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

How cost of borrowing is related to credit score?

If you want to qualify for the most competitive loan and credit card rates then you need a good credit score. What’s more, you need it to stay that way. 

• How lenders decide whether to lend to you?

Banks and credit card companies use a variety of different information to give you a credit score, which determines whether they will lend to you and at what interest rate.

Credit scoring works by awarding points based on the information:
You provide on your application form ,the lender may already have about you, based on previous accounts you have with them, and on your credit report, which is held by agency called CIBIL.
              

• You’ll also get a better credit score if you:

own your own home and/or have lived at the same address for at least a year ,have a good credit history by repaying other credit agreements on time, for example your credit card, auto loan, gold loan, personal loan , overdraft , Cash credit facility, Consumer loan  or Housing  loan.Have evidence of stability – for example you are employed rather than self-employed, you’ve lived at the same address, worked for the same company and had the same bank account for a long time are not connected financially, through your mortgage or joint bank account, to people with a bad credit score.

• How a poor credit score affects your ability to borrow .............

A poor credit score can mean you’re  rejected with any credit facility or loan or  charged higher interest rates, given a smaller credit limit.

A lenders or banks or NBFC doesn’t have to give you the interest rate they are advertising or that you see in best buy tables on comparison websites.  You may be offered an interest rate that’s higher – this is what’s called your personal APR. 

Source: Secondary

Credit Affects You! See How?

How Your Credit Score Affects The Interest Rate You Receive

Of course, you know that the higher your credit score is, the better interest rate you will get on your credit cards and loans, whether that be for a mortgage, car loan, consolidation loan, or any other type of loan you need.  The reverse is also true; the lower your credit score, the higher interest rate you’ll have to pay.

The interest rate you get is important because it has the potential to save you thousands of rupees.

3 Ways Your Credit Affects You That You May Have Never Thought Of:

Most of us understand the relationship between credit score and interest rate received.  However, there are many other ways your credit score affects you that you may have never considered:
                                 

Rate for Car Insurance.  Crazy, right?  Your credit score can affect your car insurance rate, but it is just one of the factors that are used to determine your insurance premium.  Insurers create a credit-based insurance score that is computed by looking at your credit history, geographic location, age, driving and claims history, among other things.

For the credit portion of your insurance score, these factors are important: payment history, including delinquencies or late payments; length of credit history; and types of credit, such as credit cards and loans.  The good news (if you have a good credit history) is that about half of existing customers receive a rate decrease based on credit score.. The opposite is also true.  Those with lower credit will likely pay more.

Ability to Rent an Apartment.  Put yourself in a landlord’s position.  Would you want to rent to someone who had a high likelihood of not paying and that you would have to spend months trying to evict?  That doesn’t sound like a good time, not to mention all of the money the landlord would lose while the tenant is not paying.  For this reason, more and more landlords are checking credit scores before renting to people.

Job Prospects.  How you handle your credit and how you perform at your job should be two separate issues, right? Not so for some employers.  An employer can only look at your credit history with your permission, but for some employers, if you don’t give permission, you won’t get any further in the interviewing process.

While the majority of employers will not ask to see your credit, in particular fields, asking is routine. A bad credit rating is likely to be more of a factor in certain industries like financial services

Credit scores affect more areas of your life than you may realize.The more responsible you can be financially, the higher you can make your credit score. The higher your credit score, the less you’ll pay in many areas of your life. Have you knowingly been affected in these unexpected ways by a high or low credit score?

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

Excellent Credit Means?

One of the realities of finances is that many lenders and other financial product and service providers want to know your credit score. Your credit score is essentially a summary of how you handle your money. The higher the score, the better deal you will receive, whether it’s a lower interest rate on a loan or a better quote on your car insurance.

Excellent credit can mean saving tens of lakhs of rupees over your lifetime. In some cases, especially with mortgages, you could potentially save more over the course of 30 years.

What Results in an Excellent Credit Score?

                          

Many consumers don’t think it’s fair that the credit score has become a stand-in for financial responsibility. The argument is that truly good financial habits don’t require you to borrow. For the most part, a credit score only measures how well you have handled your loan obligations. If you don’t borrow, you don’t end up with a credit score. So, unfortunately for some, the first step to building an excellent credit score is to apply for — and obtain — credit, usually in the form of loans.

Once you have loans, your next step is to make all of your payments on time and in full. You don’t need a ton of loans to build up to excellent credit, though. Usually, it’s sufficient to get an installment loan (make the same payment each month to pay off the loan within a set period of time) and a revolving loan (like a credit card). If you are careful to borrow a small amount and make regular payments, you will start building your credit history. It’s important to be careful to incorporate any credit spending into your regular financial plan so that you don’t get in over your head with debt.

There are different credit scoring models, but most have ranges between 350 and 850, or something similar. In many credit scoring models, you need a score of at least 720 to 740 to be thought to have excellent credit. When you have excellent credit, you usually qualify for all the best rates. And, as long as you have enough income to afford your payments, you shouldn’t have trouble qualifying for just about any loan.

If you want to get good deals, from qualifying for a good apartment without paying a large security deposit, to getting the lowest mortgage rate, cultivating excellent credit is a necessity. 
Visit: www.cibilconsultants.com
Source: Secondary

They affect your credit score most.

You probably already know about the connection between your credit history and your credit report and how both impact your credit score. Remember that your credit score is like the grade on your credit report: companies use this number to rate your likelihood that you’ll repay your debts and pay your bills.

But just what are the factors that go into calculating your credit score? And which ones impact your score the most?

Here’s the breakdown of what affects your credit score, from the highest impact to the least:

Your payment history : Whether you pay your bills on time and if you always pay at least the minimum amount. Even one late payment can impact your credit history.

                      

The amounts you owe : Some percent of your credit score is determined by the amounts you owe, which is made up of two parts: the total amount of money you owe all your lenders and the percentage of available credit that you’re using (like hitting the limit on your credit card). People who are using less of their available credit are considered lower risk than people who are using a lot.

The length of your credit history : The amount of time you’ve been using credit makes up fifteen percent of your credit score. Someone who has been using credit for a long time is considered less of a risk.

New credit you open or try to open : Some percent of your credit score is also based on the amount of new credit you’ve applied for recently. Every time you apply for a loan, credit cards, store cards and even a cell phone, someone will run your credit. Someone who applies for a lot of credit in a short amount of time is seen as a credit risk.

Types of credit : The types of credit you have impact about ten percent of your credit score. People with a mix of credit types, like credit cards, an auto loan, and a mortgage may have a slightly higher score than those with only one type.

So, now you know what makes up your credit score, which is your overall “credit grade.” Your credit report, on the other hand, gives you all the details about each account and shows you everything from how much money you owe, how many accounts you have, how many accounts are in good or bad standing, and how many times a lender or another company has checked on your credit history. Since, your payment history make up 35 percent of your credit score, you’ll want to pay attention to two places on your credit report: potentially negative items (accounts unpaid or past due) and your status and payment history.

Even if you do have a few negative marks on your credit report, the good news is that on-time and regular payments can help boost your credit score. It may take a little time and patience, but paying your bills consistently can help boost your credit.

Source: Secondary

Your Credit Score and Your Car Loan

If you’re in the market for a new car, you probably have a couple numbers on your mind: the mileage, the price of the car and the monthly payment.

But the one number you may not not be thinking about that could seriously impact how much you pay for your new ride? Your credit score.

Unless you’re paying for a car with straight-up cash, you’ll like have to shop around for a car loan. And your credit score will impact what kind of rate you can get on your auto loan – or even whether you’ll qualify for a loan at all.

                        

Just how does your credit score impact your auto loan? Like other loans and lines of credit, a good (or great) credit score means you’re more likely to qualify for a good (or great) interest rate on your loan. The better your credit score, the better your interest rate and the less money you’ll pay over the life of your car loan.

On the other hand, if you have not-so-good credit, you may be stuck with a higher interest rate and pay thousands of dollars more over the life of your auto loan.

And if you have really poor credit, you may not qualify for a car loan at all.

But while good credit is important for securing a good rate on an auto, even a good credit score doesn’t necessarily guarantee the best interest rate on the market. If you’re thinking of getting an auto loan through your dealer, the dealer may not offer you a preferred interest rate (they tend to make money by charging higher-than-normal interest rates). So regardless of your credit score, it’s always smart to shop around for rates on auto loans before you head into the dealership.

Since, your credit score is such an important piece of the overall cost of your car, it’s good to know what kind of number you’re dealing with before you head out to buy a car. Before you start to shopping around for the car of your dreams or start the process of negotiating rates on an auto loan, check your credit score and your credit history. You’ll have a much better sense of the types of interest rates you’ll qualify for and a better estimate of the overall cost of the car.

If you think that your credit score may be too low to qualify for a decent car loan, talk to your local bank or credit union about their auto loan options. You may be more likely to qualify for an auto loan at a financial institution where you already have a relationship, since your bank or credit union will likely consider other factors besides your credit score in your car loan application process.

Finally, if possible, consider waiting to buy a car until you can boost your credit score or save up money to make a larger down payment – both of which will not only help you qualify for a better car loan, but will save you more money in the long-run, too.

Source: Secondary

When did you last check your credit report?

One of the most important aspects of your finances is your credit. Your credit score is an interpretation of the information in your credit report. Keeping on top of your credit report is vital if you want a good credit score.

With so much riding on your credit, it makes sense to check your credit report monthly so that you can keep tabs on your situation.

                                    

Are You an Identity Fraud Victim?

You probably understand the importance of checking your credit report to see where you stand before you apply for credit. After all, you don’t want an unpleasant surprise when you apply for a mortgage! However, even if you don’t plan to apply for a loan in the near future, it still makes sense to check your credit report.

By keeping tabs on your report, you can quickly identify cases of identity fraud. Your credit report can provide you with a big identity theft red flag: “Has a new creditor appeared on your report for an account you know you didn’t open?”

When you see a new loan, in your name, might be an indication that your identity has been stolen. With so much publicity surrounding data security breaches at major retailers , it’s especially important for you to check your credit report to see where you stand.

You can spread out your reports so that you get one from each bureau every four months. 

The faster you catch this identity fraud, the faster you can fix the problem and restore your good financial reputation.

What About Mistakes?

Sometimes, it’s not a matter of fraud when information is wrong on your report.Checking your credit report is important not just to identify possible identity theft, but also to make sure that the information in your credit report is accurate. Companies use your credit report to determine credit worthiness for a loan and whether you will be eligible for purchasing insurance in some states.

And that’s not all, some employers also review credit reports when making hiring decisions. Negative mistakes on your credit report can cause you to appear less responsible than you are, and could cost you the job.

So, credit report mistakes can result in higher interest rates on loans, and in higher insurance premiums, as well as affect your ability to get a better-paying job in some cases. Over a lifetime, mistakes on your credit report can cost you thousands of dollars — and they might even cost you a job.

Are You on the Hook for Someone Else’s Debt?

Another good reason to check your credit report regularly, is when you are on the hook for someone else’s debt. If you have joint or cosigned debts, you should check your report frequently.

Many married couples apply for debt jointly. This means that your credit accounts are in both your names. It’s important to check your credit report if your spouse is in charge of making payments, just to be sure that it’s actually happening, since your credit rating is impacted by the status of your joint your loan.

It becomes especially important to keep up with payment history if you are divorced. Your shared debts are usually divided. This means your ex might be in charge of making payments on your joint credit account. If he or she doesn’t meet the obligation, it reflects on you. Regardless of your divorce decree, you are on that bill.  Creditors don’t care about your divorce.

Whenever possible, try to get your name off the debt when the divorce goes through. If this isn’t an option, check your credit report regularly to keep tabs on the situation.

This is also a requirement if you have cosigned on someone else’s loan. When you cosign, you accept responsibility — even though the other person is making payments. Check your credit report to see whether or not that debt is being paid on time. If it’s not, you will need to take steps to prevent it from destroying your credit. This isn’t just about divorce. This applies to accounts with children, parents, friends, or anyone you’ve entered a loan with, or cosigned for.

Your credit report can provide you with advance warning that something isn’t right with your financial image. 
Check it regularly, fixing mistakes, identifying fraud, and intervening when it looks like your joint or cosigned debt isn’t being paid as agreed.

To learn more about identity theft, visit www.cibilconsultants.com
Source: Secondary

Bankruptcy: Merits and demerits!

The feeling that your finances are out of control, and that you’ll never be able to afford anything again, is a terrible one. But if you’re overwhelmed by debt and you can’t see how you could possibly get out from under it, bankruptcy is an option you may want to consider.

Bankruptcy is a legal process through which existing debts, under the protection and supervision of a court, are eliminated or reduced, and/or the repayment period is extended.

                    

PROS

– You get a “fresh start.” Most unsecured debts – such as credit card debt – will be discharged through bankruptcy. That means you no longer have to pay that debt. Secured debts are those that have collateral, such as your mortgage (for which your home is the collateral) or your car loan (for which your car is the collateral). If you continue making the payments, you will most likely be able to retain your home and car throughout the bankruptcy proceedings and beyond. However, if you cannot afford the payments or stop making them, the creditor is likely to try to repossess the property or at least re-negotiate the loan.

– Filing for bankruptcy creates an automatic stay against collection efforts. This means that any creditor who tries to collect on the debt after the stay has gone into effect may be cited for contempt of court or ordered to pay damages. If you are about to be evicted, foreclosed on, or have your utilities shut off, the automatic stay resulting from filing for bankruptcy can give you a little breathing room. However, note that creditors can ask a court to lift the stay, and it will likely be granted if it appears you cannot or will not pay off even a part of your debt. Additionally, the automatic stay does not apply to certain types of debt, so depending on the type of debts you have, it may not be helpful.

– You probably won’t lose as much as you think. Every state protects certain types of assets during bankruptcy proceedings, such as your home, personal transportation vehicles, money invested in qualified retirement plans, household items, and clothing. 

CONS

– Bankruptcy is a public legal proceeding, so your family and friends may find out that you have declared bankruptcy. If you have been hiding your financial difficulties, then you may be embarrassed to have others know about your situation. However, unless your case is publicized by the media or you personally know your creditors, it is unlikely that your friends and family will find out about the bankruptcy proceeding the same way they would find out about a new job or new baby.

– Certain types of debt cannot be discharged through bankruptcy, including student loans, child support, alimony, and debts arising from criminal conduct. Thus, if these types of debts comprise all or the majority of your debts, bankruptcy will not relieve your financial burden.

– The bankruptcy will remain on your credit report for ten years, and is the worst kind of negative entry you can have. Thus, you may find it extremely difficult or impossible to borrow money, or the rates you are offered may be much higher than what the average borrower could get. However, it is certainly possible to rebuild your credit history and eventually have a good credit rating.
Visit- www.cibilconsultants.com
Source-secondary

Your credit needs to be in shape, before you apply for mortgage!

One of the biggest purchases you will ever make is likely to be your home. A home purchase is usually so large that you need to borrow money to complete it. Your mortgage is a large amount to borrow, no matter the price of your home. As a result, one of the best things you can do if you want to save money over time is to get the lowest possible mortgage rate.
The most important factors considered by mortgage lenders when determining your rate is your credit score. “The higher your credit score, the lower the rate you’ll get for your mortgage,”
She points out that lenders will also look at items like your debt-to-income ratio, employment history, and down payment when approving you for a loan and setting your interest rate, but a good credit score is the item that carries the most weight in determining your interest charges. “Over the course of the loan, a lower rate can save you a ton of money,”.
                                     

How to improve your credit score before applying for a mortgage?

The time to work on your credit score is before you apply for your mortgage. The first step is to check your credit report. 
Look through your information to determine if there are inaccuracies in your report dragging you down. Those need to be corrected if you want to see your credit score improved. Cibil Consultants offers insightful information about your financial situation so that you can identify potential problem areas to target.
Your payment history is the biggest factor influencing your credit score, so make sure you continue to make your payments on time. “If you’re not already on a budget and tracking your spending, you need to set this up right now,”. “This will help ensure that you pay all your bills on time.”
You can’t make up for past late and missed payments, though, so one way to help get your credit score in good shape is to pay down some of your credit card debt.
 Credit utilization is the second-most important factor in determining your credit score, and one of the easiest difficulties to overcome, if you have the means to pay down some of your credit card debt. “The golden rule is to keep your credit utilization ratio below 30%,” she says. “But if you want to boost your score as much as possible, keep it below 10%.” Between paying your bills on time and paying down credit card debt, you should be well on your way toward boosting your credit score to a point where you qualify for a better mortgage rate.

How long does it take to see improvement in your credit score?

The chances are that you won’t see an immediate improvement in your credit score. Your credit score is based on information that is reported to the major credit bureaus, so it depends on when your creditors report their information. Many credit card issuers report your balance (and your current credit limit) to the bureaus every 30 or 60 days. This is another reason that reducing your credit card debt can help you boost your score relatively quickly. However, there is no guarantee that your information will be reported as quickly as you like, so you might need to wait 90 days or more to see improvement.
 Black marks on your credit history can slow down your ability to get your credit score in good shape. “For someone who has a bankruptcy in their recent past, it will take longer to see improvement,” she says. “If you don’t have negative items on your credit report, you just need to wait until you can get your utilization ratio as low as possible and the issuers report it.”
Even though it might be tempting to apply for a mortgage first, and then worry about the credit score later, it’s better to wait. You won’t be offered a good deal if your credit score is only fair. Even saving 1% on your mortgage can mean a savings of tens of thousands of dollars over the course of a 30-year loan. Waiting a few months to get your score into the higher range of good, or getting it up to excellent, can be a smart money move.
“Unless you have a reason to get a mortgage as soon as possible, it’s best to wait until you can maximize your score,”. “It truly does make a huge difference in your monthly payments and this will help you in the financial long run.”

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

Reasons to check your credit regularly!

You’ve probably heard that you should check your credit regularly. But why is that advice given? Before you decide that you don’t really need to check your credit report, here are 4 reasons to take a look on a regular basis:

Prepare for a major purchase or life change

One of the biggest reasons that you should check your credit is in preparation for a major purchase. When you buy a home using a mortgage, the lender wants to verify that you are likely to make your payments. Another major purchase that requires a credit check is a car.
You might even need to prepare your credit ahead of moving into a rental. Many landlords want to see if there are potential red flags that could result in missed payments. Checking your credit ahead of time can be one way to prepare for what’s next.
It also makes sense to prepare for major life changes by checking your credit since there has been a movement toward including non-credit information, like utilities and rent payments, on credit reports. While such measure might be slow in coming, they could still impact you down the road. Pay attention to what is happening with credit reporting in the news so that you know what actions are likely to cause problems.

Identify and fix mistakes

Information from the Federal Trade Commission indicates that one in five consumers have an error on at least one of the reports issued by the major credit bureaus. Five percent of consumers have errors that could cost them more in terms of higher interest rates and even higher insurance rates (in some states).
You don’t want to be one of those whose credit reporting mistakes costs more money in the long run. Checking your credit report can help you catch mistakes and have them fixed. Credit reporting agencies are required by law to fix mistakes in a “timely” manner. While credit bureaus don’t have to remove negative and accurate information from your profile, they are supposed to update inaccurate information to provide a better picture of your behavior.
Check your credit report regularly and dispute inaccurate information. This should be done before you apply for credit so that you can avoid a nasty surprise while you’re sitting with the loan officer.

Look for signs of identity fraud

The FBI identifies identity theft a a major threat to many consumers. While you might not be able to prevent identity fraud in all cases, you can watch for signs to attempt to catch it early. Monitor your credit report for fraudulent accounts, which could be a clue that someone is using your name to open new lines of credit. You should also backup your efforts by checking your monthly account statements and checking your online banking for indications that your credit card numbers are being used to make fraudulent purchases.
By checking your credit report regularly, you can catch identity theft early and take steps to head off further problems. Some of these steps might include contacting local law enforcement or reporting the issue to the FTC. The longer identity fraud goes on, the harder it can be to reverse the impacts and avoid future issues.

Better understand your financial situation

Your credit report can also provide you with clues about your current financial situation. Consumer sites like Cibilconsultants offer you access to credit reporting tools that allow you an overview of where you stand financially, based on the information in your credit report. This can help you make better decisions about your finances moving forward so that you have the ability to improve your credit situation.
Checking your credit report can also help you understand how those in the financial industry view you. Try looking at your credit report as if you were a lender trying to decide whether or not you are a good risk. Understanding your credit report from that standpoint can provide you with ideas for an action plan to look better for financial industry decision makers.
                      

When to check your credit

The good news is that you can check your credit anytime, and it won’t impact your credit score or the information on your credit report. You are entitled to a free credit report every year from each of the three major credit bureaus. Additionally, there are consumer credit sites, like CIBIL Consultants, which allow you to look at information related to your credit report anytime. These resources can provide you with the ability to get a general idea of what to expect when you apply for credit, as well as stay on top of your situation. In some cases, consumer credit sites can also alert you to actions you can take to improve your situation and even save money.
While checking your credit report regularly won’t guarantee that you won’t have problems, the reality is that it is a good way to monitor your situation. At the very least, you can prepare for the most important purchases you plan to make ahead of time.
                                                                                                                                                                                                                     
Source: Secondary

Why you should teach your child about paying with plastic?

When you think about what to teach your kids about money, chances are that credit cards aren’t high on your list of necessary lessons. In fact, many parents would just as soon not teach their kids about paying with plastic. However, well-intentioned that approach might be, the reality is that your child probably needs to know how to interact with plastic if he or she is going to grow up to be able to handle money appropriately.

Help your child understand debit and credit

You don’t need to encourage your child to use credit cards and get into debt in order to help him or her understand the appropriate use of plastic. It’s a good idea to approach the subject, though, and let your children know that there is a difference between debit and credit, and that they should avoid debt. Introducing them to plastic during their teen years can help them prepare for a world that increasingly does not make use of cash or check.
Talk about the difference between debit and credit. When you swipe the card, it comes from money you already have. Also talk about how credit is different; it’s a loan. You are using money you might not have. In either case, the important thing is to encourage your child to keep track of what he or she spends using plastic, and encourage your child only to spend money he or she already has.
                        

Learning to manage plastic

If you can get your child a debit card attached to a joint checking account, you can begin to help him or her learn to track his or her spending while using plastic. Because spending with plastic (whether it’s debit or credit) tends to encourage less mindfulness, getting your child in the habit of tracking spending is a big step forward.
In some states, you can get a debit card for your child when he or she is 16 years old, as long as it is for a joint account. Other states and banks, though, may not let minors get debit cards. If this is the case, a prepaid debit card isn’t a completely terrible idea. Look for a card that doesn’t charge outrageous fees. 
When your child uses any sort of plastic, make sure that he or she records what is being spent. You can use pen and paper, or you can use personal finance software on the computer. I’ve already got an account set up for my son in our personal finance software so he can see where he stands, and keep track of where his money is going.
Plastic (or, more likely, payment via cell phone) is the wave of the future. Teaching your children to manage their money in a world where they aren’t likely to count out cash is an important skill. That way, they can learn to pay attention to spending, and avoid the pitfalls of plastic later.

Visit- www.cibilconsultants.com
Source: Secondary