Find your credit score

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

CIBIL implications on you

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

Low your interest outflow with good score

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

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

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

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

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

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Coping with closing credit card correctly or not?

Credit cards are the easiest way to fall into a debt trap, i.e. a situation in which you borrow just to maintain your existing borrowings. There could be plenty of reasons to close your credit card: you have many cards, your card issuer increased rate of interest or maybe you don’t want to keep a credit card somehow. Any credit card cancellation must be in accordance with the banks exit policy or else it can come back to haunt the individual for pending dues. Before taking an initiative to close your credit card, find out whether closing that card affect your credit score. Undertake the following steps to close your credit card in the right way.

Pay Off the Balance

The bank will close your credit card only after it is free of any pending balance which is due to the bank. If you can, pay off the balance on the credit card before you close it. This will lessen the impact to your credit score and give you one less credit card balance to worry about. You can close a credit card even if you still have a balance, but your credit score may suffer. And, you’ll still have to make regular monthly payments (at least the minimum) until you’ve paid off the balance. Pay off your pending amount and keep a record of the payments made for future use in case of any dispute.

Communicate with the Customer Service

Once you have decided on which credit card to close first, the first step is to call the concerned customer service and intimate them about your closing card request. Call your credit card’s customer service using the phone number on the back of your credit card and follow up the request using a written communication either directly or through an email. Don’t be surprised if the representative tries to talk you into keeping your account open. For example, they may offer to lower your interest rate or enroll you in a rewards program. If you’re sure you want to close the account, don’t allow yourself to be convinced otherwise.

Check Your Credit Report

Review your credit report to make sure the credit card is reported as closed. This will allow you to keep a check on the extent of damage the credit card cancellation had on your overall credit score. Since credit utilization ratio decreases after cancellation of each credit card, it won’t necessarily hurt your credit score if it’s not reported as closed, but you want your credit report to be accurate about the status of your accounts.

Follow-up with a Letter

Once you pay off all pending dues for the concerned credit card, insist on getting a written acknowledgement to have a record of your credit card closed. After receiving a written confirmation letter only then you should destroy your card. Keep a copy of the letter for your records.
Visit: www.cibilconsultants.com
Source: Secondary

IT department look into Credit history and loan repayment pattern of taxpayers

Prioritize cases for recovery of past dues based on a defaulter’s ability to pay.

To recover maximum tax arrears with the optimum use of manpower, the income-tax department has decided to look into the credit history and loan repayment pattern of taxpayers and prioritize cases for recovery of past dues based on a defaulter’s ability to pay.

For this, the department would consult the Credit Information Bureau of India (CIBIL) that assigns credit scores and maintains details of loans taken by individuals, partnerships and corporations, along with their PAN.

Sources said tax officials would be able to get an idea of the assets and the financial health of an assesses against which a tax arrears recovery demand has to be pursued vigorously.

The IT department which claims a massive Rs 6.74 lakh crore in arrears to be recovered is able to pursue cases accounting for only a small part of it every year due to appeals pending in various courts, inadequate assets to recover from defaulters and due to non-traceability of assesses. For FY15, it has set a target of recovering about Rs 42,000 crore of arrears, about 6% of the R7.4 lakh crore the government wants to collect this year by way of corporation tax, personal income tax and wealth tax, 15% more than what it raised last fiscal.

However, IT will vigorously pursue recovery of arrears from defaulting partnerships and large corporations even via attaching the assets of partners and directors. In the case of individual taxpayers who have expired, it intends to reach out to their legal heirs, said a field officer, who asked not to be named.

The tax authority wants to cut down the quantum of arrears to be recovered and would consider writing off smaller demands.

Source: Secondary

No idea about your creditworthiness ?

Most borrowers in the country are unaware about the fallout of defaulting on loan payments as well as presence of systems to rate their creditworthiness, says a survey.

As many as 91 per cent of the respondents were found to be lacking awareness about the adverse impact of not paying their loan dues.

The survey, which covered more than 300 people across eight cities, also found that about 85 per cent of the people did not had any idea about the presence of credit bureaus — entities that maintain database of borrowers and help lenders to check their creditworthiness while giving away loans.

Delhi and Pune led with one out of four respondent being aware of credit bureaus. Besides, Delhi, Bangalore and Pune had more than 10 per cent respondents knowing their score.
The primary objective of conducting the survey was to understand the cause and effect analysis of clients who have been through credit impairments. In other words, they wanted to understand the reasons for unavailability of credit to clients due to negative credit history and a low credit score.

The survey revealed protection of credit as a major concern as none of the respondent had taken any steps to protect their identity from theft.

Moreover, 92 per cent of respondents were unaware of their credit scores' ratings given by credit bureaus.
Besides, a mere 4 per cent of the people surveyed had checked their credit scores in last one year and 98 per cent of respondents could not decipher a sample credit report when they were shown one.

The survey revealed that 91 per cent of the customers were not aware of the impact of non-payment of credit dues.

Ascertain your credit score and know your creditworthiness. Book an appointment at  www.cibilconsultants.com

Source: Secondary

Significance of good credit score !

Now that we have talked enough about what is a credit score, why credit score is important and how credit score can help us. Now the main question is what should be a good credit score?

Starting from the beginning, a credit score is a three digit numerical figure which is derived from your data-rick credit report. It is a critical factor for lenders to determine your creditworthiness for a loan, credit card or any other credit.

Credit score ranges from 0 to 999 for all the bureaus. The major three credit bureaus in India are CIBIL, Equifax and Experian. The banks and financial provide the information to these bureaus and these bureaus based on the data provided by the banks and financial institutions provide the credit report to them. Basically credit score is a snapshot of the credit report of that individual.

Talking about a good credit score, a score more than 750 is considered to be a good credit score. Individual having a good credit score find it really easy to get approval for loans and credit card. While people with credit score less than 750 struggle to get approval for loans and credit cards instantly.

Below are some questions that are important to know about credit score:

How is credit scores generated?

Credit score are generated based on the factors such as payments histories, debt level, types of credit and length of credit accounts which are pulled out for their credit report. These factors will determine if the consumers will pay their dues on time or not. So, a credit score summarizes the information in your credit report, which makes it easier and faster for a lender to process a loan application and make a determination.

Benefits of good credit score? 

A good credit score will help you to take credit for a car or a home or get a credit card at a comparatively lower rate of interest. This means that you will have to pay less money towards interest.

Ultimately having a good credit score will only benefit you and having a poor credit score will only damage your credit profile.

Improve your credit profile by improving your credit score. Opt for service packages available at www.cibilconsultants.com

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Lengthy process: Clearing Credit Report

Credit repair is a process which helps in eliminating problematic factors from your credit report. This will help your credit report to be error free. This will hence make you creditworthy.

A person’s credit report is generally known as his credit file. The credit file contains the overall history of the credits taken by him in his entire life span. It provides information regarding number of accounts, late payments, overdue accounts, and also accounts that have been written off.

It is generally said that “Making mistakes is easy but correcting the same is a difficult task.” The same applies in case of your credit file. Mistakes such as making late payments, having overdue accounts etc. will make a negative mark on your credit report, but to remove the same mistakes from your credit report and making the report clean is a difficult task and will take time.

There can be instances that some accounts can be reported in your name which you have never applied for. These types of errors can have a negative impact on your credit report and will lead your credit score to sink.

Once you identify the errors in your report and you remove those errors from your report you will notice that your score has not increased. If you have an active trade line, then your score will increase, if not your score will remain the same.

So it is important that you have an active trade line to increase your score. Only removing errors and cleaning your credit report will not improve your score. There are also other factors that will improve your score for example having different types of credit, paying dues on time, and many more factors.

Checking your credit report frequently will help you identify errors in your report and will help you to identify factors that will improve your score.

Check your credit score and obtain report at www.cibilconsultants.com

Source: Secondary

Obsessed with credit score ?

"Recently, I received my credit score from Credit Information Bureau India Limited (CIBIL). Despite paying all my loans and credit card dues on time, my score was only 805. My friend, who has a similar history, has a credit score of 820. I want to know how to increase my credit score."

The number of such queries on our website has increased significantly, especially after CIBIL ran a series of television advertisements, highlighting the importance of the CIBIL score with the tagline, "Aage badhne ke liye naam nahi, number zaroori hai."

Thanks to the increasing awareness and television advertisements, most people are aware about credit scores provided by CIBIL, based on its analysis of the repayment information from lenders. It uses the information to arrive at a score between 300 and 900. The score is an indication for banks - the higher the score, the lower the chances of a default on a credit facility (loan or credit card). In a number of developed economies, including the US, every 10-point increase in the credit score might lead to significant variation in the interest rate.

As such, if the person querying the score was in the US, his concern about a 15-point difference between his credit score and that of his friend's would have been justified, as it might have meant a 0.25 per cent difference in a 30-year home loan annually. In India, however, we have seen credit scores are essentially used to eliminate applicants, rather than provide them preferential terms. So, you should worry if your score is below 750, as you might not get a loan in this case. But this doesn't mean if the score is more than 750, you would surely get a loan; a lender would look at several other factors. Believe me, your score of 805 and your friend's score of 820 wouldn't be considered different, as long as other things are the same.

In its circular on zero per cent loan schemes, the Reserve Bank of India had acknowledged the return on investment was generally flat and indifferent to customers' risk profiles.

As far as an answer to the anguished query at the beginning of the article is concerned, the calculation of credit scores by CIBIL is a secret, as are the code to the US nuclear weapons or the original Coke formula. But the good news is you need not try to crack this.

Broadly speaking, if you pay your debts and bills on time and have a reasonable amount of debt, in line with your income, the situation is fine. You are already doing well, as proved by your rather high score of 805. Now, stop obsessing about the score; it doesn't matter as long as you don't take too many loans or default on a loan or a credit card bill. Since, you already know your existing credit score, which is good, you could keep asking for your credit report once a year, for monitoring. You are already in good financial shape, as far as your ability to borrow is concerned!

And, you should petition the regulator for access to your credit report free of cost once a year, as is the norm in many developed economies.

Access your credit report and know your score along with its improvement and maintenance by just booking an appointment at www.cibilconsultants.com

Source: Secondary

Learn how interest rate is affected due to credit score !

Repayment of a loan has two parts- the principle and the interest on the borrowed amount. And thus every person who is applying for a loan tries to find the lowest interest rates possible. A low interest rate makes it easier for the borrower to repay it back as there is less interest added to your monthly payment.

Bank interest rates are not set generally but they are set up on the basis of your credit score. Banks check your CIBIL score to measure your credit worthiness i.e. the ability to repay back the loan which is one of the main factors in deciding  interest rates.

The major credit bureau- CIBIL, collect data from lenders and banks about your credit history and payments and compile this data into your credit report. Banks use these reports to determine your credit worth. The better your credit score, the better interest rates you get and the lower your credit score, the higher will be your interest rate. Higher credit scores show the lender that you've handled credits well in the past and pay your dues on time and thus lower interest rates while in lower credit score, the banks see you as a high risk customer and are disbelieving about you paying off your dues.

The higher risk you pose as a borrower, the higher interest rates the banks set up for you and vice versa. The range of a credit score generally is 300 to 900. A credit score higher than 750 is most likely to get lower interest rates and anything below 600 gets you higher interest rates.

Want to learn how to step forward carefully,so that it doesn't affect your credit score and thereby your lower interest rate? visit us @ www.cibilconsultants.com

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Use Your Balance Transfer Card Wisely

Balance transfer cards are cards that offer very low or zero interest rates. If you have high-interest debts to pay like loans, credit cards then you can go for a balance transfer card to preserve money on the high interest rates. You can transfer your due balance to a balance transfer card with a low or zero interest rate and pay off the balance without worrying about the interests piling up. But to get approved for a balance transfer card, you need to have a good score. A good CIBIL score also helps to get the balance transfer deals. But you should also know that balance transfer cards have an expiry period ranging from 3 months to a year.

So how should one use a balance transfer card wisely? 

Your main aim should be paying off that balance before the low interest rates for the balance transfer card expires and interests start piling up again. Don’t transfer a balance if you are not sure of paying off the debt before your low interest rate expires. Transferring a balance when you are not sure about paying it does more hurt than help because in the end you’ll be stuck with a bigger interest rate than the one in last account, once your low interest rate expires.  You would lose money than, what you were thinking of saving, while transferring the card. Make sure you understand all the terms and cinditions of the card before you make a transfer. Try to get the lowest fees & lowest interest rates and the longest period of time.

Balance transfer card don’t make the balances go away- they optimize your debt by making it less expensive for a limited period to help you pay it off. 
So, follow these steps and use your balance transfer card wisely!

For any assistance regarding credit score visit www.cibilconsultants.com

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Credit card cancellation affect your CIBIL score !

The decision to cancel a credit card usually comes in mind when we want to avoid excessive spending or if the terms of the credit card are not friendly anymore but you have to make sure to do it in such a way that it gives the least damage to your CIBIL score.

Choose which credit card to cancel wisely:
If you are carrying multiple credit cards, always make sure, never to close all your credit cards at the same time. Your credit score may be badly reflected if you close too many cards at once, it may also hamper your chances of getting a credit card or a loan in the future. Credit card cancellation must go according to the terms of the banks exit policy or it will go on to reflect a very bad credit score. Try to compare the rewards and schemes the card gives, the interest rates and the other details and then choose which card will give the best advantage. Also, remember that is better to close the credit cards which have been attained recently than the older credit cards to avoid any dip in the credit score.

Pay off any pending balances:
The bank will cancel your credit card only if it does not have any pending balances due to the bank. Pay off the balances on the card in full, or transfer the balance to a balance transfer card if you have found one with better terms. If you don’t want any more dues till the time you pay off your earlier dues, you can get your card frozen till the time you clear the balance and close off your card. If you want to close your credit card accounts without impacting your credit score then you need to make sure that you have zero balances on your CIBIL report for all your active cards.

Keep checking your CIBIL score for updates:
When you close a credit card it reduces your credit limit, which eventually gets reflected in your credit score. Keep checking on your CIBIL report after you cancel your credit card. This will allow you to keep an eye on how much damage the cancellation of the credit card had on your credit score. The credit utilization ratio goes down after the cancellation of each of your cards, thus hurting your credit score temporarily. Also remember that is easier to improve your bad credit score than to fight off the huge debt traps of the dues on your credit card.

Credit card utilization is an important factor in determining your credit score so deal with it efficiently and effectively.
For Assistance regarding credit score optimization visit www.cibilconsultants.com

Source: Secondary