How failed home loan payments reduce your credit score

Anisha wanted to purchase her dream house and was delighted at having her home loan application approved. A few years later when she decided to get her first car, she put in an application for a car loan. Much to her dismay, the loan was declined this time, and Anisha checked her credit report for possible answers. She realised that her credit score had taken a dive because she had defaulted on some of her home loan EMI repayments. This put Anisha’s dream on hold – a situation that could well have been avoided, had she been regular with her home loan EMIs.

Falling behind on payments can be one of the worst things you can do for your credit score. When you avail of a credit card or loan, ensure the strictest financial discipline in terms of loan repayment. Given the importance of the credit score in an individual’s financial life, it cannot be ignored or taken lightly.

What factors determine the credit score?

Below are the factors that impact your credit score. You will notice that of these, your payment history is the largest chunk. In a nutshell, even a single delayed or missed payment can bring your credit score down drastically. Thus, when you apply for a personal loan for low CIBIL score, for instance, chances that your application gets rejected are rather high.

Now that we have discussed the various factors that a credit bureau considers when determining the score, let’s move on to your further course of action.

Know where you currently stand

First things first – get a free credit score from one of India’s credit bureaus. There are currently four of them. This report will indicate the factors that determine your score, and what exactly is impacting your score. In fact, it’s a good idea to monitor your score on a regular basis – experts recommend that checking on this important aspect once a year may not be a bad idea at all.

Once you are armed with this information, you can look at ways and means of bettering your score.

How do late or missed payments affect the credit score?

Failed home loan payments have a negative impact on the credit score – just how severe the impact is, will be determined by a number of factors.

Firstly, a lot depends on how late your payment is. Let’s say your payment was due on June 30, but you wind up paying on July 1. In all likelihood the lender will overlook this day’s lapse and the failed payment will not be reported to the credit bureaus. Thus, your credit score may not get hit. However, a payment that is say for instance 30 days past the due date will not go unnoticed, be it towards a home loan or any other loan EMI or a credit card outstanding. Remember the other downside is financial loss: you wind up shelling out a fair amount by way of late payment fees and related charges and taxes.

A couple of missed payments may impact your credit score in the short term, say for a few months. However, the impact of consistently missing or delaying payments on your credit score can be a long one, sometimes lasting even a few years. This means that each time you apply for credit subsequently, your low score will come under the scanner. When your score is low, it’s not easy to get further loans such as a personal loan for low CIBIL score or credit cards at competitive rates of interest. It’s entirely possible that a lender will decline the loan altogether.

How to rectify the damage caused by late or missed payments

For the time being, while the damage is done, you can ensure that it is not long-lasting. Begin by correcting your errors: make sure all payments are up to date. The sooner you get on track, the sooner you can start rebuilding your score.

It’s also a good idea to avail of an ECS mandate or auto debit facility from your bank account in order to ensure that your loan repayment is taken care of on the due date itself. This will mean no more delayed or missed payments, which will help boost your credit score, given time.

In conclusion

A copy of your free credit score can help you understand where to start off with rebuilding your score. Fix your credit report by paying bills and EMIs on time, and in full. Ensure you have a healthy mix of both unsecured and secured loan products in your portfolio. Keep credit utilisation low so that you don’t appear to be relying on credit to make ends meet.

With these tips, take charge of your financial future at the earliest and make sure that you always have a healthy or good credit score.

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How to Protect Credit Card from Online Fraud

Credit cards are used by a large number of people today. This is because they allow them to make cashless payments, improve CIBIL score, and purchase expensive items under an EMI arrangement. However, you have to be careful if you are a user as credit card frauds are also quite common today.

When you are shopping or paying for bills with credit cards online, then you become vulnerable to certain risks. The following are some of the ways you can avert them and continue using the cards without a worry:

1. Shop Only from Reputed Websites

There is nothing wrong with shopping online. However, you should not be lured towards unrecognized platforms that offer huge discounts and instead stick to just popular ones like Amazon and Flipkart. This is because reputed ecommerce stores take the online privacy and security of their customers seriously. The small online stores, on the other hand, may not go that extra mile to safeguard your financial information.

2. Use Technology

Before mobile banking was a thing, i.e. a decade ago or so, managing bank accounts was quite tedious. You had to pay a visit to your bank branch to deposit or withdraw money, open a new account, invest in a particular scheme, etc. Today, you can use technology to perform a variety of personal banking tasks effortlessly. For instance, you can monitor your credit card transactions via your bank’s official app that can also update you when new transactions are made or when abnormal purchase activities are identified in your accounts.

You can use a mobile app or your online banking account to enable security features that can alert you about unrecognized transactions and prevent frauds.

3. Check Credit Report

Finance experts highly recommend that you check your credit report every once in a while so that you can keep tabs on your financial activities. For instance, you can check the details of the payments of credit card bills, loans, etc. that were made in the past. You can also identify discrepancies and mistakes in the report so that you can have them removed and improve CIBIL score.

Checking your credit report can help in prevent credit card frauds. This is because if there are transactions made with your cards but without your approval, then you can find them in the report. In the same way, you can learn if there is a new credit card under your name, which is often the case with identity thefts. At any rate, this information can help you prevent credit card frauds to a huge extent.

Note: As per new rules, all the credit rating agencies including CIBIL have to provide their users a free CIBIL score and report at least once every year. So, in case you haven’t got yours this year, then you can apply today for free!

4. Avoid Sharing Credit Card Information Online

All the top online stores and merchants allow you to store your credit card details on their websites so that you don’t have to enter them every time you need to buy or pay for something. This is to make your experience more comfortable, and the websites promise the highest level of security. However, if you don’t want to take any chances, then it’s best to avoid storing the details in the first place. This is because you never know if a major cyber attack may take place that compromises all the records. The only way to protect your information is to keep it to yourself and share only at the time of payment, even if it’s a little inconvenient.

5. Avoid Sharing Credit Card Details on Public Computers

When you are traveling and use a computer in a cyber café or a library, then avoid accessing websites where you need to share your credit card details. You should also keep the same in mind when you connect to the Internet with a public Wi-Fi connection. This is because these connections can be tapped into by hackers.

Credit cards have their uses but they can also be misused by fraud entities. So, if you want to prevent financial frauds online, then be sure to follow the tips above.

What is the procedure to increase your credit score from low to high?

Your credit score is an important factor when it comes to your financial life. This is because lenders use this information when you apply for fresh credit, to determine whether to approve your loan or credit card application. Typically, a higher score will yield you the best deals especially in terms of interest rates – which makes it reason enough to ensure that your credit score is consistently high.

If you’re looking to improve CIBIL score and don’t know whom to ask, you’re in the right place! Read on to know more.

What is the credit score?

A three-digit number that represents your credit report, the score is generated by a credit bureau. There are currently four such bureaus in India, of which CIBIL is one. These scores range between 300 and 900, and a score above 750 is considered to be good.

What influences the credit score?

There are several factors that a credit bureau considers when generating your credit score. Let’s take a look at them:

Tips to increase your credit score

Now that we’ve established the importance a credit score holds when it comes to your financial health, let’s discuss the ways by which you can improve your score.

  • Call for your credit report. To begin with, get your free credit score from any of the bureaus. This is a great starting point for you to know where you stand. It’s simple: once you know exactly how good or bad is your credit score, you’ll also be able to understand what it will take to build the score. Further, check the report carefully to ensure that the information therein pertains to you. Any errors need to be highlighted to the concerned bureau immediately, as these can impact your score negatively. It is also a safeguard against identity theft.

  • Make timely payments. If you have an existing credit card or loan, you’ll know what we’re talking about. Given that your payment history is such an important aspect, it is only prudent to make timely payments. Making complete payments is ideal, so that you don’t fall into the debt trap of rolling over payments month on month. If you’re not able to keep track of EMI or card payment due dates, consider setting up an ECS facility from your bank. Sit back and relax while your payments go through seamlessly!

  • Use an existing account well. Do you have a credit card that you possibly no longer use, but have maintained well? By this we mean timely and complete payments. If the answer is yes, we’d advise you to hold on to this account, because it can have a positive impact on your score and in fact help boost the numbers. This is because to a lender, a card that is paid off in a timely manner indicates that the cardholder is likely to be creditworthy. Make an old account count!

  • Don’t apply for cards if you don’t need them. Here’s another golden rule! Every time you apply for fresh credit, be it a card or loan, a hard enquiry is made against your credit report. This brings down your score for a while, which can be fairly damaging. You can also head straight for debt, by getting tempted to overspend since there is credit at hand. It’s best then, to apply for credit only when you absolutely need it.

  • Have a healthy credit mix. A lender looks more favourably at a person who is able to handle all types of debt well, be it a credit card, personal loan or car loan – essentially a mix of both secured and unsecured loan products.

  • Manage your credit utilisation ratio well. Experts recommend that you do not use more than 30 percent of the credit limit across all cards. When you come close to maxing out your cards, a lender tends to view you more unfavourably as a person who is heavily dependent on debt to make ends meet. Keep on mind that your score will suffer if you don’t keep a close eye on those card balances! This is also a good way to ensure that you do not overspend.

  • Determine what you need to fix. Once you have your free credit score in hand, you are on the right track. Draw up details of your income versus expenditure so that you know just how much you can repay on an EMI. Similarly, understand how much you have to pay by way of credit card payments. Inculcating financial discipline will help you greatly.

The bottom line

It is never too early nor too late to improve CIBIL score. All it takes is time and effort, and the discipline to monitor your expenditure. Taking care of your credit score can be your gateway to good financial health, so start now!

Which is the fast way to increase cibil score

We are in an ear where everything that we want is instant. Instant is good. But it creates a lot of anxiety, impulse, and impatience. Everything instant is not good. Despite getting the results too soon, it’s always not necessarily perfect. There are many instances where the perfection or accuracy is not maintained at the speed of achieving it. While speaking over credit score and it’s rate of increasing or decreasing often has many myths. Let’s get those busted. There is no magic that can happen and would get your score to optimum great over a day or month. Also, the speed of increase also depends on the score which is currently. If the score is 450 and if the score is 650, definitely the time required to get 750 which is considered optimum best, differs. The one which has 650 will take lesser time compared to the one which has 450.

A CIBIL Score is a three digit number which is determined by payment history, the amount owed, new credits, credit mix and length of credits. Where, 35% is comprised of payment history which means how one has been making payments over the tenure of credit accounts opened. Credit consists of the credit card usage and the loans taken. 30% is for the amount owed. The total amount that has been taken, I.e. the credit limit one has for the credit card and the loan amount taken also has a major role in making the credit score. Length of credit history is 15%. How long have been the credit accounts are open, is the factor that is also considered. Rest both, new credits, credit mix are given 10% each. New credits are the one which is applied. But, if there are multiple attempts for opening new credit accounts can drag the score down. As it makes the creditors think that one is in dire need of funds which is also called credit hungry behavior. Credit mix is the combination of a secured and unsecured type of credit along with the fixed and revolving type of credits. These are the parameters and the weightage of them.

Now, on individual history, these scores are made. Any mistakes in these parameters will mess up with the score. The details information is mentioned in the CIBIL report. How long have been the account open, how and when are the payments made, any defaults, missed or delayed payments are all mentioned in the report. Also, the inquiries made for applying the credit are also mentioned. The first score is established after 6 months of an active account. Then the score is updated almost every month. Credit utilization is also a factor which affects the score. This is specifically for credit cards. One should not use more than 35% – 40% of the total credit limit of the card one has. To increase the score, the first and the foremost thing which has to be done is rectifying the old mistakes. There may be any missed payments, default accounts, unpaid dues, etc. work on them. Talk to the banker, tell the issues you had. Try clearing all those first. Then, use your credit card upto 35% of its limit. If your usage is more, apply for a new card. And use the mix. As you apply for a new card, new credit factor is also considered. But yes, do not overdo! Try taking a secured loan, say a gold loan or secured credit card. This will be a good of credit mix as well.

Once this is achieved, make sure you do not miss any more payments or delay in payments. Organize the payments. Keep reminders. Do not miss the repayment dates. While you follow this practice for over few months, a good credit score is no far! Again, there can’t be any finite time that is calculated to get a 750 score, but it is always achievable if the above mentioned points are taken care of!

Good Credit Score is Beneficial for Instant Loan Approvals

People take loans all the time- home loans, personal loans, auto loans- the options are plenty. However, the process of applying for a loan and actually receiving the funds is a long and tedious one. There are many people who don’t get loans at all, even after numerous attempts. So, what can you do to get a loan as quickly as possible? If there is one thing that you can do, then it has to be credit score improvement!

How Does Good Credit Score Benefit Loan Applications?

When a bank receives a loan application, then it checks a variety of things before approving the same. These include the applicant’s repayment history, existing debt, credit utilization ratio, length of credit history, etc. However, the most important thing that it considers is the credit score.

Your credit score lets the bank know how high your creditworthiness is. So, if your score is low, then it would suggest that you face problems with credit and personal finance management. However, if your score is high, then it would know that it can count on you for the loan’s repayment and that the risk of defaulting is minimum. Hence, it would approve your loan application rather quickly.

Apart from instant loan approvals, high credit score also helps in the following ways:

1. Better Rates

If you seek more affordable loans, then you have a very good reason to increase credit score. This is because those who have a good score are able to get lower interest rates from the banks. When your score is high, then you know you have the leverage at the time you want to negotiate with the bank. You can urge the lender to offer better interest rates in light of your good track record as evident by the good rating. More often than not, they agree without giving you a hard time.

2. Bigger Loans

As the loan amount increases, so does the risk for the lender. So, if you want a big loan, then you can increase the odds of getting approval by checking your free credit score first. If you see that your score isn’t up to the mark, then you can work on it before you submit the applications. Otherwise, when you need a loan on an urgent basis, then you might be able to get only a small portion of the same from the bank.

3. More Options for Jobs

You may find it surprising but many companies, especially in the finance domain, now review the credit reports of the candidates who appear for jobs. Usually, they check if they i.e. the candidates have ever defaulted on a loan in the past or if their score is up to the mark. The idea behind this measure is that if someone has a bad credit history, then they are also unlikely to be suited for a professional job. This again has to do with the usual association of bad credit rating with personality traits like lack of discipline, time management problems, etc.

You may not necessarily be judged on the basis of your credit rating when you appear for job interviews. However, if you don’t want to take any chances, then it’s strongly recommended that you increase credit score as much as possible before proceeding.

4. Higher Credit Card Limits

Most credit cards come with fixed limits and you can only spend within these limits and not a penny more. Naturally, you would want the highest limits possible so that when you are in a cash crunch or in case there is a financial emergency, then you can use your credit cards for help. Now, here is the thing- the lenders are usually more willing to increase the limits when the users have a good credit rating. So, if it’s high credit limits you seek, then you should check your free credit score today itself and see if it needs some improvement.

As you can see, there are numerous benefits of a good credit score. So, if you ignored yours so far, it’s time to take control and make improvements. Always remember- a good rating will help in your entire life!

Worried About Life After Retirement? Get Income in Your 60’s

Planning your retirement doesn’t have to be challenging. There are many ways to boost your savings for the twilight years and live life comfortably even after you have retired from your job permanently. The following are some of the best options to consider:

1. Senior Citizen Savings Scheme (SCSS)

SCSS is one of the most popular savings schemes for retirement as offers a high interest rate of 8.4% and also allows for tax deduction at the time of investment. However, there is one downside to this scheme which is that the maximum amount that you can invest is Rs. 15 lakhs. If your spouse also invests, then the limit can be increased to Rs. 30 lakhs.

2. Public Provident Fund (PPF)

The Public Provident Fund (PPF) is another popular long-term investment plan which has a tenure of 15 years. It offers a tax-free interest rate of 8% which is compounded, meaning that the returns are quite high. Also, both the principle and interest are supported by sovereign guarantee to make it a safe investment.

3. Atal Pension Yojana (APY)

If you are within the age group of 18-40 years, then you can invest in Atal Pension Yojana i.e. APY. As the name suggests, it’s a pension scheme in which you can deposit money on a regular basis to receive a regular pension after you retire. You get the option to receive a monthly pension of Rs. 1,000, Rs. 2,000, Rs. 3,000, Rs. 4,000, and Rs. 5,000. If you pass away during the tenure, then your spouse can receive the pension instead.

Apart from the popular investment schemes that are discussed above, you can take certain measures to save more money for your retirement:

Take Loans Once When You Have to

It’s possible that from time to time you may need to take a small business loan or personal loan. However, you should be careful with debt, especially when you are close to retirement. So, take a loan when you have no other option. Also, try to clear all your debt by the time you turn 60 and avoid getting lured by attractive interest rates or pre-approved loans that your lender may offer you on the account of your good credit score.

Take Care of Your Health

Staying healthy becomes more and more important as you age. Not only poor health affects your lifestyle, but it can also make a big dent in your savings that you might be saving for your retirement. So, try to improve your diet, exercise on a regular basis, and take measures to lower stress as much as possible.

Educate Yourself on Investments

There are all kinds of investment options depending on your budget and requirements. While there are standard pension schemes that are discussed above, there are other options as well which include mutual funds, stocks, bonds, etc. You can earn a lot more through these options, granted you know what you are doing. So, whenever you get free time, try to learn more about these investments and how you can maximize your earnings.

Protect Your Credit Score

Your credit rating is something that you need to protect all your life. This is because the score affects everything- the interest rate on a home loan, business loan, credit cards, etc. also your job prospects. You may have to pay high health and auto insurance premiums if the insurer checks your credit score before calculating the amount.

Save on Taxes

Did you know that there are many ways you can reduce your taxes? For instance, if you are investing in PF scheme, 5-year tax-saver fixed deposit accounts, etc. and paying a premium for health insurance, etc. then you can deduct these amounts from your taxable income and pay fewer taxes to the government.

Bottom Line

It’s understandable if you are anxious about your retirement. When you are old, then it becomes difficult to do lots of things that you are able to do today without any problems. However, financial planning can make your twilight years safe and stress-free to a huge extent. This is why it’s best to start working on a roadmap as soon as you can. Good luck!

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.

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.