High credit score can get you a cheaper personal loan

One of the best loans which are available in the market is a personal loan. With no strings attached to it, you can use the funds in any way you want. Despite of having other loan options like car loans, bike loans, loan against property and many more, people are taking personal loan to satisfy their needs and wants. It is so easy to avail one that you get your loan sanctioned within minutes. In some cases you already have a pre-approved loan available towards your account and you can get it with a few clicks and voila, you get the money credited towards your account.

Want to have the above scenario with yourself? Did you just logged in to your bank account just to check if you have a pre-approved loan offer? Not many banks offer such service unless you have an account with HDFC. HDFC personal loan is the best and they offer the best there is in the market. Apart from the banking irony, what is more important for such kind of a privilege is your credit score.

A credit score plays an important role when it comes to loan sanctions. On the other hand if you have a high cibil score, is rest assured that the offers will keep rolling in towards your account and you can use these offers at your ease. Not only will you get a loan on a cheaper interest rate, but also you will get the best personal loan offers.

What is the range of a great cibil score?

A typical credit score falls in the range of 300-900. You are considered to be a good profile if you happen to have a score above 750. But on the other hand if you are in the range of 800 and above you are considered to be the best of loan eligibility and the lenders will be always after you offering great financial products.

Benefits of high cibil score

You are always a first customer to be offered a loan if you need one. The lender has special rights for people with high score and they are considered to be a valuable customer. Not only this, when you opt for a loan, you have the power to negotiate terms with the lender all by yourself. You can negotiate on the processing fees and also the interest rates. You can set terms with the lender and get the loan processed according to your will.

How to improve your good cibil to best cibil?

Well, the answer to this is it will take a lot of time to get through to a great cibil. If you have been a defaulter in the past or you have a settlement towards your report, you can simply kiss your dream a goodbye because defaults and settlements stay on your report for a very long time.

On the other hand, you can start building your credit by making all your payments on time, fix errors on your credit report if you find any, increase credit limit of your credit card and so on. You can still get a loan for low cibil score in the market but you will encounter a lot of problems and you will end up paying high processing charges and high interests on the loan as compared to market standards.

A great cibil score comes with a lot of dedication and financial integrity. A lot of us just pay the minimum due amount every month thinking this will not affect the credit but unfortunately it does and you end up not only paying the late charges and interest but also your financial peace.

 

Six easy hacks to improve your credit score from bad to good

Your credit score is a representation of your financial health, which is what makes it important enough for you and sit up and pay attention. With a healthy score, you can look forward to a healthier financial life as well, and avail the best offers on loans and credit cards. Otherwise, getting a loan for low CIBIL score can be quite a challenge!

If your credit score is currently not up to the mark, do not fret. We’re here to help you improve your score from ‘bad’ to ‘good’. These six easy hacks should get you started. Read on to know more.

Tips and tricks to work on your credit score

  1. Make timely payments: First things first, pay your bills on time each month as they arrive. There’s nothing like bills paid in full to make a prospective lender look at you positively. Payments when made on time and ideally in full, look great on your CIBIL report as well. Paying up late or less than the total amount due also impacts your score negatively, so do keep that in mind!

If you find it tough to keep track of which bill needs to be paid out when, how about setting up calendar reminders or alerts on your mobile phone? And yes, if you have any previous bills outstanding, consider paying those off as well.

  1. Don’t apply for too much credit: While your wallet may look impressive when it is spilling over with multiple credit cards, what isn’t so impressive is the impact this has on your credit score. The reason being, each time you apply for a new credit limit, the lender makes an enquiry about your credit score. Each such hard enquiry can negatively impact the score. It’s pretty clear, then – don’t make applications unless you really require that additional card or loan.

  1. Stay well within your credit limit: While larger credit limits are tempting, remember it’s also that much easier to utilise them. The trick to staying credit healthy includes staying well within your credit limit. Using around 30 percent of your credit limit or less is ideal, by the way, for your score to get a boost. On the other end of the spectrum is the danger of maxing out your card limit, so do track what you spend! The lower the balance, that much better is your credit score. In short, know what you are spending before the ratios get skewed.

  1. Track your score: It’s no secret that monitoring your credit score is one of the best things to do to bring your score up. Let’s see what all this does for you, shall we? For starters, you’ll be able to know how you’re faring when it comes to credit usage. Experts recommend that you check your score once a year, but there’s no such rule set in stone. In fact, it’s recommended to check your score more often, especially if you’re planning to apply for a housing or car loan. Secondly, you’d know immediately if there is any inaccuracy in the report. Which brings us to the next point; read on!

  1. Report any inaccuracies on your report: This is where monitoring your report comes in, and is an important activity. There have been instances wherein an individual’s credit report reflects information pertaining to someone else – which can impact the credit score negatively. To cite an example, if a person has a poor repayment track record and the same reflects erroneously on your CIBIL report, rest assured that this information will pull your score down. Make sure, then, that your report contains only your data and no one else’s.

  1. Don’t erase past records: It doesn’t matter if you’re not using the credit card that you’ve had for a while. As long as your payment history on that card is good, with payments made on time and in full, your credit card can help boost your score. It’s pretty simple – when a lender is looking at your credit history, they are encouraged to see a prospective borrower who comes with a robust financial history. Having this backing only makes your subsequent applications for loans and/ or credit cards stronger.

And finally…

Establishing and maintaining a good credit score will always be to your advantage. A few good practices like those mentioned above can ensure that you’re not stuck trying to get a loan for low CIBIL score. Instead, you can avail of the best deals when your score is healthy.

Remember that repairing your credit score is not an overnight task. Taking it from ‘bad’ to ‘good’ needs time and patience. Your best bet to go about it, is to establish good credit habits. Be practical in your approach and over time, you should see the results of your hard work pay off.

Let’s find out interesting facts about credit score that you didn’t know

Credit score itself is an interesting topic. The whole logic, algorithm, how is it calculated, what factors are associated with it. All becomes one big score that is required to check the creditworthiness of an individual when he or she has applied for a loan or credit card to either the banks or the NBFCs (Non-banking Financial Institutions). For the basics, A Credit Score is a three digit number ranging between 300-900. Where 300 is the lowest and 900 is the highest. The score between 750-900 is a good score. Between 600-750 is considered as an average score and anything below 600 is bad.

There are four credit bureaus in India who gives credit scores. CIBIL (Credit Information Bureau India Limited), Experian, Equifax and CRIF Highmark are these four bureaus. These credit bureaus have the authority to access an individual’s credit history as they have the communication channel set with the banks and NBFCs (Non Banking Financial Institutions) who passes the information of when was the loan or a credit was applied to when it was approved to when it was disbursed and finally when they do they start repaying. Any missed or delayed payments, are all recorded and obviously which affect the score!

Payment History, Amount Owed, Credit Mix, Length Of Credit History and New Accounts are the five factors of which the credit score is made! We all know that. We have read many times about these criteria or the parameters and how they can make or break the score. The free CIBIL Score that is offered also helps anyone know the score and a detailed report wherein one can check the mishaps that must have happened if the score has gone low or anything related. But let’s know a few things beyond that. And what are other factors that one can take care too!

The first that comes is the credit utilization ratio:

What is the credit utilization ratio?

If you are a credit card user, you would know that there is a credit limit to the card which is assigned to you. Now, the credit limit given does not necessarily mean that use the whole of it. Practice shows that people who used a maximum 35% to 40% of their credit limit of the credit card, helped them keeping the score batter and on an average increasing the score. The logic is that it shows that the user is not credited hungry and is responsible enough to use some amount of the credit available. In such a case, if your utilization is high, try and get one more card and manage the balance or you can always clear the outstanding and revive the credit limit.

Secured Loans:

Secured loans or secured credits gives the financial institutes an idea that there always is a backup just in case if there is an emergency and you may just not be able to pay off the loan. A Car loan, Gold loan are some such small amount example of loans and secured credit card which is obtained against the FD that is kept to get that credit card are some of few hacks and tricks you can follow to get a better score.

Investing in something and from the interest received, pay the EMIs:

Now, this is one very interesting concept. Say you have X amount of money with you. If you are buying a home or a car or want to go for higher education or maybe send your kids for the education if you are that age, keep that amount as an investment. Take a loan for the work and manage in such a way that from the interest received from that investments, you can pay the EMI of a loan. In such manner, you can have the money safe, invested and with a new loan account, all the factors of the credit score are also covered helping you increase the score!

Follow these simple interesting hacks related to credit score which you probably didn’t know!

How to become your own credit score guru?

Let us decode today all basic details about credit score. First, we start with the main question, Why is the score required? And then. How the score is derived? What are the criteria that affect the score? What is the range of credit score? Which score is considered a good score and which is a bad score? What does the score affect? Eventually, let us take each question and become our own guru when it comes to credit score. First of all, understand that credit score is no rocket science. It is a basic concept if understood properly, you may never go wrong and get a drop in your score!

Let’s start with the first question:

Why is the score required?

Credit Score shows the worthiness of an individual. When one applies for a credit either in the form of a loan or the credit card, the banks or the NBFCs (Non Banking Financial Institutions) checks the score and then decides first to approve or reject the application and then if loan then at what rate should it be approved and if credit card then the credit limit.

What is the range of credit score?

A credit score is a three-digit number ranging from 300 to 900. 300 is the least of score and 900 is maximum.

Which score is considered a good score and which is a bad score?

A score that falls between 300-600 is considered a bad score. A score that ranges between 600-750 is considered as an average score and the score above 750 upto 900 is a good score.

How is the score derived?

There are four different credit bureaus in India who gives the credit score to each individual. They are CIBIL (Credit Information Bureau India Limited), Experian, Equifax and CRIF Highmark. These bureaus have five different criteria for evaluating an individual’s score. These five factors are Payment History, Amount Owed, Credit Mix, Length of Credit History and New Accounts. Majorly the algorithm that evaluates the score has the weightage across all these parameters which is decided by the bureaus!

What are the criteria that affect the credit score?

1. Payment History

Payment History constitutes the major weightage in a score. 35% of the total score comprises of payment History. This is not just the details of the payments that are done but also the detailed description of how the account of any loan say personal loan, education loan, business loan, home loan or car loan and the credit card repayments are done. The delays, dates that are missed or any credit account that is not closed is all mentioned here and affects the score.

2. Amount Owed

Surprisingly, the total amount owed by an individual carries 30% of the weightage in a score. This usually is the current outstanding of the loans and credit cards limits that says the total amount owed by anyone.

3. Credit Mix

This one has 15% of importance. The credit that is taken is divided into 4 categories. Fixed type of credit, Revolving type of credit and Secured type of credit and unsecured type of credit. As the name suggests, these are the basic ones that give you the idea about what exactly they are. A good mix of all these types of credit also makes a good part of the score.

4. Length Of Credit History

How long has been the first ever credit account opened and if it’s still on consists of 10% of the credit score. One must try and not close the oldest credit account in such case for keeping the score better.

5. New Credit Account

Each new credit account opened consists of the last 10% of the score. This doesn’t mean that anyone keeps on opening the account and the score will increase. That would seem the Credit hungry behavior and may drop the scores down. Maximum a new credit account should be opened once in 6 months!

If all these points are taken care for, you can be your own credit score guru and need not be worried about how it works and take advises from various people!

Start learning the basics of your credit score

There is always a first time for everything. That can be your first home, your first car and many more. You tend to have the same feeling about your first salary or application of a fresh new loan. But have ever thought about where does your financial transaction lead you to? All your financial transactions lead you to your credit report.

Now what is a credit report and how does that matter you may ask?

A credit score is nothing but a numeric representation of how you are doing financially. The score ranges from 300-900 and higher the numbers, higher are your chances to get a loan or a financial product. A good cibil score can not only help you get a quick loan but will also help you in many other ways like landing you in your dream job, etc.

It is really important to know the cibil score and also the basics of how the score calculation works. If this is your first time encountering such a thing, you are the right place. Today we will sight you some basics of cibil score and how it is calculated.

Do I have a credit score?

Yes! We all have a credit report. If you are making any financial transaction, you will have a credit score in place. If you have never applied for any credit, your cibil score may be on the lower side or even no cibil score, but you definitely have a report in place.

Checking your own credit score does not affect the score

This is the top most myth which revolves around the credit score and its calculations. There are two types of inquiries, hard and soft. A hard inquiry is made whenever you are applying for a loan or a credit card by the bank and it gets reflected towards the report. On the other hand, if you are personally inquiring about your report, it is termed as a soft inquiry which is not reflected on the account and does not take your credit score down.

How is the score calculated?

The cibil score is calculated on many grounds. Grounds like your payment history, tenure of the credit, types of credit you hold, credit inquiries, etc. What you need to understand is that cibil score calculations are always tricky. Even if you miss one payment, you will end up losing a lot of number out of the score and end up on the low cibil score section. You will have to be smart and agile when it comes to maintaining your cibil report.

 

 

 

Where is my credit information stored?

Your credit information is gathered and recorded to different credit bureaus in the market. The most preferred by the Indian lenders is CIBIL as a credit bureau and most of the time your cibil report is checked if you have applied for a loan.

Can anyone have access to my report?

The answer to this is a yes and also a no. The banks and lenders have special access to view report of any individual who is applying for a credit or a home loan so yes; the creditors have access to your report all the time. On the other hand, on a personal level only you have access to your credit report and no one else.

Is data theft real?

Yes, it is. Your data if not preserved properly can be used by someone else and you may end up having a low credit score. Always make sure all your information is accurate and safe so that you do not encounter such a thing.

When you are starting fresh on the credit grounds these are the basics you should know, what is much more important than the above points is, how you maintain your score for future financial transactions.