How to maintain a good credit score?

You might be known that loan applications often get rejected due to less credit score. Have you ever thought what leads to constituting your credit score? Keep in mind, only repaying your loans in time doesn’t edge a good credit score as there are other factors also which impact our credit history. A good credit history can be maintained by following these simple rules:

Pay your dues on time:

Paying your EMIs regularly helps in upgrading your credit score whereas a delay in payment negatively affects your credit score as well as your credit history. Making late payments are viewed negatively by the lenders and affect drastically the chances of getting your loan approved.

Use your credit limit wisely:

Don’t fully utilize your credit limit on your credit card. You must be careful not only about making payments in time, but also about using your credit limit. If you over utilize your limit, the negative it is for your credit score. It is always prudent to use up to half the limit of the sanctioned amount on your credit card. Avoid relying on borrowings and secure yourself financially while using lesser credit limit.

Uphold a healthy mix of credit:

Usually, a borrower credit history should sustain a mix of secured loans and unsecured loans. Secured loans comprises of Home loan, Car loan etc. whereas unsecured loans comprises of Personal loan, Credit card etc. If the borrower is defined to high mix of unsecured loans, then the risk of default increases. The indefinite credit history should contain a mix of a home loan, car loan and a couple of credit cards.

Regularly inspect all your accounts:

You should examine your co-signed, joint and guaranteed accounts monthly and ensure that all your loan repayments made in time. As a guarantor or co-applicant, you are held equally liable for missed payments. Remember, your joint holder’s negligence could affect your ability to access credit when you need it.

Avoid applying frequently for loans or credit cards:

Many inquiries for loans or credit cards may affect your credit score. The lender will take it negatively as the borrower behaviour shows ‘credit hungry’ and indicates that the debt burden is likely to or has increased and you may be less capable of keeping any additional debt. If you have made many applications for loans or credit card, it could reflect in your credit report which will lead a loan provider to view your application with caution.

Monitor your credit report timely:

Paying your dues in time does not initiate a good credit score. As some errors like inaccurate late payment may pull your score down. So, reviewing your credit information report frequently may ensure that your credit history reflects your current financial status accurately without any errors.

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

How joint loan affect your credit score?

Nothing is more troublesome than purchasing a house of your dreams or a car or when you have a big wedding coming up. It involves lots of hassles and money. For example, a home loan is usually the biggest financial liability in an individual's life, and thus needs to be carefully considered. Sometimes you may want to buy a house of greater value, but you may not be eligible for a huge amount of loan from the bank. This is where opting for a joint loan comes in handy. 

Here are some pointers about what a joint loan is and how it can affect your credit report and score: 

Why do I need to apply for a joint loan?

A joint loan is given to two or more borrowers. With more than one borrower, you have more income to pay the loan, and it may be easier to qualify for a large loan. Also, additional borrowers may have better credit history and more collateral to help you qualify. If you're married or would like to go in for a joint loan with either of your parents / siblings, it proves to be a more convenient approach to managing your money together. 

Responsibility of the co-applicant in a joint loan.

A co-applicant in a joint loan refers to a person, who applies along with the primary applicant, for a loan. This is done so that the income of the co-applicant can be used to supplement the borrower’s income and increase his/her eligibility or credit limit. As a co-applicant, you are completely responsible for the loan if your partner defaults or under any circumstances is unable to repay the loan. Therefore a co-applicant’s credit score is also checked by lenders before deciding on the loan application. If a co-applicant’s credit score is low, it may negatively impact the loan application. 

Both the borrowers’ credit score is affected by a joint loan 

A joint account is reported on both individual’s credit reports. This is where issues arise resulting from differences that states who is responsible for paying the debt. If the responsible party does not pay on time or does not pay at all, that is reflected on the other party’s credit report as well. In addition, creditors can come after both parties for payments and collections. For example, in a divorce even if the divorce settlement stated who was responsible for the debt, it won’t apply to the original agreement with the creditors, which listed both as responsible for the debt. On the other hand, both the borrowers’ credit score gets negatively impacted in case either of the partners default on the payments of the loan EMIs. Hence, it’s imperative that both borrowers on the loan should ensure paying the EMIs regularly on the due date, month on month. 

With a fair understanding of the benefits of opting for a joint loan, given below are some Do’s and Don’ts one must consider before applying for a joint loan: 

• Insist on having co-owners to be co-borrowers of the loan. However, the reverse is not necessary, banks do strongly suggest to have same person to become a co-owner and a co-borrower 

• Though a joint loan requires both the applicants to furnish the necessary Know Your Customer (KYC) documents, make sure you check your CIBIL credit score and analyze your CIBIL credit information report before making the decision.

Get your credit score and a hassle free loan. Just consult doctor for all your financial worries at www.cibilconsultants.com

Source: Secondary