Glossary

Asset Classification (AC) – It is important to note that some banks report DPD as per the Asset Classification norms defined by RBI, which are as follows: 

                         



Actual Payment Amount – Is the amount you have paid to you lender if it is different from the EMI Amount. This may be more or less than the EMI Amount.


Amount Overdue - Indicates the total amount that has been paid to the lender in a timely fashion (includes principal and interest amount)


Cash Limit – Applies to credit cards specifically, It is the amount of cash you are permitted to withdraw from your credit card.


CIBIL – Credit Information Bureau of India Limited


Credit Information Reports (CIRs) - A report on a loan applicant’s willingness and ability to make payments in a timely manner in the past.


Credit Rating (CR) – A judgement of a person’s ability to repay debts. The rating is often based on a person’s current and projected income and past debt payment history. Also called a credit score.


Credit Score – Is a number, between 300 and 900, that reflects a person’s credit history.


Control Number (CN) – This is your report number and is essential if you need to raise a Dispute Requests.


Collateral – Is provided to a lender as security to protect the lender in the event you are unable to repay your loan. This may be property, shares, gold, etc.


Credit Limit – Applies to credit cards and overdraft facilities. It reflects the total amount of credit you have access to with regard that credit card or overdraft facility.


Creditworthiness – The ability of a consumer to receive favourable consideration and approval for the use of credit from an establishment to which they applied.


Current Balance – Is the amount you still owe on a particular c credit card facility. Lender, typically take 30-45 days after your payment is received to update this information with CIBIL.


Dispute – If a consumer believes an item of information on their credit report is inaccurate or incomplete, they may challenge, or dispute the item. CIBIL will investigate and correct or remove any inaccurate information or information that cannot be verified.


DPD (Days Past Due) – DPD or Days Past Due apears in the Account information section of your CIR. The DPD indicates how nary days a payment on that account is late that month. Anything other than ‘000’ or STD is considered negative by a lender.


EMI Amount – Is the EMI (Equated Monthly Instalment) that you pay on the loan.


Enquiry – Enquiries are added to your report when you apply for a loan or credit card and the lender decides to access your CIR. Details such as the name of the loan provider size and type of loan are captured in this section. Please note that the date of the enquiry may differ from your actual application date because the lender may access your CIR a day or more after you have applied.


High Credit – Applies to credit cards and facilities. It reflects the highest amount ever billed (including interest and fees) for that particular credit card or overdraft.


Ownership – This field tells the lender who is responsible for payments on that loan or credit card. There are 4 types of indicators that can appear on your CIR:
1. Single: You are solely responsible for making payments on the accounts.
2. Joint: You and someone else bear joint responsibility to payments on these accounts. this wiIl also reflect on the other individuals CIR.
3. Authorized User: This is used for add-on credit cards that you may have. While this reflects on your CIR, lenders know that you are rot responsible for paying dues on that particular account.
4. Guarantor: A guarantor pledges to repay a loan on behalf of a third party who has taken a loan. Hence, he provides a guarantee to the lender that he will honour the obligation, in case the principal applicant is unable to do so.


Repayment Tenure – Is the term at your loan. This field is to be read with the ‘Payment Frequency’ field in order to accurately understand the term or the loan. For example, 120 at a monthly payment frequency would mean the term of the loan is 10 years.


Sanctioned Amount – This is the loan amount disbusmed is Applies to account types other than credit curds aid overdraft.


Settlement Amount – When an amount owed on a loan account in disputed, the individual and lender settle at some amount in between. lt’s what the lender believes is owed and what the individual believes he should pay. This is the amount the individual has agreed to pay. The rest of the amount (that the lender believes is owed) is written-off by the lender.


Suit-Field / Wilful Default – In case the lender has filed a suit against you, there is specific reporting prescribed by the Reserve Bank of India (RBI). This is as follows:
1. No Suit Filed (or the field will be blank); 2. Suit filed; 3. Wilful Default; 4. Suit filed (Wilful Default)


Written-Off Amount (Principal) – This field reflects the principal unpaid written-off by the lender. It follows that the difference between the total and principal written-off amounts is the interest amount that has been written-off on this account.


Written-Off Amount (Total) – When a loan is written-off there is an interest and principal component. This field reflects the total interest and principal amount written-off.


Written-Off and Settled Status – If this section is populated the lender has either restructured your loan by offering you different terms (extend the loan tenure or reduced the interest rate, etc) Written off this amount, or settled at some amount less than what the lender believes it was owed.
The possible values are as follows:
1. Restructured Loan; 2. Restructured Loan (Govt. Mandated); 3. Written-off (WO); 4. Settled; 5. Post (WO) Settled

Source: Secondary

Avoid home loan rejection this way.

Real estate is the most coveted investment instrument in the country. Buying a home, whether for investment or residential purposes, can take years to materialise and given the prices, few can afford to pay the money upfront. In such situations, buyers inevitably turn to banks for home loans.

Although the norms for approving home loans have eased in the recent past, don't expect it to be a cake-walk. One small mistake can result in you merely dreaming of the house, and never actually owning it. 

We look at factors that can play a crucial role in getting your loan approved or rejected.

                         

BAD OR LOW CREDIT SCORE

You cannot build a house if the foundations are flimsy, right? When it comes to loan approvals, banks use a similar analogy. If you have a low credit score, you will be denied a home loan out rightly even if you fulfill all other conditions. Credit score is considered to be the most important factor by the banks while disbursing a loan. 

Credit score reflects a consumer's behavior towards the financial transactions. In some ways, it is a mirror to his financial habits and underwriters base their decision and develop risk-based pricing based on the credit score.


So, if a person has defaulted or delayed the payment on any kind of loan or credit cards, it will have a negative impact on the credit score. Other factors like being guarantor to a person who defaults on payment of his loan can affect your credit report too if you fail to repay his loan. So, be very sure before taking up the role of a guarantor. There are credit rating agencies like CIBIL, Experian Credit Information Corporation of India, Equifax Credit Information Services and High Mark Credit Information Services that provide credit score to individuals. Once you submit your loan application, the lender seeks a copy of your credit report from the bureau. They analyse this not only for the credit score, but also to review the extent of existing loans / credit cards, performance of ongoing and closed loans. All these go in to the final assessment of your loan application.

A credit score provided by CIBIL is a three-digit TransUnion score which is derived from the credit history found in credit information report (CIR). A CIR is an individual's credit payment history across loan types and credit institutions over a period of time. It ranges between 300 and 900. It indicates the probability of default of a borrower based on their credit history.

To maintain a healthy credit score, one should ensure timely dues payment and avoid taking too many unsecured loans as it may be considered negative. But if the damage is already done, you can work towards improving it slowly. 

INCORRECT PERSONAL DETAILS IN CREDIT REPORT

Your credit information report contains your personnel detail, so wrong information can lead to a mismatch between the details on your loan application and credit report and hence lead to your loan rejection. If there is any change in the personal details, you must update your lender so that it is reported to the credit information bureau and is reflected in your credit report. Any individual can get the credit report for a nominal fee from the credit bureaus.

However, it is important to check the report for anomalies like a credit card listed in your report but not owned by you, or a loan on their name which they had never taken. Prospective borrowers can also apply directly to the credit bureau for their credit report for a nominal fee. This allows you to review the facilities listed against your name, seek corrections if you spot any anomalies like a credit card listed in your report which is not yours and to know your bureau score. All bureaus have dispute resolution forms on their websites which aggrieved customers can fill and send with relevant identification documents.

REJECTION OF LOAN BY OTHER BANKS

Some people tend to apply to multiple banks at the same time. However, remember that if your loan is rejected from one bank then it can have an impact on your credit score and hence lead to the loan being rejected by other banks too. It is better to wait for the reply from one bank before applying to another so that you know why your loan is rejected and get the same rectified.

NEW OR UNSTABLE JOB

Since the repayment of loan is of utmost priority to the lender, they would like to ensure that you have timely repayment capabilities when he disburses the loan. In case of salaried person a steady flow of income is determined by the stability of job. Since repayment of home loans is normally sanctioned for 15-20 years, stability of income in future becomes a necessary criterion to be assessed at the time of loan sanction. For example, if the borrower has a contract of employment with just eight months left in it, it is natural for the lender to enquire if the contract has been renewed in the past or whether the borrower holds any professional qualifications which would give comfort that alternate employment would be forthcoming.

It is a similar story when it comes to changing jobs. While it may give the buyer a higher income level, it gives a negative impression to the lender. It is generally advised not to change your job if you are planning to take a home loan in the near future. In fact, the financial strength of the employing company is also considered as one of the factors for the evaluation of the application. People working in a proprietorship company, having less than 50 employees & not having provident fund facility, face issues in getting a home loan.

AGE FACTOR

Age is one of the most important factors considered by the lender while disbursing a loan. Typically, they put a minimum age bracket of 23-24 years and maximum limit of 60-65 years for loan applicants. Assuming a 22-year-old, who has been working for the last three years, applies for a home loan and the qualifying criterion for that lender is a minimum age of 23 years with at least two years of continuous work experience, the lender would in all probability turn down such an application.

APPLYING WITH RELATIVES OTHER THAN SPOUSE/PARENTS

If you want to get a home loan of a higher amount, clubbing the income of your spouse is a good option. But while banks allow clubbing of income of the spouse, father and son, the same does not extend to every family member. Some banks are skeptical of clubbing the income of the siblings because in case of a dispute, the EMI could be delayed. Clubbing the income with any other relative is not allowed. Also, a co applicant can't be a minor.

LOCATION OF THE PROPERTY

Banks also make their decision to disburse loans on the basis of the project's location. Take for instance, Noida Extension, where a number of projects suffered due to lack of clearance and acquisition disputes in 2011. As a result, a number of public sector banks stopped sanctioning fresh loan sanctions in the area, as per news reports. All lenders have limitations with the geographic locations. If the property is beyond such limit, the loan will get declined. The technical valuation of properties in remote locations may also be lesser than the purchase cost; banks do try to cover the risk of funding in an under-developed area on case-to-case basis.


UNSATISFACTORY EVALUATION OF THE PROPERTY

You must ensure that you are buying a house at a price which is close to the market price. This is important because the bank does the valuation of the property itself and will give a loan of upto 80% of the property value after considering other factors like your repayment abilities.

UNCLEAR PROPERTY TITLE
In the event that the property does not have a clear and marketable title, or there are issues connected to the approvals from the relevant authorities, normally banks or home finance companies keep the loan sanction letter valid till the customer finds another property which has clear title and approval. So, before buying a property you must ensure that it is not involved in any dispute.

LACK OF REPAYMENT CAPABILITIES

Banks ascertain your repayment capabilities before disbursing the loan. It depends on the disposable income that is left in your hand after paying off existing EMIs. Banks generally give a loan which amounts to an EMI of upto 50% of the disposable monthly income. So, first assess your repayment capabilities before applying for a loan.

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

Is your physical health included in your credit offer?

When we talk about credit, we are often referring to financial health. Fair or not, your credit history is considered a very real peek at your financial health. If you have poor credit, you are assumed to also have poor financial health.

But what if your credit history provided more than just a look at your financial health? What if your credit was also an indicator of your physical health? 

Attitudes and actions that lead to poor health — and credit

One of the reasons that there appears to be a correlation between poor credit and poor health has to do with the attitudes and actions that lead to these issues. According to the study, which used data from more than 1,000 people followed over the course of 40 years, self-control, cognitive ability, and educational attainment are factors that influence both cardiovascular health and credit history.

                                  

The bottom line? If you practice poor impulse control, and if you engage in habits that are likely to damage your health, or even just avoid actions that are good for your health, there is a pretty good chance that you aren’t very observant of good basic behaviors in your financial life, either. And that can lead to credit problems.

According to the study, the human capital factors that predicted both credit scores and risk for cardiovascular disease accounted for about 45 percent of the correlation between credit scores and cardiovascular risk. While it’s not exactly a huge endorsement of the link between health and credit, it’s still a pretty big deal. It indicates that your health habits and your money habits are probably more connected than you thought.

Source: Secondary

Know about your child’s credit report

You know that you need to teach your child about finances early on. But while you teaching your child the importance of budgeting and saving up for goals, chances are that your child’s credit report doesn’t come up.

However, you could be making a big mistake by not keeping tabs on your minor child’s credit history. Children’s IDs are attractive to criminals because they know that most children have no credit. They are working with a blank slate when applying for credit.

If you don’t watch out for your child’s credit history, there is a good chance that he or she could enter adulthood with negative credit, thanks to unpaid debts racked up by criminals looking to cash in.
                                            

Why your child’s credit is vulnerable?

Today, much of the credit process is handled electronically and automatically. You can apply for a credit card online, have it sent to your address, and never see a person face-to-face. It’s even possible to use a minor’s Social Security number to apply for credit offline. When you give a number in a store, looking for a financing offer, what you give is run through electronically, and many associates only see whether or not you are approved, and what kind of financing deal you can receive. 

This makes it relatively easy for scammers to steal your child’s ID and do a great deal of damage. After all, most of us don’t even check our credit until we apply for our first credit card. Your child might not even realize something is amiss until his or her early 20s. 

It is not very common to have any credit protection as a minor, so the theft will go undetected for a longer time. 

Another issue is the fact that many kids are online with their lives. 

From gaming to social media, children are online, and interacting with others. And, because kids are often much less guarded than adults, it’s relatively easy to get information from them that can be useful, even if it isn’t a Social Security number.

“Parents now must worry what their children are doing online, and what others may be doing to them online. Parents must start protecting their children from these crimes.

How to protect your child’s credit?

Most parents don’t think to check their children’s credit reports; many parents don’t even check their own credit regularly. This is a big mistake that needs to be remedies. The best way to detect child Identity theft is to have their credit monitored, just like an adult’s. 

Additionally, watch for suspicious signs that your child’s credit might be compromised. There have been stories in the news about children who receive credit card offers — and who have even been approved for credit cards. And, even after the passage of the Credit CARD Act, there are still stories of minors receiving credit card offers. Receiving these offers might be a sign that someone has used your child’s identity to obtain credit.

Also, it’s possible that your child has a credit report for less nefarious reasons. If someone sends your child a gift, ordered online and sent directly to him or her, the name might be on a marketing list that could then be sold to creditors looking for potential customers.

Once you start monitoring your child’s credit report, you have a better idea of what is going on with it. You can request to have a freeze placed on the report, so that it’s more difficult for new credit to be opened in your child’s name. With a freeze on the credit report, you should be contacted for verification before new credit is issued.

Monitor as much as possible so you can catch problems right away. Once you have found a discrepancy on the report, handle it with the company and the credit reporting company.

Visit: www.cibilconsultants.com
Source: Secondary

Insight of your Credit Report!

Your credit report is one of the first places you need to go to check in on your financial health. Why? Not only is your credit report the place of record that outlines your entire credit history, but this report can provide you important information if something seems “off” on your credit score or if you’ve recently been denied credit.

Yet despite your credit report being so important, it’s a very difficult thing for the average person to read. Your credit report is multiple pages in length, there is a ton of information and numbers to sift through and it’s hard to know what to look for if you are looking for any sort of error or unknown account in your credit history.

                             

Just what exactly is in your credit report and how do you read it? Here is a breakdown of some of the basic information found in your credit report and what each section means:

Report Number and Index: This section is all about navigating your credit report if you view it online or if you need to talk to someone about your report on the phone and you need your report/reference number.

Potentially Negative Items: Your credit report will show you if you have any potentially negative items. These include accounts that are unpaid or accounts that were paid past the due date. Negative items on your credit report may stay there for up to 7 years.

Status and Payment History: Your status and payment history shows if you have any on-time and late payment of your debts or credit items.

Accounts in Good Standing: Accounts that have a positive status and are considered in “good standing” are viewed by creditors as a good thing on your account.

Accounts Types: This tells you the type of loan and whether it is revolving (like a credit card) or an installment loan (like a car loan or student loan).

Soft and Hard Inquiries (Requests for your credit history): Your credit report will show how often someone has checked your credit history, also known as inquiries. A soft inquiry is when someone checks on your credit as a background check; this does not affect your credit score. A hard inquiry is when someone checks on your credit history because they are going to make a lending decision; this does affect your credit score. Hard inquiries can remain on your credit report for up to two years.

Personal Information: Your personal information is an obvious piece but a very important one. This includes things like your name, social security number, address and phone number. If it’s not accurate, your information (and therefore your credit history) could be mixed up with another person’s.

Personal Statement: Did you know that you can add a statement to your report? Sometimes you may want to add a personal statement if you have disputed an item on your credit report and it has not been resolved or to explain the situation behind an account in collections. You can do this by contacting the credit bureau.

Visit: www.cibilconsultants.com

Source: Secondary

Divorce can affect your credit score!

In many marriages, one spouse pays little to no attention to the household finances. But if the marriage is coming to an end, both spouses need to be concerned because divorce can have a substantial impact on both of their credit ratings.

The act of divorce itself doesn’t impact your credit. But divorce is rife with financial issues, and the division of assets and debts can have a huge impact on the credit history of both you and your spouse.

Perhaps the main impact of divorce on credit involves joint accounts. A divorce decree will spell out who is responsible for which accounts, but it will not actually remove one spouse or the other as an account holder. Thus, it is still up to you or your former spouse to remove the name of the person who is no longer responsible. The person who is no longer responsible for the account should ensure that his or her name is removed, particularly from any jointly held debts, so that he or she will not be liable in the event the other spouse fails to make the required payments. Failure to ensure the removal of your name from such accounts can negatively impact your credit for a long time, even if your spouse’s actions occur years after the divorce is settled.
                               

Your liability for debts incurred during your marriage may depend on the law in the state where you reside. In community property states, such as California, the law presumes that you and your spouse are entitled to half of what the other earned during the marriage, and are responsible for half of the debts incurred. However, in equitable distribution states, the law requires that assets and liabilities be distributed equitably and fairly between both spouses.

During divorce proceedings, while your name is still attached to jointly held debts, you should ensure that timely minimum payments are made toward each debt, in order to protect your credit history. Even if your spouse has historically made those payments during your marriage, he or she may not continue to do so during the divorce. If the divorce decree provides that your former spouse is required to make payments on accounts held in your name, you should monitor the activity on the account closely to ensure that the payments are made, since the lender will still hold you responsible and it will be your credit that is impacted by any failure to make timely payments.

Another area that is significantly impacted by divorce is each spouse’s income. What is affordable when two spouses’ incomes are pooled is often not affordable when the same amount of income must support two separate households. This may be particularly true when children are involved and one spouse keeps the family residence, with the same mortgage amount and living expenses, while the other spouse must acquire and maintain a new, separate residence. You will need to ensure that you can manage to pay all necessary expenses subsequent to the divorce, or you may find yourself falling behind on payments and that will negatively affect your credit.

Your good credit may be extra important in the event of a divorce, since it will be the sole basis on which lenders will decide whether to grant you a car loan or mortgage. Prospective landlords may consider your credit history in determining whether to lease you a new home. Therefore, it is extremely important that you do what you can to protect your credit during your divorce.

Source: Secondary

Credit card offer for you!

“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,  suggests 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,” 

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.
                      

 Perks that come with a credit card should also be considered. 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?” he says. “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.  That 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.”
Using tools like  can also help you identify cards that you are more likely to qualify for. This provides you with a realistic idea of what to expect.
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

Responsible credit without using debt!

Not everyone wants to utilize debt as a way to build credit responsibly, but most advice available on building credit relates to taking out a loan, or using credit cards to prove good payment history.
As a financially savvy and responsible spender, how are you going to establish or rebuild credit without leveraging debt to do so? Below are three smart but unconventional ways to build credit without using debt. 
Pay Your Rent
One of the main ways to build a solid credit history is to use an online service to pay your rent each month. William Paid is one of the many services available that reports your payments to the top credit agencies.
As long as your monthly payments are consistently paid on time, you can use it as an alternative way to build or rebuild your credit.
                                   
Get a Secured Credit Card
Don’t worry, a secured credit card works differently from a traditional unsecured credit card. Instead of receiving a line of credit from a credit card company and having the temptation to max out the limit, a secured credit card requires an up-front deposit that becomes the card’s credit line.
Your cash is used as collateral against the purchases made on the card, so it’s more difficult to get into credit card debt.  

Your account will be reported to the major credit bureaus, just like a traditional credit card, and help build credit more responsibly while avoiding accumulating debt.

Pay Bills on Time 
The most responsible way to build credit is to pay all of your bills on time. This includes things like rent (mentioned above), utilities, cell phone bill, cable/internet bill, etc. Start by getting at least one type of bill in your name and make consistent on-time monthly payments. 
They allow you to establish credit in alternative ways by simply paying your bills. Aside from the traditional utilities bills, this can include payments for medical bills, tuition, day care, and more.
They create a report that tracks payment history, which can be used when applying for a loan at a financial institution. It’s a little unconventional, but living a debt free lifestyle is worth the out-of-the-box thinking.

Build Credit Without Using Debt
You don’t always have to use debt products to build credit and establish a good history of paying bills on time, it just takes a bit of unconventional thinking.
Use these three ideas to prove a good history of credit and up your creditworthiness in a responsible manner, and watch your credit score increase the right way. When you’ve been in debt, and worked towards paying it off, the extra time and energy is definitely worth a debt free lifestyle.

Source: Secondary

Check- Check! Credit Check!

When you think of a credit check, chances are your thoughts jump to loan transactions. After all, the point of a credit history is to provide context for your past credit transactions as a way to predict the default risk you pose to a current lender. The reality, though, is that your credit profile is used for other financial transactions.
Just because you aren’t borrowing money, it doesn’t mean that your credit information isn’t being used to make judgments about your level of financial responsibility. Here are five non-loan financial transactions that may require a credit check:

                           

1. Cell phone service

A person recently signed up for new cell phone service. Before the company would open an account for him, they ran a credit check. This isn’t unusual, many carriers want to make sure you’re going to pay your bill as agreed. Others worry about letting you walk out of the store with a phone that will be paid for in the service contract.
Poor credit means that you may be limited in account choices. “You may only have access to an account with strict data usage and calling limits if you have a poor score,” . Additionally, if you want to upgrade your phone later, your carrier might make you pay for the upgraded phone up front, rather than letting you make installment payments.
Some Internet service providers and cable/satellite TV companies also run credit checks before opening accounts for new customers. If you expect to access entertainment in this way, you need to be aware of the possibility that your credit history will be accessed and used to judge you.

2. Insurance premiums

“Many auto insurers review credit scores when setting rates,”  “Poor scores are highly correlated with future claims insurance. You may pay more for car insurance if you have a poor score.”
Some states ban insurers from using credit scores to make these decisions, but there is still the chance that you could pay hundreds of extra dollars a year on your auto policy as a result of your credit situation. 

3. Renting an apartment or a home

Even though you aren’t borrowing when you rent an apartment or a home, the reality is that you are still expected to make regular payments. For some landlords, a poor credit rating could be a red flag that you will be difficult to collect from. You might be turned down for some housing situations if you have a poor score. 
You might also need to get a cosigner for your lease if your situation isn’t up to scratch. In some cases, you will be approved to move into the rental, but you might need to make a larger security deposit. This can be difficult if you are short on ready cash.

4. Applying for a job

Even your ability to earn an income can be impacted by your credit history. Employers aren’t supposed to check your credit score, but that doesn’t mean that some won’t look at your credit report to identify possible risks. “This occurs most frequently for jobs where people handle money or other valuable items,”  Someone with a bad credit report might be considered a risk of embezzlement or bribes. “You may lose a good job opportunity if you have poor credit.”

5. Finding true love

Finding the right life partner is supposed to be about love and compatibility. It’s supposed to be romantic. However, there are also money components involved with identifying a life partner. “Many single people now exchange credit reports and scores before becoming serious in a relationship,” citing recent surveys that indicate that singles are interested in the financial viability of potential partners.
Even if your partner is willing to overlook your past financial indiscretions, he or she might be unwilling to combine finances with you until you get your credit score in shape. Even though marriage doesn’t have to mean that you share a credit profile, many partners are wary that your situation could affect them.
In the end, you need to be aware of the fact that a credit check isn’t just for loan-related financial transactions. Attempts to include other information in credit reports and scores are under way, since utility payments and rental payments can also be indicators of your level of financial responsibility. However, for now your credit profile is still one of the main ways that others — even non-lenders — decide whether or not you are an acceptable risk.

Source: Secondary

How to use a credit card?

Keep control of your cards instead of letting them control you. Cleaning up your credit card debt takes time and self-control, but the steps outlined here aren’t difficult. There’s no reason that credit cards can’t be a helpful, convenient tool – assuming you can learn to use them sensibly and responsibly. Use these simple tips to stop adding to your existing credit card debt and start regaining control of your finances.

To start with credit

While getting started with your credit card, don’t make maximum use of credit card immediately.  Instead, make small charges on your credit card and pay the balance in full each month. The motto of a credit card isn’t to buy things you don’t have the cash for, but to begin building a good credit history and instill good spending habits.

Plan your payments

Manage to pay more than the minimum balance every time. It’s tempting to send in the minimum monthly payment when you’re under financial duress, but don’t do it. 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. Building a good credit score takes time so, doesn’t try to rush it. Use credit responsibly and a great credit score will follow.

Review your activity

Monitor your credit card statement thoroughly every month. Don’t take for granted that everything on your credit card statement is accurate. Go through each transaction on your card to be sure that: your last payment was applied correctly, you were charged the right amount for all your purchases, and there are no unauthorized transactions on your credit card.

Self- control

You’ll have to maintain self-discipline and stop yourself from using credit card to make a purchase, but can’t pay your bill in full at the end of the month. Make sure that you put money aside to pay your credit card bill on time and don’t spend it on something else. Initially, manage to use just one credit card, so you can keep a track of your payments easily. Several balances and due dates can cause confusing and lead you to debt and a damaged credit score.

Wise decision-making

Are you ready for bigger purchases? Make wise decisions about purchasing items you need versus those you simply want. Using your credit card responsibly means recognizing which things you need and which you just want. Once you’ve created a habit of paying your complete bill, you are better prepared to use your credit card for slightly larger purchases.

Source- Secondary