Payment of credit card debts through a debt

A question often asked by borrowers is,” Should I avail personal loan or balance transfer to disentangle from credit card debt?” Short-term debt like credit card can be a convenient source of quick funding but can eventually make a deep hole in your pocket. Remember, the interest rates on credit cards are much higher than that on other loans. But weigh all your options and their consequences before you avail a personal loan or low-interest balance transfer as you run the risk of being debt trapped.

Balance transfer versus personal loans

How can one break out of this viscous circle? Either you should ask your bank or credit card issuer to lower the rate or find out whether you can afford to pay off the debt without opening any new credit accounts. Do a little homework to figure out the right option to protect your credit score and save money.

Although both are possible consolidation options for your credit card debt.

Balance transfers are performed by switching one credit balance over to another credit card, usually for a low promotional rate over a limited time period. On the contrary, personal loans are provided by banks and credit unions and can come in secured or unsecured forms. These loans typically have lower interest rates than credit cards, especially if you secure the loan by pledging an asset, such as your car as collateral.

Selecting which option depends on various aspects. For example, how your debt is currently distributed might limit your options. Even though many credit card issuers allow you to transfer over balances from multiple cards into your new card, not all do. On the other hand, a personal loan is probably the cheaper option.

You might be not found it suitable to pledge collateral against a possible secured personal loan. If you default on your credit card debt, it’s unlikely that the card issuer will sue you and comes after your assets. That changes when you open a secured personal loan; the company does take the asset to recoup its loan if you default.

Whether a personal loan or a balance transfer, both categories are likely to negatively impact your credit score, even if you never miss any payments.
Visit: www.cibilconsultants.com
Source Secondary

No regular income? Then how to build a credit?

Credit is one of those things that we feel that we need to develop if we expect to succeed financially over any period of time. However, building credit can be difficult when your income is irregular. Whether you have a part-time job without a set schedule, or whether you are self-employed and you never know exactly when your next payday will be, getting credit can be difficult when your income varies.

“One of the biggest challenges of building credit on an irregular income is that your income fluctuates, making payments difficult".

Not only that, but your irregular income might make it difficult to qualify for certain loans, especially if documentation is wanted from lenders regarding your situation.

You don’t have to resign yourself to a thin credit file, however. It is possible to build credit even when you have an irregular income. Here are some of the things you can do: 

Get a credit card

Even for those with irregular incomes, one of the best ways to build credit is to start with a credit card.Keep things small. Get a small card and keep your balance and utilization low.

You might be able to qualify for a credit card with a low limit. As long as you use that card responsibly, you should be able to begin building credit. Make small purchases with the card, and pay them off. All of your purchases should be part of your regular budget so that you know you have the money to pay off the balance. As you regularly make payments on time and in full, your credit situation will improve. 

If you can’t get an unsecured card — even one with a low credit rating — you can consider a secured credit card. You will have to provide a security deposit as collateral for your secured credit card, but it will give you something you can start with. As with the unsecured card, it’s important to make small purchases and pay them off on time if you want to begin building your credit.

Another option, is to have someone add you as an “authorized user” to a card. If you have a spouse or a parent with a steady job, you can begin building some credit as an authorized user. However, being added as an authorized user isn’t the same thing as having the card. Some points are always good points, but it’s not the same amount of points as when you have your own card.you have to watch out if the credit card account owner maxes out the card, since it can impact your situation.

Small personal loan

As you show that you can handle small revolving credit card accounts, and begin building your credit file, you can see if you can get a small personal loan. These installment loans can help you establish that you can handle different types of credit. If you have been using a specific bank for a long period of time, and have a good relationship with the bank, you might be able to get a small personal loan. These loans can be useful because they are usually paid in installments, with set terms. Get a small loan that you can pay off over a few months to add another layer to your credit file.

Alternative credit scoring

Another consideration is that alternative credit scoring can help you prove your ability. The  alternative programs can help you get your foot in the door. Other payments made by you like rent, utilities, insurance, and even gym membership are considered as well. This information is verified, and you are assigned a credit rating.

There are mortgage companies, auto loan providers, and others willing to work with companies like this to provide loans to those with thin credit files. If you have an irregular income, but can show that you are reliable in your ability to pay, these programs can help you get your first loan. Then, after you have begun with this first “traditional” credit account, it’s easier to build your credit file going forward.

Don’t get in over your head

The biggest pitfall of handling your credit when you have an irregular income is getting in over your head. It’s easy to think that you will be able to pay something back during a month when your income is higher. But what happens next month, when your income is lower?

When building credit on an irregular income, it’s especially important that you choose your loans carefully, and ensure that you really can repay them. You need to make sure that making your payments is a priority. Build up an emergency fund during the higher-income months so that you have a cash cushion to draw on during the lean months. Ensuring that you can meet your obligations is the best way to keep up a good credit score once you have established your credit.

Source:  Secondary

Fewer checks, faster loans, with good credit score

If you have a good credit score from a credit bureau, it is not necessary that you may get a loan at a lower rate. But you could get your loan faster and with fewer checks by the lender. Process differentiation is the first advantage that customers can look forward to as a result of their good credit scores. The second advantage would be the rate differential, which may take some more time, said Mohan Jayaraman, MD, Experian Credit Information Company of India.

 

A credit score is a number that indicates the borrowers potential to repay and chances of default. It indicates the creditworthiness of the person. Banks and lenders now increasingly rely on credit scores, which are given by credit bureaus, to decide if the loan should be approved. Usually, the higher your score, the more are the chances of your loan application getting approved.

 

Explaining why banks are not yet offering lower rates for customers with a good credit score, Jayaraman says that for Indian banks consumer lending segment is a fairly low margin business. So, their aim would be to keep margins steady. But many banks have now started making the process simpler for customers with better scores.

 

For example, for a customer with a good score, the bank may do away multiple field investigations. If normally the bank conducts two field investigations before approving the loan, in this case the bank may do with just one.

 

Similarly, the turn around for approving the loan could be faster in case of a customer with a high credit score. For instance, the bank may approve the loan of a customer with a good credit good within one or two days, while for other customer it may take up to a week. 

Unsecured loans, such as personal loans is where the differential, especially the rate differential is likely to be seen before other segments, since the margins are higher in that segment.

 

In personal loans, some banks offer better deals for customers of a particular profile, such as those working in a particular company and who may have their salary accounts with the bank. Or customers who already have a banking relationship with the bank. 

"'Eventually the credit score bank will be a new segment for banks to approve the loan. For instance, banks will say that borrowers in certain band will get better scores,'' Jayaraman said.

 

Shyamal Saxena, general manager, retail banking products, Standard Chartered Bank said that the market will eventually evolve to the pricing differential based on credit scores. As of now for a customer with a good score, banks may do fewer verification. "The retail credit penetration in India is still very low and there are a large number of customers for whom banks will do the extra verification,'' he said. 

Customers can know their individual scores by accessing the individual credit report from credit bureaus.

Source: Secondary

To Pay Less Next Time, Repay Loan Installments On Time.

You may soon be able to negotiate lower interest rates on loans offered to you by banks and non-banking finance companies.

Have you always been paying your personal loan installments on time? Never defaulted on your credit card bills?

Good. You may soon be able to negotiate lower interest rates on loans offered to you by banks and non-banking finance companies (NBFCs).

But those who default, beware: you may have to shell out far more for everything, from personal loans to home loans and insurance premia.

The Credit Information Bureau of India Ltd (Cibil) has launched a rating system based on the gigantic amount of data on personal loans that is in its possession.

Cibil maintains a database on the credit history of over 135 million individuals and companies. It will now provide personal loan scores ranging between 300 and 900, where 900 indicates a good borrower.

This score is referred to as the Cibil Trans Union Personal Loan Score and a bank or NBFC can access this score through Cibil.

“Earlier, there was no objective mechanism to distinguish a good personal loan borrower. But with the personal loan score, individuals may be able to get lower interest rates for a good score,” said Satish Pillai, general manager, analytics and decisioning services at TransUnion, a stakeholder in Cibil.

The personal loan score is based on the amount of loans you have pending with other members of Cibil, your repayment track record, the number of inquiries that banks have made on your credit history, the amount of loans you have given up repaying (defaulted on), your credit card repayments, and in case there are any suits filed or loan write-offs.   But if you are wondering how you will get to know your rating then you will have to wait. 

“By the end of this year we will be ready with the infrastructure to provide individuals their own credit score,” says Arun Thukral, Cibil managing director.

Once you know your credit record, you can negotiate with a bank to give you better rates. Of course, the bank would have many other parameters to take a decision, but repayment capability would be a major criterion. 

This score will be available to all 165 member banks of Cibil and other financers to help them weigh the chances of a borrower defaulting on a loan.

Thus, if a bank gets an application from a person and finds that his personal loan score is 890, then it would be willing to welcome such a quality customer. Personal loan interest rates offered by banks differ from individual to individual, ranging from 15 to 30%, with some NBFCs charging up to 48%, as per industry estimates.

Source: Secondary

Ahmedabad Borrowers Have Better Credit Score: CIBIL Study

The study also indicates that credit card penetration is very high in Ahmedabad as compared to other cities in the country.

While credit cards and personal loans being the most availed form of credit in Ahmedabad, the borrowers from the city have higher chances of getting loans as they have better credit scores, revealed a study conducted by credit information company Credit Information Bureau (India) Ltd (CIBIL).

The study also indicates that credit card penetration is very high in Ahmedabad as compared to other cities in India. Credit cards (34%) and personal loans (21%) are the most availed form of credit in Ahmedabad. Credit card and personal loan penetration in Ahmedabad is higher as compared to the pan India average.

According to the study borrowers with a credit score of 700 and above have a higher chance of getting their loan and credit card applications approved by banks. "More than 80 per cent borrowers in Ahmedabad have a CIBIL TransUnion Score greater than 700. Hence they have higher chances of getting loans or credit," said Harshala Chandorkar, senior Vice President - Consumer Relations, CIBIL.

Talking about other finding of the sample study Chandorkar said, "CIBIL data also indicates that more than 90 per cent of new credit is sanctioned to borrowers above a score of 700. Banks and financial institutions today consider the score as a crucial parameter before sanctioning any new loan."

The state of Gujarat has 52 per cent credit applicants who are less than 35 years of age as compared to the national average at 49 per cent.

Speaking about increasing consumer awareness on CIBIL she added, "We have seen a significant growth in consumers reaching out to us for their own credit reports and scores from across metros as well as Tier II & III cities. There has been more than 200 per cent growth since the time we launched our Consumer Relations operations in 2009."

CIBIL is India's largest credit information company that maintains information on over 305 million consumer trades and 15 million commercial trades.

Courtesy : Business Standard

Credit score can fall even after repayment of loan.

Traditional wisdom says repaying loan(s) helps one get a good credit score. However, this might not always be true.

Consider the case of a professional Rahul . Recently, his application for a housing loan was rejected, as his credit score was lower than required by the lender.

His score, 680 two years ago, dropped to 620 this year, despite the fact that he completed the repayment of a car loan of Rs 10 lakh within the term of five years (which ended in December last year).

Most lenders require a score of 700-750. Lenders and credit counselors say there are a number of reasons for such rejections. Typically, those in a situation such as Rahul should check their repayment history, as irregular loan payments hit one’s credit score.

In Rahul’s case, one factor might be the fact that he doesn’t have any loan to service now. If there’s no loan to be repaid, there is no case for a credit score. Experts say this could easily pull down one’s credit score by 5-10 points. Therefore, it might be a good idea to own a credit card and make small spends through it, though owning a credit card but not using it lowers one’s score.

Such customers are termed ‘credit-hungry’. Each enquiry could pull down the credit score by 5-10 points. As such, shopping for best loan rates online is a better idea.

One should ensure she/he does not take too many unsecured loans —personal loans, credit cards, etc. One who is servicing more than one personal loan will always have a lower score than someone servicing one or more housing loans, even if the personal loans are repaid on time.

Similarly, those with more than three credit cards have a lower credit score, even if their repayment history is good. Try not to repay credit card bills in equated monthly installments, as this hits your credit score. over-utilizing active lines of credit could also have a negative impact on credit scores.

Those who have negotiated with a lender to settle loans also have lower scores. Usually, an unpaid credit card bill is considered a non-performing asset (NPA) after 90 days. Once termed an NPA, the lender can’t charge interest. Subsequently, the borrower pays only the outstanding, or principal, and closes the account. However, while it might be easier to repay such a loan, this isn’t good for your credit profile.

Protect your credit score by opting for packages at www.cibilconsultants.com

Source: Secondary

Apprehend your Credit History

Credit history is an individual’s or company’s records of his past borrowings, repayments, other payments and bankruptcy. It is basically all the past records of your credit life. Credit History plays a very important role in building up your credit score and that is why it is important to understand your credit history.

All the factors affecting the CIBIL score are somehow or the other related to your credit history. Having a good mix of credit in your credit history forms 10% of your credit score.  You should’ve taken a good mix of unsecured and secured loans including home loans, auto loans, personal loans etc. to score higher in your credit report. Not only taking loans but servicing them in time also affects your credit score. You should have timely made payments as part of your credit history so as to get a good score.

The other factor which gets affected by your credit history is the length of your credit accounts.  The longer your credit history, the better your credit score. That is why it is recommended by most people not to close old credit card accounts which have been going on for a long time, as it brings down the average length of your credit history. 

But also be aware that defaulting on your payments and bankruptcy stays on your credit history for a long time too and negatively affects your credit score. Therefore, making timely repayments and servicing your debts responsibly for a long time is the way to a good credit history which in turn is the way to maintain a credit healthy life and a good credit score!

Learn about credit score and apprehend your credit history by just booking an appointment at www.cibilconsultants.com

Source: Secondary

Go for loan if you really need one !

A number of these requests within a very short span of time can have a negative impact on the credit score.Let us understand it with an example :

Rahul who is a top official at a large brokerage firm was incensed with his prospective home loan lender. He had approached them on the advice of his colleague to whom the lender had given an excellent rate. While the lender was more than happy to give him the loan, they were offering him a slightly higher rate.  When he enquired about the reason, he was informally told that his credit score was lower than his colleague and hence the higher rate.

He asked for and got a copy of his credit report from the prospective lender and confirmed that the credit report was in order and had correctly showed that he had paid all his dues on time. He had also requested his colleague to get the credit report from the same lender.

When Rahul compared the two reports he was amazed that his credit score was lower than his colleague’s score.  Hence, he called me to throw some light on the matter.

I asked him to take his colleague’s permission and send the two credit reports to me. The look at two reports was quite illuminating.

Both had excellent repayment records and good credit scores though his colleague’s score was little higher than Rahul’s. The only visible difference was that Rahul had about four credit cards (all showed an impeccable repayment record on the credit report) against only two credit cards for his colleague. However, a closer look revealed that there had been four enquiries for his credit report for a personal loan of `300,000 just four months back, though no personal loan showed up on his report.

When I checked with Rahul, I was told that he was considering taking a personal loan for a foreign holiday but had ultimately dropped the idea. He had applied to four banks but ultimately did not take the personal loan though it was sanctioned. The banks, once they received the request from him for a personal loan, had sent a request to Cibil for his credit report.

The credit report also contains information about how many times Cibil got a request for the credit score of a particular person and for what products and amounts.

Now it is not known how Cibil exactly determines your credit score but a number of these requests within a very short span of time, especially for unsecured credit (indicating hunger for credit), can have a negative impact on the credit score.

So, at least for now I asked Rahul to live with it (after all his credit score was not bad). But for the future I told him to be careful while shopping for credit. First make up your mind if you need credit or not before applying for it. Sometimes the sheer fact that you applied for credit (that you did not ultimately need) may result in a small reduction in your credit score even though you did not end up taking the loan.

These kinds of errors are to be reported immediately to Cibil and the concerned banks. The banks should be asked to get the records amended in Cibil records. If they do not respond to your request within a month, you should file a complaint with the banking ombudsman. A mistake in your credit record can prove very expensive, hence pursue these steps seriously.

You should apply for a loan or credit card only and only if you see no error in your Cibil report.

Once you get your credit report and it is error-free, you should go ahead shopping for credit card or a loan product.

But before applying for many of them to know more about the scheme aligned with them, you should always do some smart shopping online.

You can compare various credit products and then apply only for the product that suits your requirement the best. This will ensure that only one bank makes an inquiry for you credit record, hence your high credit score can be safeguarded.

Get personalized services related to credit report and generation of score by just booking an appointment at www.cibilconsultants.com

Source-secondary

Real-time Credit Scoring Fuels Personal Loan

Unsecured personal loans which had all but disappeared after record defaults in 2007-08 are making a strong comeback thanks to the Credit Information Bureau of India's real-time credit scoring. Also expanding the market are new intermediaries who are generating leads that help lenders go beyond tapping walk-in customers at retail chains.

Consumer loans on equated monthly installments started picking up a couple of years back initially through credit cards. The EMI sales was also driven by subvention from the dealer or manufacturer who agreed to bear the interest cost but not the credit risk. Card companies were the first to tap this opportunity. But considering that there are only 1.9 crore credit cards in circulation the market is quite limited. Lenders such as Bajaj Finance, Future Capital, and Fullerton have expanded the market by putting up their loan desks within retail chains.

"In 2007 all finance companies did not have a clue of who the borrower. The loans were on the basis of documents filed by the borrower. We found that even Form 16 documents were fake" said the chief of finance company. He added that loans were pushed by agents who had an incentive to get disbursements which created a moral hazard resulting in bad loans rising. What has changed now is that lender is now able to identify how leveraged the applicant is, they can also identify in five minutes if the borrower had missed out on any loan installment in the past.

Besides finance companies banks too are scaling up their consumer loan business. According to the latest RBI data, outstanding consumer loans on April 28, 2014 stood at Rs 13700 crore up 60% from Rs 8600 crore a year ago. These consumer loans are typically those availed for making small-ticket purchases such as washing machines, flat screen televisions or laptops. Among finance companies, Future Capital's consumer loan book has almost doubled from Rs 1821 crore in March 13 to Rs 3593 crore in March 14. Bajaj Finserv has seen its Consumer loans disbursements rise 36% to Rs 13,360 crore in FY14.

Lenders are able to take a decision within minutes because they are able to pull down an individual's credit history within five to seven minutes and find out the extent of loans and the level of delinquency. "We now have credit history information in respect of 330 million accounts in our repository which includes information from 350 cooperative banks and over 300 regional rural banks," said Harshala Chandorkar, senior VP, Cibil. "Besides drawing the credit scores from Cibil, the lenders have systems where their credit policy is built into the software. This allows them to disburse loans instantly," she added.

Expanding the market to tier II centres are a new set of intermediaries. Onemi India which initially started as a catalogue mail order firm which retailed consumer goods at EMIs by tying up with card companies. With a customer base of 2.5 lakh Onemi has now raised $5mn in private equity funding from Venture East. It is now targeting loans of Rs 385 crore during FY15.

"For the lenders the last mile is always the problem. What we do is conduct the due diligence on behalf of the lenders at the applicants location. Besides earning from generating leads for lenders we are also looking at whether we can underwrite some of the credit risk," said Abhijit Bhandari, director and founder of Onemi. The company is now looking at raising more capital which will be invest in warehouses and logistics.

"We are also looking at selling to customers of micro finance companies. Since MFIs can lend only in income generating segments we are looking at retailing goods such as inverters and bicycles. Our research has shown that there is also a great demand for laptops even in rural areas," said Bhandari. While banks continue to find it a challenge to lend to the new-to-credit segment, finance companies and intermediaries like Onemi see this as a big opportunity.

Besides getting information on borrowers, Cibil is now trying to enrich its database by including repayment profile of those who have never availed of a loan. The credit scoring agency has sought permission from Reserve Bank of India to obtain payment track record in respect of utilities such as telephone bills and also in payment of insurance premium. "The telecom companies have expressed their willingness to share subscriber credit records. They are already using Cibil credit records for fixing credit limits for post-paid subscribers," she said.

Improve and maintain your credit score at www.cibilconsultants.com

Source: Secondary

What is debt consolidation ? How it affects Credit score ?

When the debts you have taken pile up, the one option for paying it back is debt consolidation. Your debt consolidation report, before you combined the bills, should look better than your credit report. Ultimately, the aim is to improve your credit score, not ruin it. Debt consolidation saves us time and money when we are trying to get out of the debts of loans and credit cards. But does debt consolidation only help our credit or does it hurt it too? It depends on how we consolidate and what we do after consolidating.That is why, it is important for us to understand how debt consolidation will affect our credit.

First let us understand what is debt consolidation:

In simple terms, debt consolidation is taking one big loan which would be enough to pay off your multiple outstanding debts. You get the money to pay off the debts, and then have to make only a single payment to pay the new debt. In this way you don’t have to worry about different loans and their interests but just one loan. Debt consolidation can be done in different ways- we can take a loan or make a new credit card account and transfer all our existing credit balances there.
Debt consolidation will obviously affect our credit score as we are taking a new credit card or loan. It can affect our credit score both negatively as well as positively:

Positive effects:
It is easier to deal with a single payment than managing several outstanding accounts. Instead of worrying about the fees and interest piling up on your several accounts, you now have to worry about only one account. Due to this fact, you will now be able to efficiently budget your money as you will know exactly, how much your monthly payment will be. Likewise, it will also help you save money.Personal and home loans have lower interest rates than most credit cards. Many people also use credit cards with zero percent interest rate for debt consolidation. If you have huge amount of debt at very high rate of interest, then consolidating these debts will help you save 20% or even more on your debts.

Negative effects:
Debt consolidation works only if you manage it correctly, but usually even doing the right can damage your CIBIL score temporarily. It depends on your actions on how it will your hurt your score.Missing a payment on your debt consolidation loans can bring your credit score down. If you close your credit card accounts after consolidating, it can negatively affect your credit score. Don’t close your old accounts as they give you the longest credit history. Always wait till all your debt is paid off before you close your accounts. This is because, your debt level will stay but your available credit will start to decrease. This will make it look like you “maxed out” and can be a big risk.

When you are applying for a new loan or credit card, you apply for new credit which will eventually lead to a “hard enquiry” in your credit and your score would go down.
Your credit score also partly depends on your credit utilization ratio.If your credit cards maxed out and you open a new card it will increase your debt and will make your utilization ratio go down which will eventually help your score. But if you carry a high balance on any of these cards, your score will take a dip. If you have transferred your multiple debts and closed your credit limit, your credit score will still suffer even though your other credit cards are paid off.

The conclusion is, handling your debt consolidation properly will have a positive effect on your credit but if you go the wrong you will do more harm to your credit score.

Deal with credit score issues by consulting doctor for all your financial worries only at www.cibilconsultants.com

Source: Secondary

What's good for your credit score: Settlement or Full payment?

There is an old debt in your account for a long time and the bank offers you a settlement to pay less than you owe. So what do you do? You may be in two minds, where on one hand you would be tempted to pay the settled amount and clear the debt while on the other hand, wait for some time and pay the full amount. People are confused on what effect any of these options may have on their credit score?

Settlement of a debt is when the bank offers you a lower amount than your actual debt in exchange of you making a one-time full payment for the settled amount. It is basically you pay off the amount in one time to have your debt forgiven. Settlement is usually an option for unsecured debts like, credit cards and personal loans where the credit has no collateral backed up and which could be sold off to pay your debt. Since, the creditor has a risk of getting no payment, he goes in for settlement where at least he would receive a smaller one-time payment than no payment at all.

But as tempting settlement can sound due to the lower amount, it does affect your credit score in a negative way. Firstly, it would show up on your credit report as ‘Settlement’. Whenever you pay an amount less than what you owe, it does hurt your credit score and credit history. In addition to all that, a ‘settlement’ on your credit report looks bad to potential lenders in future as it shows a history of not paying off what you owe.

But if you already have missed payments and your debt has been taken over by a collection agency, then your credit score already has been damaged. Taking a settlement would further have little or negative effect on your CIBIL score.

Full Payment is always the best option to eliminate a debt. When you pay off the borrowed amount in full it gets wiped off from your debts. It also affects your credit score positively in two ways- one, by reducing your total debt and other, building a good payment history.

If you are looking for a loan in near future, then settlement would be a very bad option and full payment should be the only option. If you can wait for some time and pay off the debt in full, then that would be very good for your credit score. But, if you think the interests are piling up and there is no way you can pay off the whole amount then settlement is the way for you.

Find out your credit score at www.cibilconsultants.com

Source: Secondary

Know the difference between CIBIL credit score and report

This question triggered a thought in me as to a possibility of confusion among borrowers regarding the difference between CIBIL score and CIBIL report. For me, as systems develop and borrowing capacity of people enhance, it is very important that this difference is understood.

Credit score is a number arrived at by using information in your credit records submitted by all your lenders to the credit bureau. Credit score is a numerical value at a given moment of time that helps the lenders to assess the credit risk associated with lending money to you.

Higher the number means lower the risk of default for the lender. In India, a number more than 750 out of 900 is treated to be a good score by lenders when they look at CIBIL credit score.

The credit bureau may use multiple factors such as credit lines offered to you, the repayment history, credit utilisation information, and details of loans secured or unsecured loans to arrive at Cibil score.

 The score changes over a period of time and improves if you keep a tab on the extent of credit you avail of and service your loans on time. If you borrow beyond your repaying capacity and fail to repay in time, this score falls, thereby spoiling your credit profile.

However, the numerical value does not offer any other information pertaining to the borrower to the lender. That is where Cibil report comes into the picture.

Your Cibil report is a holistic document, which also includes your Cibil score. A credit report offers wide range of information, besides this. A credit report offers information pertaining to name, gender, age, address, and PAN card number that helps in identifying an individual.

Credit bureaus also have information about the types of loans you have home loan, personal loans, credit cards and the outstanding on each of these. Cibil report provides all loans' details along with age of each loan and your repayment history too. If you have defaulted on any loan or settled a loan in the past, Cibil report reveals it to the lenders.

Cibil reports also enlist number of inquiries. This is the number of times lenders have accessed your Cibil report while assessing your loan application.

By now, you must have understood that Cibil report is far more informative in comparison with Cibil score. While credit score simply gives one numerical value, credit report offers many more qualitative and quantitative inputs to the lenders along with the identification details.

 It helps lenders to take an informed decision while lending money. As a borrower you should keep a track of your credit profile. Hence, it is of paramount importance that one keeps track of one's investments and liabilities. One of the simplest ways to keep your credit profile is to leverage oneself well within our repaying capacity.

The very decision to stretch oneself at a time when saving money is a daunting task, it is crucial that you leverage less and save more. Lastly, do ask for your Cibil report at least once in a year.

A look at the Cibil score mentioned in Cibil report gives you a fair idea of where do you stand in the eyes of lenders and running through Cibil report helps you identify if there are any lapses at the credit bureau's end.

Get your score and credit report at www.cibilconsultants.com