Ignorance: Credit damaging factor

Mr Rajeev had a well-established business. Being the only child, he, with the support of his father, consolidated his family business. Rajeev maintained good ties with people as well as with his bank. As he kept a huge balance in his account and made big transactions, he was a prominent customer of the bank. The bank handled all his issues, which helped him to concentrate on his business better. At some point of time, Rajeev planned to expand the business abroad. But for doing so, he needed a huge amount of fund.

                           

As he was a prominent customer of the bank, he was confident that the bank will finance the intended expansion. But the bank rejected his loan application.Rejected? How can the bank reject his loan, he was a prominent customer? The reason for denial was stated to be Rajeev's low credit score. With such a credit score, even if he had applied for a smaller amount of loan, the bank would have refused that as well. Had Rajeev been ignoring his credit health?

Did his plan of expanding the business abroad end here? Did Rajeev become successful in improving his credit score and credit health?

Nowadays, people are not aware of credit score. They are least interested. People do not consider these factors important. They do not even know the meaning of credit history. According to a recent survey, above 90 per cent of the respondents were not aware of their credit scores.

Credit score is a three digit number which ranges from 300 to 900. It is considered that a score of 750 and above is a good one. The credit score is decided by the credit bureaus. Banks provide all the information of an individual to these bureaus to check the creditworthiness of an individual. With the information provided by the banks, the credit bureaus calculate the credit score. Unaware of his credit score and credit history, Rajeev was irritated and depressed. His low score and poor credit history restricted him from getting loan for expansion. Not only his bank, but other banks as well denied to grant him loan. Afterwards, Rajeev contacted many financial advisors but in vain. On discussing his problems with a good business client, he was suggested to contact a good credit health improvement company. Rajeev was also unaware that there are organisations who help individuals to improve their credit health. These companies assist individuals not only to restore a bad credit health but also teach them how to maintain a high credit score for future.

Source: Secondary

India: Third Most Affected Nation By Online Banking Malware

Growing Internet penetration and rising popularity of online banking have made India a favorite among cyber criminals, who target online financial transactions using malware, security solutions provider Trend Micro said. According to the firm, India ranks third after Japan and the US in the tally of countries most affected by online banking malware during the April-June quarter of 2014.

Japan topped the list with the highest number of online banking malware infections this quarter due to VAWTRAK. In May alone, it saw 13,000 malware infections. The US saw about 5,000 malware infections during the month, followed by India at 3,000 attacks.

"India posed for cyber criminal expansion with an average of 2.5 million malware detection in a given month. Also, 33 per cent more malicious apps were downloaded and network traffic from affected computers continued to rise," TrendLabs Director Myla V Pilao told PTI. TrendLabs is Trend Micro's research and development center. These and many such incidents show that cyber criminals will always adapt to new trends and situations whether in the use of new malware or targeted attacks techniques to continue their attacks, she added. 

She said the severity of attacks has intensified against financial and banking institutions as well as retail outlets globally.

"Total attacks have exposed more than 10 million personal records as of July 2014 and that strongly indicates that organisations need to adopt a more strategic approach to safeguarding digital information," she said. Such incidents often lead  to stealing of consumer's personal information like customer names, passwords, email addresses, home addresses, phone numbers, and date of birth.

These types of personal privacy breaches have affected organisation's sales and earnings, while leaving customers unable to access accounts and dealing with service disruption, Pilao said. "The pace of change in technology sector has never been as rapid as it is now, and as a result we see firms struggling to keep up with the latest developments," she said. Pilao added that it is essential that Indian businesses treat information security as a principal constituent of business  strategy as time and again it has emerged as one of the top countries witnessing cyber crime. 

"The incidents observed during this quarter further establish the need for a more comprehensive approach to security," TrendLabs Director Myla V Pilao said. 

A report by another security solutions firm McAfee said India is the fourth most affected country in Asia, with 786 phishing domains and 1,557 servers hosting suspect content. Also with 145 spamming domains originate from India, the country is the eighth most affected country in the Asia Pacific region.

According to government's cyber security arm Computer Emergency Response Team-India (CERT-In), 62,189 cyber security incidents were reported in the first five months of the current calendar year. Also, till May this year, 9,174 Indian websites were hijacked by various hacker groups spread across the world.

Learn about identity theft at www.cibilconsultants.com

Source: Secondary

Learn how your business credit cards affect your CIBIL score?

Yes,Every business credit card affects your credit report. But how they affect your credit report depends on you- more specifically, how you choose to handle your company's decision to grant you a business credit card.

Only having business credit card will not improve your credit score. If you're paying your bills on time with your business credit cards, you can expect your credit score to be improved in your credit reports. But if you're not paying on-time, it will harm your credit score.

Personal and Business credit: New businesses don’t have a lot of their own credit history. You may not have built up specific credit accounts related to your business name - that's why you're looking for a business credit card in the first place.

Lenders will routinely look at personal credit for new business owners who haven't yet established their own enterprise. That shows having a good score will benefit you a lot, and help you dedicate yourself to repay borrowed amount.

Personal Credit History: You will be surprised to know that, having no credit in the past, also might count against you on some card applications. Lenders routinely run a simple credit report for a potential borrower. There are a lot of issues that can come up on this credit report, that may stand in the way of your loan or business credit card.

If you have someone is consignor on a loan with you, that can be a potential solution, but those individuals have to know what they are getting involved in, and it's up to you to reassure them that the situation won't end up as loan default and complications. You can also shop around and try to find lenders who will take the time to scratch the surface of your credit history.

Source: Secondary

Keep business credit separate from your personal credit

For many entrepreneurs and solopreneurs, it’s common to create a business with personal financial resources.For someone with a solo business and no employees, it’s especially tempting to use  business financial resources as  personal financial resources. After all,income is  family’s income. It all goes to the same place, so it doesn’t matter if it’s a little mixed up, right?

Actually, it does matter. Keeping your business finances separate from your personal finances is important if you want to make things easier for you, and reduce trouble come tax time.

Protect your personal finances from your business setbacks

When you first start with your business, your personal assets do matter. You might need to use your own capital for startup costs, and there is a good chance that your personal credit will be used in the decision to extend your business credit for the first time.

However, as your business grows, it’s important better define the line between you and your business. There is a level of protection for your personal finances when they are separate from your business finances.If your business is structured properly, and your finances are separate, a setback for your business doesn’t have to become a setback for your personal financial situation.

A good example of the importance of keeping your personal and business finances separate comes from Robert Kiyosaki, the author of Rich Dad, Poor Dad, and the owner of multiple businesses. When one of his companies announced bankruptcy a couple of years ago, his own personal fortune was protected. Even though one of his businesses had financial issues, the fact that Kiyosaki kept things separate meant that his own individual resources weren’t impacted.

This can even apply in the event of a lawsuit. If someone sues your business, and it is properly organized and legally separate, your personal assets might be protected from the consequences of the litigation. 

The same can be applied to credit. As your business grows and develops its own credit history, you can separate your personal credit from your business. That way, if something happens to your company, and your business credit is tarnished, it won’t have as big an impact on your personal situation. The protection can work both ways; you can protect your business finances to some degree from your personal financial setbacks when you keep your business credit separate.

Consult with a knowledgeable business organization expert, attorney, or accountant as you work toward creating a separate financial profile for your business. 

Better records for your business

Another good reason to keep your business credit separate from your personal credit is for record keeping purposes. If you use your personal credit card to purchase business supplies, it’s harder to show the separation, especially if your business purchases are buried on a receipt with several personal expenses. What happens if you are asked to show documentation during a tax audit, or for some other reason? Using your business credit for business purposes and keeping it separate from your personal financial uses can help you quickly and easily track your expenses.

It can also make record-keeping easier for your own purposes. Keeping track of payroll, business purchases, and other overhead costs is much easier when you have separate accounts for business. You can quickly and easily track spending trends and plan for the future when you maintain separate accounts. 

Build business credit 

Building business credit is often difficult. Initially, you will be required to provide personal information, and you might need to a personal guarantee a business credit or loan. However, once you have your first business credit account, do what you can to build a credit profile for your business. Using your business credit card wisely, and not overdrawing your business checking account, can help boost your business credit reputation.

As your business establishes its separate credit profile, eventually it will be able to get credit without your personal guarantee.

Even if you operate as a sole proprietorship, it can make sense to at least open a business bank account and use it for income, and for business expenses. You can “pay yourself” out of your business account, and that will also create another layer of record-keeping that can serve you well at tax time. 

Even though you feel like you are your business, especially at the start, it’s vital to build those walls,. It makes things easier for you, and it can also provide your personal finances with protection against business catastrophes.

Maintain your credit profile with a good credit score. Visit www.cibilconsultants.com

Source Secondary

How much debts are beneficial for you ?

Debt is an important tool which helps you finance large purchases, open a business or even help build your credit score. It is a topic on which different people have different opinions; some find it acceptable till the time you have enough resources to pay it back while some think it is not necessary and that it would become a big liability on your finances.

But we have to remember that debts do help you finance big purchases when you don’t have enough cash flow and it also forms a big part in shaping up your CIBIL score, we just need to know where to draw the line. But when debt become too much? Till How much debt is beneficial for your credit health?

There are guidelines by the lenders on how much debt you should have. Your debt shouldn't exceed a certain percentage of your income. You should have enough income to cover off your debts as well your interests.

When you start missing out on payments, work overtime to pay off your debts, use up your savings- that’s the time when you have crossed the ‘beneficial debt’ line. The debt is no longer beneficial to you and it would start harming your credit score now. Till the time you use it responsibly, debt is a great credit tool but if not it becomes a big dent in your finances.

Before taking additional debt, keep these points in mind.

• The most important one- you should have enough income and savings to cover your payments for the debts( including interest)

• Always go into debt when you are confident you receive a ROI (return on investment).  If you don’t get  good returns, there's no point in going for the debt. Research well on the debt’s ROI value before you go for borrowing.

• Check if you are qualifying for a good interest rate. Calculate the overall charges in the long run. For e.g. - if getting a house at a low interest rate would be better than renting. If you are not getting a good competitive rate, then take a little time look at your options or if you have a bad credit score, rebuild it and then go apply again.

If you'll follow above mentioned measures, then the debt you are going for is not too much, but if you can’t then that debt is obviously gonna too much.

Repair and enhance your credit score by just selecting suitable package available at www.cibilconsultants.com

Source: Secondary

Make your business creditworthy !

Is your business credit worthy is one of the main things asked when you apply for a loan or credit card. Here are some ways to make your business credit worthy-

Make yourself personally creditworthy:
Your personal credit score pays a big role in building your business creditworthiness. If it is low, you should focus on repairing it. Pay off all your dues on time i.e. any past amounts which are due and/or also those in process of collection. Pay down any revolving balances on your credit cards and in future try to avoid carrying such debts. If that is not possible for you, then make sure you pay more than the minimum amount which is due and also make these payments on time.

Establish a separate business identity:
As and when your business starts getting settled and well established and you are looking for specific credit score for your business, then set up a separate business entity from your personal affairs. Get advice from your legal advisor or attorney on which would be the best possible legal structure for your business. Register for a federal tax ID or an EIN (employee identification no) in your state. Then lastly, establish a business banking relationship to segregate your business from your personal finances.

Establish separate credit record for business:
After you've set up a separate business identity for your business and been there for a while, you would like a separate credit record different from your personal credit record, for your business too and for this you need to apply for a separate credit card for your business.

Keep up with your business credit reports:
Most businessmen say they don’t get time to check their business credit reports when in reality they are just afraid to check them. You should not be afraid because the faster you would check the reports, the sooner you’ll be able repair them or fix any discrepancies you find. The credit reports should be checked at least annually to make sure there are no mistakes; if you have a frequently changing business situation then check them quarterly. Get your most recent credit report when applying for a loan.

Keep checking up with the credit rating:
Keep checking up with the credit rating about your reports. If you find any inaccuracies or error in your business credit reports, report to the credit bureau directly and challenge them.These bureau are supposed to contact the lenders with the incorrect information; the creditor would then, either contact the credit bureau and correct the information or would respond to you, explaining their reasons on why they do not agree with you on issue of the disputed payment.

When you settle this issue, your credit score is most likely to go up. However, keep checking it till it does.
Now that your credit score has improved it would also improve your credit worthiness. This credit line can be a safety net for your business, as it makes sure that you have required cash for your day to day business activities and for handling an emergency.

For any assistance regarding credit scores and report book an appointment now only at www.cibilconsultants.com

Source: Secondary

How to maintain good BUSINESS credit score ?

You don’t only have a personal credit score-If you own a business, there is something known as a business credit score too. It is on the basis of your business credit report that lenders determine whether to give credit to your businesses.

Managing credit for your businesses is very challenging for small business owners. Lack of knowledge makes them commit various mistakes like using personal credit cards for business transactions, missing out on small business credit opportunities etc. thereby affecting the credit worthiness of their business.

Don’t close your old accounts: 
Unlike, how it is said in personal credit to close unused accounts, in business credit it is recommended to not close unused accounts. In business credit score, the more accounts (even if they are unused) the better. The more accounts you have, the more credit you can borrow in future. Closing unused accounts reduces the amount of credit you have available therefore reducing credit utilization ratio and also your credit borrowing limits later in future.

Keep your financial accounts updated:
Though this factor doesn't directly affect your business credit score but if you have applied for any credit, lenders may seek your balance sheets and check whether there are any differences in the actual revenue and the revenue you claimed in your application. This can have an effect on your credit limits and in some cases even the loan amounts.

Evaluating your company’s structure: 
Though sole proprietors firms and partnership firms are the easiest firms to create but they have the most financial constraints. You have to keep evaluating the structure of the company as it may affect your credit score.  

Don’t apply for multiple credit obligations:
Your business credit score can be negatively affected if you apply for multiple credit cards or loans in greed of discounts and increasing your credit history. Too many applications will give you the ‘credit hungry’ tag by the lenders and more credit checks i.e. ‘hard inquiries’ will be done against you, thus hurting your credit score.

Balance transfers:
As said, the more accounts you have the better. But managing multiple accounts become a little hard and sometimes balances remain on some cards. Try to pay off all your balances and if you can’t there are some banks which offer transfer balances at 0% for a certain period of time to pay off the balances.

Source: Secondary