How Poor CIBIL Score Can Destroy Your Financial Goals?

You may not realize how poor CIBIL score can affect your life, but if you take a closer look you can see how it has the power to set itself as a major obstacle in several areas.

Here are a few ways how bad credit score can destroy your financial goals:

  1. Lack of Access to Money

Finding a loan for low credit score is harder than you think. Thus, if your life threw a curve-ball in the future and you need money on an urgent basis, things can become bleak easily. Most credit lending institutions perform a through credit check for every single loan application, and if you have a poor score it is highly unlikely that yours will get approved.

  1. High Interest Rates

Obtaining a loan for low CIBIL score is not impossible, but it comes with a catch- high interest rates. When the applicant has a history of CIBIL dispute  or lacks satisfactory CIBIL score then the lenders deem them as ” a high risk candidate”. To balance the risk they charge hefty interest rates for the personal loan, or any other kind of loan that they seek. This money paid in extra interest can be a lot, and thus make it difficult to manage the EMIs along with the monthly expenses.

  1. Job Risks

The importance of CIBIL score is increasing by the day in India. This is evident from the fact that more and more companies have started making it mandatory for the job seekers to have no history as a loan defaulter if they want to apply for jobs. SBI was one of the first to demonstrate this, when it mentioned clearly in the job advertisement that those candidates who had ever defaulted on a loan were ineligible for the posted jobs.

If you have a poor credit score then finding a good job can become difficult for you in the future. Even your existing job can be at risk if you default on a loan, as your company may look at it as a sign of bad money management and lack of responsibility.

  1. Increased Stress

Bad credit can rob you of joy in many ways. You start worrying constantly about your finances, and if you have a family to support then things can only become worse. Every time your phone rings you wonder if it is your debt collector. Paying with your credit card also starts making you nervous, as you pray that it doesn’t get declined when a seller swipes it in the machine. All this stress eventually forces you to seek professional help from a therapist of a doctor, which again costs you a lot of money, and you get caught in a vicious circle.

  1. Financial Limitations

Your finances can come under rigid constraints when your CIBIL score falls abysmally low. You have to limit your expenses in every possible way to get rid of the accumulating debt. Thus, unless something is really important, it has to wait until the debt is cleared. Home needs renovation? It has to wait. Car is broken? Need to use public transport for a while.

Needless to say, your quality of life takes a blow when your credit is not looking good. You can’t even apply for a new credit card, which could make things slightly easier for you, as for that too you need to have a good credit score.

Once you have understood the points mentioned above you can easily see why CIBIL score is important in your life. Even if you feel your score is good enough, you should never stop being careful with your debt payments. Missing one single EMI can have an impact on your credit report.  Plus, you can always improve credit score, if you know the basics of the same. If your score is already plummeting then it is best to get an expert to help you out. CreditSudhaar, for instance can provide you some of the best credit experts who can help improve your score in the smallest time possible.

 

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Why You Must Collect NOC (no objection certificate) After Paying a Loan

Getting a loan has become a lot easier today. People have become more careful towards their CIBL score, and credit report, which is why they are able to get their loan applications approved without any problems. So, whether you want to buy your dream car or dream house, now is as good a time as any. However, you may know a lot about how to get a personal loan or a home loan, but are you aware of the correct loan closure formalities? When you have paid back a loan in full, it is important to carry out the proper closing procedure, of which collecting an NOC is an integral part.

What is NOC for Loan Closure?

An NOC or No Objection Certificate is a legal document that can be used by you as a legal proof that you have paid all your outstanding dues to the lender successfully. An NOC carries your name, address, account number, and other relevant details. It also certifies that the lending institution (whether it is the bank of NBFC) no longer has any legal rights or claims over your collateral.

Why You Must Collect NOC Once You Have Paid a Loan

There are many reasons to collect your NOC from your lending institution, as it can have a huge impact on your financial health. Here are some pointers on the same that you need to consider:

  • An NOC is essential for CIBIL to verify that you have successful repaid a loan. Failing to provide the certificate can lead to CIBIL score damage, as your credit report will continue to mark the loan as unpaid. This loss of credit score can limit your creditworthiness, and make getting a loan in the future difficult.
  • If you decide to not collect the NOC from your lending institute then they may not record the closing of the loan in their files. Thus, after several years you may suddenly receive a letter from the institution asking you to pay the loan, which you have actually paid. This misunderstanding can lead to an unwanted headache, and wastage of time.
  • Some banks are quite stringent with their procedures, and simply handling the misunderstanding may not be enough with them. They can take a legal action against you, and if you don’t have an NOC then there can be grim consequences.

Thus, there is no denying that collection of NOC is really important once you have repaid a loan. But how do you go about it? Here are some tips that can help you:

  • When you have made the final payment for your loan, you can write a formal letter to your lender asking them to return all your documents that they have kept with them, necessary bank statements, etc. along with a NOC.
  • Some banks and other financial institutions allow their customers to download their NOC document online. All you have to do is login to your account, select the document, and download it on your system.
  • If you have taken a car loan then you will need an NOC as well as an RTO form (aka Form 35). You will need to submit them to your Regional Transport Office, as well to your insurance provider.
  • If you have taken a home loan on a registered real estate property then you will need to go to your local Registrar of Properties office along with a representative from your lending institute to get the lien removed. Only then you can get the NOC.

No matter what kind of loan you have got, once you have repaid it you must get an NOC for the same. This is an important step of the loan procedure, and serves as a formal closure. Ignoring the same can lead to a lot of troubles, one of which is CIBIL score damage. Once this has happened it can take a lot of time and energy to improve credit score. It can also cause the financial institution to put your name on the loan defaulters list. Thus, make sure you ask your lender to provide an NOC as soon as you have made the last loan payment.

 

 

 

Are you really credit aware

In this day and age most people have become dependent on credit. Owning a home, car, funding a wedding etc. have become much easier thanks to the various credit facilities extended by financial institutions. However, despite the rising popularity of credit, many still do not know about the function of the credit bureau and have limited understanding about their credit reports. Being credit aware is important as it can help you with bad credit fix, enhance credit score etc. that in turn eases your financial journey. In this article, we will look at what one means by CIBIL report and credit score as well their importance.

 

To borrow money from financial institutions, your credit report and score plays a big role. The credit rating is assigned to you by the credit bureau. TransUnion CIBIL Limited is the country’s first Credit Information Company. Popularly known as CIBIL, the institution holds the records one’s payments in relation to loans and credit cards. Credit Information Report and the CIBIL TransUnion Score, the two CIBIL products, have brought drastic changes in the way credit is handled by financial institutions and customers.

 

A credit score, generally referred to as CIBIL score, is a three-digit number that reflects your creditworthiness. The number is determined based on the elements found in the credit report. Financial institutions look at your CIBIL score to estimate whether you will be able to repay back the loan amount on time. The credit bureau uses advanced analytics for calculating the score and then assigns the individual a number between 300 and 900. The closer the score is to 900 the better. It is important to enhance credit score, if your digits are below 750. The first and the foremost way to enhance credit score is by ensuring all payments are made on time. Multiple payment defaults can bring down your score. Lowering your credit utilization rate is another means to enhance credit score. Also, it helps to maintain a healthy credit mix; do not hold too many unsecured loans. Putting into practice different measures to enhance credit score is mandatory for all as it will help you avail credit easily and at low rates of interest.

 

If want to check your score, you would need to visit the official website of CIBIL and fill in the online score request form. You would then have to fill in the kind of subscription you require and your personal details such as email address, date of birth, gender and PAN number. After entering the required details, the site will direct you to the payment page. When the payment is done, you would have to submit authentication details, and once this step is successful, you will receive your score in a matter of some hours via email.

 

A credit report contains details about your credit history. Financial institution run a credit inquiry i.e. make a request to check your credit report before extending credit. The report is useful in identifying your true financial standing. Some of the information that can be found in your credit report include – defaults on loans (if any), number of inquiries made by banks and other financial institutions, types of credit used, payment history etc. Checking your CIBIL report at least two or three times is required as it helps you stay aware of your financial position. In case you spot any errors, you can raise a CIBIL dispute which in turn will ensure bad credit fix. Undertaking bad credit fix by getting errors in the report rectified is also a means to enhance credit score. Hence to make sure that no errors have crept in or your accounts are being misused, it is important to check your credit report at regular intervals. In case it occurs, raise a dispute with the bureau who then will undertake bad credit fix.

 

It is not just the banks that have an interest in your credit score and report. The other parties that can show interest in your credit history include employers (to making hiring decisions), landlords (to determine your ability to pay rent) and sometimes even by insurance companies (to decide on the premium). Now since multiple parties can look at your score, it becomes essential to undertake bad credit fix in case you have a weak score. If your credit utilization rate is high then one way to conduct bad credit fix is by getting a higher credit limit and spending less. If a particular line of credit is hurting your score then focus on getting rid of it by paying it off sooner. Striving to enhance credit score is necessary as it creates a positive image in the minds of the financial institutions. Remember, the closer the three-digit figure is to 900 the easier your financial journey will be.

 

 

 

How to Manage Credit Card E-Statements Effectively

We do a lot of things electronically today, let it be shopping or booking a room in a hotel. Banking is no different. Online banking is trending, and banks too are encouraging the same. If you are a credit card user then it is likely that your bank has pushed you to switch to electronic statements (or e-statements)  rather than paper versions at one point or the other. However, should you go for it? Keep reading to find out.

Importance of Statements

Bank statements hold a lot of importance- they serve as a record of payments, charges and fees, and even errors, if they have occurred so. They are also almost essential when it comes to making tax returns, applying for mortgage, etc.

E-Statements Vs Paper Statements

There is a reason why banks tend to promote e-statements- they are convenient, and make less clutter. Also, as digitization is on the rise, more people are willing to opt for e-statements rather than paper statements. Some banks also charge a small fee for paper payments, which is another reason why people like to get e-payments instead.

Although e-statements are easier to manage and organize, paper statements have their advantages. They are permanent, and can be accesses and used easily. Many people don’t give e-statements due importance, and often ignore them, which is another reason why paper statements can be useful.

Managing Credit Card E-Statements

If you are sticking with paper statements then it is a different story, but if you have decided to go for e-statements, then you can use the following tips to manage them better:

  1. Opening and Saving Your Statement Every Month- Whenever you get the notification for your monthly e-statement through your e-mail or sms, make it a point to log in your account and download in ASAP. Don’t just take a look at it and forget about it, but keep it in a separate folder along with other e-statements. This way whenever you need to check the records you know where to go.
  2. Keeping Contact Information up to Date- If you decide to change your primary email address or phone number, make sure you inform you bank about it. This way they can deliver messages about your e-statements on your new phone number or email address. It is also important that you check your credit report e-statement frequently, so that if there is any discrepancy you can get it corrected by contacting your bank.
  3. Computer Security- Just like security is important with paper statements, it is important for e-statements too. Thus, make sure your computer is secure and protected for malware and other forms of cyber attacks. Install a good anti-virus program and keep it updated. Also, never share your e-statements online through email or any other medium.
  4. Keeping a Record- While collecting and storing your e-statements can be handy, it is important that you keep a separate record too. Make a spreadsheet with all your accounts in one column, and the months on the top. Enter the amount you pay each month in the columns under the months. This spreadsheet can be really useful when you want to track your payments.
  5. Don’t Just Rely on E-Statements- Monitoring your credit card account can prevent potential theft or other kind of frauds. Thus, you must never just rely on your e-statements for keeping an eye on your account. Instead, log in your account on a regular basis, and do a brief check. Also check your credit score from time to time, to ensure that you are not losing points. For this you should be obtaining your CIBIL report at a regular interval. Poor CIBIL score can make obtaining a loan a nightmare.

Unless you have some concrete reason to opt for paper statements, there is no harm in choosing e-statements. In a world that is increasingly becoming paperless, e-statements will soon become a norm, and it is a possibility that paper will be out of the picture altogether. Thus, the sooner you make the switch, the better. Make sure you follow the tips given above on managing e-statements, and you won’t have to worry about a thing.