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
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How to maintain a good credit score?

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

Pay your dues on time:

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

Use your credit limit wisely:

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

Uphold a healthy mix of credit:

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

Regularly inspect all your accounts:

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

Avoid applying frequently for loans or credit cards:

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

Monitor your credit report timely:

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

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Revolving credit and its impact

The tide of the future seems likely to carry with it ever increasing waves of revolving credit in the sea of borrower credit extensions. Already revolving credit represents more than a ripple in that sea. The reasons are primarily economic. Think before you spend – if you don’t pay off your monthly bill, the amount can snowball into a pretty big figure as it revolves and gains interest. Here are snippets on the functioning of revolving credit and how it can make you fall into debt traps.
                 

A loan with a difference

Here, you get credit while you go spending or paying bills. You can use the credit limit to purchase anything you desire. Further, you don’t have to pay EMIs or an amount equivalent to that. All you need to pay, to keep your credit card alive, is a minimum amount, which is normally five per cent of the money spent plus interest. Do that and your loan keeps getting revolved in minimum monthly payment cycles.

Unsecured Credit

While an unsecured revolving line does not require collateral. One of the most common unsecured revolving credit lines is a business credit card. Obtaining a business credit card typically requires the business to have a positive credit history and high credit score but does not require an asset to obtain the credit. Another type of revolving credit for a business is an account with suppliers in which you have a set purchasing limit and the company invoices you for purchases. Once you pay the invoice, the amount is available for you to use again.

Understanding revolving credit account

Revolving credit is a type of credit in which the consumer’s balance and minimum monthly payment can fluctuate, and where the cardholder usually has the option of avoiding finance charges by paying the last statement balance within the established ‘grace period’. This type of credit account also has a predetermined credit limit. Credit cards are the most widely used type of revolving credit. Unlike a loan, a revolving account doesn’t automatically close when the account reaches a zero balance. It tends to remain open and available for use until the lender or the consumer chooses to close it.

How it Works

With revolving credit, a bank allows you to continuously borrow money up to a certain credit limit. Every time you buy something on credit, that amount is subtracted from your total credit limit. And every time you pay off your balance, your credit limit goes back up.

The interest rates on credit cards are much higher than that on other loans. At times they can be twice as much. This makes it impossible to repay the bills in minimum monthly pay-outs. A rough calculation suggests that of the minimum payment made every month; only around 1.5 to 2 per cent goes towards repaying the principal amount. The rest goes towards interest payments. So, keep a check on your credit card spending and avoid revolving your credit card balance.

Impact on your credit score

Maintaining a low revolving credit balance has a significant, positive impact on your credit score because your credit utilization ratio is a key factor in your rating. Revolving credit helps in cases where you need to borrow in unpredictable amounts for ongoing projects, education or other needs. The challenge with revolving credit, though, is the temptation to overspend because you have more credit available. Remember, your credit rating is important when you apply for new loans and want to get a good rate. The reason a low revolving balances are important is the perception of lenders. Typically, they assume that if you use a small portion of your available credit, you are in a safe debt position. This makes you seem like less of a risk if they choose to issue new credit to you. Paying down high balances not only helps your score, it puts you in a better position to manage your debt.

Find your credit score at www.cibilconsultants.com

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Borrow responsibly !

Whatever you want, you can avail instantly with the help of loans.  But, wait! Have you ever thought that if loans have made our life much simple, then why so many borrowers spiral into debt traps which is making their life severe?  The reason is – ‘borrowing more than you can afford’. Here’s a sneak peek on lending basics for guiding you aim at your goals with the help of borrowed money.

Three essential goals are to be kept in mind. First, don’t borrow more than you can comfortably handle. Second, minimize your borrowing costs by maintaining a good credit score and favoring secured loans. Finally, before retirement, you should strive to be debt-free.

Unsecured debt

Lenders grant unsecured credit without requiring anything from you as security. There is a considerable amount of risk on the lenders part, because if you fail to pay, they have to take legal action to recoup the money they lent. This is why unsecured credit generally carries a higher interest rate than secured credit. However, if you have proven yourself as a good credit risk by having a long history of borrowing and repaying money responsibly then the interest rates can be appealing.

Most people consider having one or more credit cards, which are another form of unsecured borrowing. The interest rate is often high. Indeed, while credit cards can help you manage your monthly expenses; try not to carry a large balance on a regular basis. If you find it hard to control your credit-card spending, consider a debit card instead, where money is taken directly from your bank account. That may make you more careful about your spending.
                   

Secured loans

With secured credit, an asset (called collateral) secures the loan. Due to this security, the lender assumes minimal risk – if you miss a certain number of payments, they can take the collateral. The lender doesn’t have to go the expense and hassle of taking you to court and winning a judgment before foreclosing on your home or repossessing your car.

If you need to make major home repairs or update your house, you might take a mortgage, which is another type of secured borrowing. Interest rates for home-equity loans are typically low, and you can usually deduct some of the interest from your income taxes. Remember, though, that these are secured loans – if you can’t meet the payments, your home is in jeopardy. Secured credit cards allow you to begin in the world of credit. All you need to do is put down a small deposit as security and you can start charging – and building a positive credit history.

Don’t ‘borrow beyond means’

Irresponsible borrowing can not only put you in trouble but can also make your family members’ lives difficult. If you plan to apply for a loan, particularly a home loan, make sure to only borrow what you need and can repay. Most people will want to be debt-free by retirement. While you may borrow a fair amount in your earlier twenties, you should be looking to pay off debts in your fifties, so you’ve eliminated any loans and the associated monthly expense by the time you quit the work force.

The lender will likely to check your credit score, when you apply for a loan. A higher score will increase your odds of getting the loan and may also mean a lower rate. Because your credit score is so important, you may want to head off unpleasant surprises by reviewing it yourself.

It is incredibly easy to take on more debt than you can afford. Whether the balance is secured or unsecured, the consequences for falling behind are severe. However, if you borrow wisely, you can come out ahead and achieve your financial goals quickly and affordably.

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Secured loan or unsecured?

Every borrower has different financial objectives and priorities in life, and attitudes towards risks. Many consumers often find themselves in a dilemma when it comes to choosing between secured and unsecured loan. However, a lender evaluates a consumer’s credit history before making a loan under either circumstance. Understanding the differences between the two and other characteristics unique to each are mandatory for borrowing money. Want to know – which type of debt is more important for you? Let’s find out…

Secured Debt

Secured debts are tied to an asset that’s considered collateral for the debt. Lenders take on less risk by lending on terms that require an asset held as collateral. As this type of loan carries less risk for the lender, interest rates are usually lower for a secured loan. A prime example of a secured debt is a mortgage, where the lender places a lien, or financial interest, on the property until the loan is repaid in full. If the borrower defaults on the loan, the bank can seize the property and sell it to recoup the funds owed. Lenders often require the asset be maintained or insured under certain specifications to maintain the asset’s value.

Unsecured Debt

With unsecured debts, lenders don’t have rights to any collateral for the debt. Lenders issue funds in an unsecured loan based solely on the borrower’s creditworthiness and promise to repay.  If a borrower fails to repay the loan, the lender can sue the borrower to collect the amount owed, but this can take a great deal of time, and legal fees can add up quickly. Therefore, banks typically charge a higher interest rate on these so-called signature loans. Also, credit score and debt-to-income requirements are usually stricter for these types of loans, and they are only made available to the most credible borrowers. Credit card debt is the most widely-held unsecured debt. Other unsecured debts include student loans and medical bills.

Prioritizing your debts

If you’re strapped for cash and faced with the difficult decision of paying only some bills, the secured debts are typically the best choice. These payments are often harder to catch up with and you stand to lose essential assets – like shelter – if you fall behind on payments.

You might give more priority to unsecured debts if you’re making extra payments to pay off some debt. Unsecured debts sometimes have higher interest rate that makes it expensive to spend a long time paying these off. Even when you’re in debt repayment mode, it’s important to keep up the minimum and installment payments on all your accounts.
Visit: www.cibilconsultants.com
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Revealance of the priority in which the debts should be paid

Easy availability of loans has made our life much easier. It’s convenient way to acquire life’s necessities. But, wait! If loans has made our life so much easier, then why people at times fail to meet the deadlines which are making their life difficult? And furthermore, it also puts you under pressure as a portion of your monthly income is truncated towards paying the EMI. If planned well, you can actually reduce your burden by shedding your liability. Now, if you have several debts to clear, aim to prioritize loan repayments to clear the most expensive ones first.

Personal loans comes first

Being unsecured loans by nature, are offered to you on the basis of good credit history or a sound income stream. Start by attacking your most expensive debt. Simply put your personal loan as bad debt, so pay it off as soon as you can. Prioritize the obligations with the highest interest rates. Paying off the highest, most toxic debt will free you up sooner and help you pay less in the long run. Plus, it will take a load off of your mind.

Unproductive loans

The other loan debts does not involve tax benefits like loan against property, gold loans, loan against insurance policies, fixed deposits and auto loan. You should repay these loans as per the interest rates. Gold loans come at comparatively lower interest rates! Loans against insurance policies, fixed deposits attract less interest rate compared to gold loans and loans against property.  Such loans captivate less interest rate in comparison to personal loans.
Finish up with home loan

Home loans are the most popular debt in India. You can enjoy tax benefits on repayments of a home loan. Home loan consumers often find themselves in a dilemma when it comes to choosing between fixed and floating interest rates. Nobody can predict which way interest rates will move and hence it all boils down to personal choice, cash flows and appetite for risk. However, you will be charged for every switch that you make during the tenure of your loan. You can prepay your loan fully or partially, depending on the terms of your loan. However, do remember that the cost attached to paying off your loan early, if any, in the structure of penalty does not restrict the benefits.
By following the above mentioned step by step priorities, you can actually enjoy the ecstasy of debt-free life. At times, you may find some investments yielding higher interest rate as compared to the interest rate being paid on the existing debt. While making any financial decision, do consider the advantages and disadvantages of either to go for paying off an existing debt or an investment.
Visit- www.cibilconsultants.com
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Secured cards help in building your score

Getting credit nowadays is becoming a much harder task. Lenders take a look at CIBIL reports before giving out loans and credit cards. And thus, the people with lower credit scores get stuck since nobody is ready to provide them loans due to their lower scores. So what possibly could be a good solution for these people?
With low credit scores, there are very few card options out there for such people. These people have trouble getting unsecured cards and that is why secured cards would be the solution for them.

What is a secured card?
A secured credit card is basically a card given, based on the money placed as security deposit which is taken as collateral. And that is why lenders get the confidence that they will get their money back even if you have bad credit or no credit history. The credit line in your secured credit card is determined from your ability to pay, your income and your cash collateral deposit.
Secured cards are like prepaid cards but unlike prepaid cards, your payments would be reported to the major credit rating agencies like CIBIL, Equifax etc. thereby ensuring that your account history will be reported to your credit report. Thus, secured credit cards will help you establish your credit history.


How will these secured cards work?
Secured credit card works just like unsecured credit cards. You can use them for the usual everyday transactions where you use normal credit cards. As much as these secured credit cards can help you rebuild your credit history, a default in your payments and you would be back to square one, with the card issuer keeping your collateral deposit. The monthly payments are just as important for a secured card just as it is for an unsecured card. Secured cards are also reviewed at regular time intervals, if the card issuers find your credit behavior responsible (i.e by being regular on your monthly payments) they may qualify you to move to an unsecured credit card and get a refund of your collateral deposit.

That is how by making timely payments and maintaining your balances well within your credit limits on secured credit card , this responsible credit behavior might help you a lot in building or rebuilding your credit score.

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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

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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

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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

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Factors affecting credit score !

You are probably aware that it is imperative for you to have a good Cibil score in order to qualify for a loan with an attractive rate of interest. In order to obtain a good Cibil score you need to maintain a good credit history.Now that you know the link between your credit history and credit score you are naturally keen to  do all you can to keep your Cibil credit score as high as possible. But have you ever wondered what goes into the constitution of your Cibil score? let us read through the points below :

• Your repayment history:  The first and most important thing that impacts your credit score is your repayment history. You need to clear all your bills and loan repayments well within the dates stipulated in order to maintain a good repayment history.Even a single default has a negative impact on your score.

• What you owe your lenders:  There are two basic considerations when it comes to calculating what you owe your lenders which is referred to as credit utilization. First, is the total of your credit card limits sanctioned to you and secondly the percentage of your money you are utilizing. Hence your credit utilization ratio is calculated as balance outstanding on all your credit cards as a percentage of total credit limit on all your credit cards.

• How long have you been servicing debt:  This may come as a surprise, but the amount of time you have been using credit also has an importance. Therefore, if you have been servicing debt for a longer period of time and handling it responsibly, i.e. by making timely repayments etc., it is going to have a positive impact on your Cibil score.

• The amount of new credit you have taken or applied for:  Everytime you apply for a new credit such as a loan, credit card etc, the banks and other financial institutions run an inquiry on your Cibil report to check your credit history to find out about your financial health and repayment capability.If there have been too many such inquiries on your Cibil report, it has a negative bearing on your credit score.

• The mix of credit:  Even though ours is primarily an EMI led generation, Indians are by nature averse to the idea of credit. So if you have been avoiding credit like the plague and have a single type of credit, you cannot have a good credit score, especially if you have only unsecured loans like credit cards or a personal loan. In order to score high on this ground, you must have a healthy mix of credit comprising of secured and unsecured loans and have the ability to service them well in time. Those with a mix of various credit types such as mortgage, personal loan, car loan, credit card etc. is likely to score higher than those who have a single type of credit.

A good credit score will ensure that you get a loan without any hassles at best interest rates when you really need one.
For assistance on maintaining and repairing your credit score just book an appointment with our experts at www.cibilconsultants.com

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Secured vs unsecured loans and their Impact on Cibil score !!

It is not uncommon for people to ask about the difference between unsecured debt versus secured debt and how they two types of debt may affect credit scores.Some loans can have the opposite effect and actually damage your score.It is important to for us to understand what a secured and unsecured loan is in the first place. 

If a loan is unsecured, it does not have any collateral. Personal loan and credit cards are the most popular unsecured loans available today.

Any loan that has collateral is considered secured loan for example, a home loan or car loan or gold loan.Any default or delay in the repayment in both kinds of loans is bound to affect the Cibil score of a person. The banks report credit limit and balance on credit card and the loan amount for personal loans. The banks also report repayment information to the credit Information companies.The same is the case with secured credit. The banks repayment all the secured loans held by and also the repayment history.

Secured loans have the largest positive impact on your credit when they are repaid. If you have never taken a secured loan, your credit may be low despite your good record of repayment.

"Non-payment of or serial delays in repayment of credit card dues negatively impact the credit score. Possession of too many credit cards and little or no secured loans can negatively impact the credit score," said Sridhar K, vice-president, Highmark Credit Information Service Pvt Ltd.

So before you decide any changes in the repayment schedule, be aware of the impact of each loan has on your credit score.

For any assistance regarding credit score and loans contact us at www.cibilconsultants.com

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