your situation.

Small personal loan

As you show that you can handle small revolving credit card accounts, and begin building your credit file, you can see if you can get a small personal loan. These installment loans can help you establish that you can handle different types of credit. If you have been using a specific bank for a long period of time, and have a good relationship with the bank, you might be able to get a small personal loan. These loans can be useful because they are usually paid in installments, with set terms. Get a small loan that you can pay off over a few months to add another layer to your credit file.

Alternative credit scoring

Another consideration is that alternative credit scoring can help you prove your ability. The  alternative programs can help you get your foot in the door. Other payments made by you like rent, utilities, insurance, and even gym membership are considered as well. This information is verified, and you are assigned a credit rating.

There are mortgage companies, auto loan providers, and others willing to work with companies like this to provide loans to those with thin credit files. If you have an irregular income, but can show that you are reliable in your ability to pay, these programs can help you get your first loan. Then, after you have begun with this first “traditional” credit account, it’s easier to build your credit file going forward.

Don’t get in over your head

The biggest pitfall of handling your credit when you have an irregular income is getting in over your head. It’s easy to think that you will be able to pay something back during a month when your income is higher. But what happens next month, when your income is lower?

When building credit on an irregular income, it’s especially important that you choose your loans carefully, and ensure that you really can repay them. You need to make sure that making your payments is a priority. Build up an emergency fund during the higher-income months so that you have a cash cushion to draw on during the lean months. Ensuring that you can meet your obligations is the best way to keep up a good credit score once you have established your credit.

Source:  Secondary

Manage Your Debt

It has become really hard dealing with credit in the present economic conditions. Your loan application is examined more thoroughly now by lenders and banks. Your credit report is what is used to evaluate your loan application and debt forms a big factor of your report. But managing debt is different for every individual as your debt could be because of different circumstances like job loss, medical conditions, etc. You can just follow these basic tips to manage your debt:

Prioritize:
Prioritize your payments; Think of paying off which debt would be beneficial to you. Decide if you want to pay off a smaller debt first or debt with higher interest first.

Negotiate:

Negotiate with your bank or creditor to lower your interest.Talking to your banks helps you as they cooperate with you for your debt payments.

Debt Consolidation: 
If negotiating doesn't work, you could look at consolidating your debt. Debt consolidation is taking one big debt with a lower interest rate or zero interest to pay off all your debts. It helps you as you don’t have to paying off multiple debts but only single installment a month.

Credit Counsellors:
If sometimes you can’t help yourself, credit counsellors can. They help you draw your budget, reduce your spending, negotiate with your banks for lower interest rates. To get best services at best prices,research well before consulting to any agency.

Settlement/ Bankruptcy:
If you have no other resort left, settlement can be the last option. In cash settlement with your credit or bank, the bank gives you a big discount for paying off your debt by a certain date in cash. If you don’t have cash for a cash settlement, then you may have to declare bankruptcy.

Settlement and Bankruptcy both negatively affect your CIBIL score  and stay on your credit report for a long time, so try to follow the above steps and try to never reach the last resort.  

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source: secondary

How to figure out the best budget for you

One of the pitfalls of personal finance is that it’s easy to get caught up in the idea that there is a “right” way to do things. This can spill into budgeting, even though the way you budget is likely to be as personal as any other aspect of your life.

Before you decide what budgeting strategy is likely to work best for you, think about your relationship with money so that you can get a feel for what will help you stay on track.

Understanding your money personality

In the last few years, there have been many experts labeling money personalities based on some of the habits that characterize consumers’ spending. Here are some recommended different budgeting strategies based on the way you interact with money:

1. Spender: “This is someone who has enough money, but likes to make big purchases,” . Rather than getting caught up in nickels and dimes, the spender might budget according to percentages. Setting up a system where 20% might go to savings, 30% might go to housing, and so on, depending on priorities and preferences.

2. Saver: A person , which focuses on control over money. “The saver might use a detailed Excel spreadsheet to keep track of accounts daily.” The saver is always watching the spending and looking for ways to cut costs.

3. Shopper: “This is someone who spends emotionally and might be in debt,”. “The best type of budget for them might be an envelope budget.” When the money is gone, it’s gone. An envelope budget forces you to pay attention each time you spend, since it is usually a cash-based system.

4. Planner: When you’re a planner, you see your money as a means to your end goals. You look ahead, directing your resources to where they will do the most good to help you in your lifestyle now and later. 

5. Investor: “An investor is usually very money savvy,”  “They might not even need a budget, or they could use a combination of the aforementioned methods to stay on top of things.” The investor uses money to make money, and often plans ahead, incorporating earnings from interest and investment returns into the plan.

Sticking to your budget

There’s nothing wrong with experimenting a little bit with your budget to see which strategy most appeals to you. At the very least, it’s important to have some way of ensuring that you don’t spend more than you earn each month.

One of the problems with sticking to a budget, is that many people don’t acknowledge the realities associated with their money habits. “Once you figure out your money personality, the best thing to do is accept it,” . “If you know you are a shopper, you are aware that sometimes you spend on things you don’t need.”

Just being aware of that can help you place safeguards in place with your budget. Before you rush into budgeting, take the time to review what matters to you. Track your spending for a month or two so you can identify your major spending categories — or even discover money leaks that you would like to plug.

Once you’ve done that, you can figure out your money personality, and even consider changing it if you aren’t happy.“Fortunately, if someone isn’t happy with their personal money style, it just takes a little self-awareness and perhaps a good budgeting method to turn it all around.”


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7 Ways When Credit Card Rewards Prove To Be Expensive !

Get bonus points, cash back, miles and more.How we love to redeem credit card rewards. Rewards are a good way to save some money while spending. However, the same rewards can prove expensive if we start spending to save. Spending to save? Yes, that indeed happens.Rewards can be very tempting and can lure card holders to spend money which they otherwise wouldn't have. What happens then? You end up spending more money than what the reward is worth! Such spending decisions taken under the influence of a reward temptation can be a bad idea for your wallet. Here are 7 situations when credit card rewards can backfire.

1)    Here redeem your rewards, but first open your wallet!

Rewards points accumulated can be redeemed as per the card company's policies. This typically includes spending at specified outlets, brands, miles or cash back. Once you know that you have accumulated the reward points there is an urge to redeem and benefit from it. This urge pushes us to think of ways to redeem which includes going in for purchases which are not required! Whether it's shopping for clothes, accessories, travel plans or dining out, decide to spend on these activities only if they were a part of your plan anyway. Planning to spend for redeeming rewards is not a good idea. 

2)    Chasing rewards?! They are watching you.

Often friends and family talk about the "amazing" credit card they have signed up for. Their stories of saving money, claiming air miles and access to exclusive lounges lure us into going and checking out what the deal was about. Not denying that it may be a good deal, but stop before you decide to sign up. Having a bunch of "amazing" credit cards, signed up primarily because they have good rewards scheme can prove detrimental for your CIBIL score. Banks can view you as a credit risk if you aren't organized while picking credit. Credit utilization and repaying on time is a task which requires a good tracking system. If your tracking system is not in place it is possible that you miss out on repaying or end up spending more than you intended to. Your wallet and CIBIL report, both will be affected as a result of the reward chase.

3)    Mind your score!

Reward credit cards have a higher rate of interest. If that is the choice you have made then redeeming the reward points will definitely be on the list. However, while availing rewards you may end up spending more money. The repayment of which, if missed can lead to paying a heavy interest rate. Moreover, these delayed payments can negatively impact the CIBIL score. Now the last thing you need after ending up spending more money is a drop in your CIBIL score!

4)    I don't need it but let me buy my reward!

Credit card offers can be generous deals. The best offers are generally up to 5% of the value spent as reward in some form or the other. Now if you are making a purchase with an eye on this offer, then you are in trouble. Spending 95% of the money on an unnecessary purchase is far from being wise about spending.  Availing the reward should be a bonus on the purchase and not a reason for the purchase.

5)    Did you see the fee?

Reward cards charge a considerable annual fee. While we sign up for the cards, enticed by the rewards, the annual fee is often ignored. It is important to evaluate the total worth of the rewards as against the annual fee applicable. Are the rewards another reason for you to spend more? Does redeeming the rewards means planning for unwanted purchases? Answer these questions for yourself to know if the credit card rewards are actually helping you save. If not, look out for options with lower or no annual fees and do away with unwanted temptation to spend more for redeeming reward points. 

6)    Watch out if you are shopping for more debt!

If you already have a credit card with a credit limit which is utilized regularly and timely repayments are being done then you are in the right zone. This approach will help you max out the benefits of using a credit card while positively keeping up your CIBIL score. Don't let greed take over and make you hunt for reward cards. While the immediate benefits like signing up bonuses and short term benefits like using a certain amount within a limited period of time in return for reward points may appear lucrative, it is a bad idea in the long run. You are actually taking on more debt even though you don't need it! We definitely don't need to find newer avenues to part ways with our hard earned money.

7)    Focus on your goals more than the rewards!

To stay out of trouble and sail smoothly it's important to stick to your personal financial goals. A part of this plan is sticking to budgets every month. Major expenses are planned and money is set aside for such expenses beforehand. Credit card rewards can prove distracting while you are trying to stay focused on planned spending. To avail rewards, we convince ourselves to get off the budget plan. Bad idea! The thrill of availing the reward not only takes us off the road leading to our financial goals but also drills a hole in our pocket. So remember, goals over rewards any day.

Credit cards when planned and used can indeed help us save and give us access to money when required. However, using cards to accumulate reward points and then planning ways to redeem them is not a great idea. Focus on your financial goals, plan your expenses and aim to save. Keep off those credit card reward carrots!

Keep an eye on your credit score along with using credit card because credit card can affect your score positively and negatively both.
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What is debt consolidation ? How it affects Credit score ?

When the debts you have taken pile up, the one option for paying it back is debt consolidation. Your debt consolidation report, before you combined the bills, should look better than your credit report. Ultimately, the aim is to improve your credit score, not ruin it. Debt consolidation saves us time and money when we are trying to get out of the debts of loans and credit cards. But does debt consolidation only help our credit or does it hurt it too? It depends on how we consolidate and what we do after consolidating.That is why, it is important for us to understand how debt consolidation will affect our credit.

First let us understand what is debt consolidation:

In simple terms, debt consolidation is taking one big loan which would be enough to pay off your multiple outstanding debts. You get the money to pay off the debts, and then have to make only a single payment to pay the new debt. In this way you don’t have to worry about different loans and their interests but just one loan. Debt consolidation can be done in different ways- we can take a loan or make a new credit card account and transfer all our existing credit balances there.
Debt consolidation will obviously affect our credit score as we are taking a new credit card or loan. It can affect our credit score both negatively as well as positively:

Positive effects:
It is easier to deal with a single payment than managing several outstanding accounts. Instead of worrying about the fees and interest piling up on your several accounts, you now have to worry about only one account. Due to this fact, you will now be able to efficiently budget your money as you will know exactly, how much your monthly payment will be. Likewise, it will also help you save money.Personal and home loans have lower interest rates than most credit cards. Many people also use credit cards with zero percent interest rate for debt consolidation. If you have huge amount of debt at very high rate of interest, then consolidating these debts will help you save 20% or even more on your debts.

Negative effects:
Debt consolidation works only if you manage it correctly, but usually even doing the right can damage your CIBIL score temporarily. It depends on your actions on how it will your hurt your score.Missing a payment on your debt consolidation loans can bring your credit score down. If you close your credit card accounts after consolidating, it can negatively affect your credit score. Don’t close your old accounts as they give you the longest credit history. Always wait till all your debt is paid off before you close your accounts. This is because, your debt level will stay but your available credit will start to decrease. This will make it look like you “maxed out” and can be a big risk.

When you are applying for a new loan or credit card, you apply for new credit which will eventually lead to a “hard enquiry” in your credit and your score would go down.
Your credit score also partly depends on your credit utilization ratio.If your credit cards maxed out and you open a new card it will increase your debt and will make your utilization ratio go down which will eventually help your score. But if you carry a high balance on any of these cards, your score will take a dip. If you have transferred your multiple debts and closed your credit limit, your credit score will still suffer even though your other credit cards are paid off.

The conclusion is, handling your debt consolidation properly will have a positive effect on your credit but if you go the wrong you will do more harm to your credit score.

Deal with credit score issues by consulting doctor for all your financial worries only at www.cibilconsultants.com

Source: Secondary

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 !

Source: Secondary

Surprising Tactics Rich People Use To Grow Their Money

Let’s be honest, most of us daydream about what we would do if we were rich. We imagine doing stuff like quitting our jobs, buying a boat, and spending the rest of our lives sailing around the world. It brings a certain satisfaction dreaming about such things, but is this really how rich people spend their time?

I highly recommend you check it out if you are at all interested in someday becoming wealthy. You might be surprised to learn that most self-made millionaires are extremely frugal. In fact, out of all the millionaires they profiled, the most wealthy drove the oldest cars and had smaller homes compared to their peers.

Here are some of the most surprising tactics used by millionaires to manage (and grow) their money.

Spend Time Researching Investment Opportunities

On average, millionaires spend almost 20% of their income on investments. More importantly, these people spent time activity researching their investments. In other words, investing isn’t viewed as simply a retirement plan, but rather, one of the most important drivers of their wealth and future security.

Keep a Budget

Surprisingly, most millionaires have a budget and consider it important to stick to it. In other words, they have a plan. And in the end, this really does make a huge difference. How many people do you know who actually keep a budget?

Don’t Buy Luxury Cars

Fact is over 80% of luxury cars are purchased by non-millionaires –that is, people trying to create the illusion of wealth.

its really surprising !!

How to Negotiate With Creditors ?

If you are struggling to make your credit card payments or to pay off other debts, it may be time to start negotiating with creditors in order to avoid bankruptcy proceedings. You need to be prepared though, as they are used to people requesting some sort of concessions in negotiations and very good at avoiding them.

Keep in mind that while you’ll only be going through this negotiation once, the person you are negotiating with probably does it for a living. That means that you need to be prepared.

The first thing that you can do is make a budget and figure out how much you can actually afford to pay your creditors. Obviously, you have to be able to cover your normal bills, and they should realize that if you are unable to do so it is impossible for you to get out of debt.

At the same time, figure out how much you think creditors may be willing to let you out of. A good rule of thumb is to start around 50 percent of the bill, because creditors will rarely let you out of much more than that. Start the process by calling your creditor and making an offer. Make sure that you tell them that you cannot manage to pay off the original amount, but can pay a percentage.

Depending on the situation, you may propose a payment plan or a lump sum payment. If your offer is rejected, you’re going to begin putting on your game face and working your way up the chain of command on the other and of the line by asking for a manager. 

If you are able to come to an agreement, make sure that you get it in writing so that you do not have any legal problems down the line. Ask them to mail you a hard copy of any agreement so that it can be signed and saved.

One thing to try to throw into the negotiations is to have your creditor remove any negative comments on your credit report once the debt is settled, which will help to preserve your credit rating.

If you get stuck at any point in the process and your creditor is not being receptive, it may be worthwhile to throw the “bankruptcy,” word out there. Creditors know that if you go through bankruptcy, they will get nothing. They should prefer your offer to nothing at all.

source-secondary