Will My Job Hurt My Credit Score?

Money is an important aspect of life. You almost need money to complete every task in life. Where do you get the money from? That’s right, by doing a job. A good job can determine what you do, where you stay, what you wear and how your lifestyle can be. Your job can impact you in lot of ways both directly and indirectly.

Will it impact your credit score? Absolutely not! Your jobs, the designation, take home salary, bonuses, etc. does not get reflected in your credit report. This does not mean your salary does not have power on your loan buying process. For example, you are applying for a credit card; the lender will ask you for your annual salary to set a credit limit on your card. This way your job indirectly contributes when you apply for a financial product or a credit line.

So what exactly may hurt my credit score?

Payment history, debt levels, age of credit, types of accounts and inquiries on your credit report are the five main factors which contribute to your cibil score. Your employment status, your incomes and gains are never reported to the bureaus.

If unfortunately you lose your job for some reason, that can indirectly affect your credit score and you will end up on the loan defaulter list. Losing your job can be a saddest thing that can happen to you. You join a firm with a lot of confidence expecting your position will be intact, but when a bomb is dropped on you of unemployment, you are shattered everywhere.

Let us see how a job loss can indirectly harm your credit score,

Behind on loan EMIs and credit card payments

There is a famous proverb stating “Money brings Money”. When you happen to be in a job, there are a lot of bankers and card lenders who offer you different financial products like loans and credit cards. Though we know, they are just our want not need; even then we tend to go ahead with it. Because you have a stable job and a fat cheque, you start spending and get used to a lavish lifestyle. After losing your job, you realize that the EMIs are pending and the credit card bills are overdue and you have no money to make the payment. This will definitely result to a dip in your credit score.

Take new loans to pay your bills

Now that you know that you are in deep trouble financially after losing your job, you will opt for a new loan. A new loan will come with new terms and a new EMI, because it is an urgent requirement you may end up paying more processing charges than usual. You may also try to get in touch with your credit card vendor and ask for a limit raise. Limit raise totally depends on the sole discretion of the card lender, who will check your cibil score first and then think of giving you a limit raise.

 

Unexpected expenses

Trying to close one financial hole after another can be stressful but if in between this process something unexpected happens, like a family member needs medical attention then you are in for another problem in your life. This will result to you finding another loan to fill this gap.

A job hunt

Maintaining a good credit score is really important, even if you have lost your job. Many employers check your credit report to understand your financial capability and determine if you are job worthy. A bad credit score can cost you your next job. So no matter how bad your financial situation is, always pay all your debts on time.

You should always save money and keep some amount as reserve for unexpected events in life. Even if you lose your job, the reserve money can help you keep going for at least till the time you find another job. Spend less, always focus on what you need rather than what you want, this will definitely help you in long run to save money and live in financial harmony.

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How to Make a Good Credit Score Even Better?

We live in a time where having a good score is crucial for financial security and a comfortable life. However, the question is- what exactly is a good score?

Generally speaking, if your CIBIL score is below 600 then it’s considered a low CIBIL score, and if it’s above 750, then it’s considered a good score. But here is the thing- you should never be happy with your score.

It should be one of your continuing goals to improve credit score even if it’s good enough. This is because if you stop caring, your score can drop over time and become a “poor score” one day without you even knowing. In addition to that, working towards the best possible score ensures that when you need a loan or a credit card, then you are able to obtain them without any problem and at attractive terms and interest rates.

How do you make a good score better?

There are many things that you can do to take your score from “good” to “great”, such as:

Don’t Break the Streak

Since you don’t have a low CIBIL score, it means that you have been paying all your loan EMIs, insurance premiums, and credit card bills on time. So, if you want to increase your score, even more, it’s important that you never break this habit. In fact, you should do whatever it takes to never miss a single payment.

Your repayment history is one of the biggest factors to affect the credit score. In some credit rating agencies, it can make for as much as 30% to 40% of your entire score! Thus, the only way to improve credit score on a constant basis is to be punctual with your payments at all times.

Create a Healthy Credit Mix

Did you know that by simply increasing the variety of credit in your report you can easily increase your credit score by 10% to 20% or even more?

A lot of people are able to push their score only to a limit because their credit report is based on just one type of loan or credit card only. So, if this is the case with you as well, then you can add new credit profiles to your portfolio and see the magic happen! For instance, if your experience with credit in life is only on the basis a personal loan, then you can apply for a credit card or a car loan. You are sure to notice a major improvement in a short period!

Develop a Habit of Frequent Report Checking

If you can’t remember when the last time you checked your credit report was, then it’s something to worry about.

Monitoring your credit report is extremely important when you want to increase your CIBIL or credit score as much as possible. This is because it helps you track your progress and alerts you when or if your score starts to drop.

Checking your CIBIL report frequently also helps you prevent identity thefts and other frauds that can rob you of your savings and even greatly harm your credit profile as well.

Put an End to Your Credit Card Debt

If you love to use credit cards but make minimum payments more often than not, then it’s possible that you have a huge debt on your card(s) which is really bad for your score.

Although technically you are allowed to make minimum payments to avoid penalties and other kinds of charges on your credit card bills, from your credit score’s point of view, it’s bad. In fact, if you apply for a new loan then it’s quite possible that the lender will reject your loan application even if your score is high because of your high debt.

When it comes to credit score, it’s important to remember that you must not rest on your laurels once you have secured a good position. You must always pay attention to your finances to ensure that your score not only stays high but also makes an improvement over time as well.

Age Of Free Credit Score: True?

From January 2017, the Reserve Bank of India made it mandatory for all credit rating agencies to provide a credit report without any cost once a year when a request is made. This means the agencies have no obligation to provide a report themselves, thus if you need a report then you have to expressly make a request as per the guidelines laid down by the agency to get it. Well, does this guideline by the RBI actually translate into free credit score for all those who require?

How to Get Your Free Credit Score?

There are four credit agencies that provide credit reports for individuals in India and each has a different process for getting a credit report. Let us have a look how you can access your free credit score from each one of them:

  • Transunion CIBIL: If you want to get your free score from CIBIL you can do so by visiting the website where there is a link at the bottom of the home page for getting a free report. It’s a three step process, the applicant needs to fill a form where basic details need to be filled and then answer a few additional questions for authentication purpose. Post the details being verified the applicant can access his/her report.
  • Crif High Mark: They also have a link for getting the free score; it is on the left side bar of the home page. The first step is to fill in basic information, here the information required is more detailed, after filling the form the applicant chooses his/her order, then they authenticate themselves, after which they can download their report.
  • Equifax: If you follow the link that is displayed for getting a full free credit report you are directed to a set of guidelines where you are instructed to download an app for the same. The applicant will need to login to the app using a temporary PIN, authenticate themselves and login again after 24 hours. You are given four attempts to answer three questions related to your credit history; once you have completed all steps successfully you get the report on your phone. Those who do not have smart phones can get the report by sending a scanned copy of an identity proof and address proof along with the application form at the mentioned email id.
  • Experian: There is no separate link for a free credit report but once you click on the link for getting a report, it takes you to a form where you fill in details as required, get an OTP and then generate a password. After this, you can almost immediately access your report.

So is it Really the Age of Free Credit?

Yes, it is the age of free credit. Each organization has a different process, for some, it is slightly cumbersome and for others, it may be simple and quick. Irrespective of that fact, all rating agencies do provide a free credit report almost immediately or after some delay. If the process is followed the applicant can access their reports if they wish to do so.

Since there are four rating agencies, effectively one can get four credit reports in a year which makes one report each quarter. In case someone wants more reports than that (which is unlikely) then the option of getting it free might not be there.

So what does it mean for you?

Being updated about your credit health has many benefits. It allows you to spot any errors in the report and get them rectified if required, you can improve CIBIL Score by assessing the reason for it being low, and looking at report can also help you detect signs of any identity theft if it happens. Checking your report has many positives, now it costs nothing and it also does not lower your score.

So it’s up to all of you out there to make the best of the situation and stay credit healthy by checking your credit score regularly and that too without paying anything!

 

How Important Is One’s Credit Score?

Indian loan market has seen a rapid growth in recent years. Gone are the days, when people used to take loans only in times of financial crisis. Declining interest rates and flexibility to repay have made loans an attractive option to fulfil one’s needs today and repay the amount in equal monthly instalments. With this trend, credit scores and credit reports have also gained importance. People are waking up to the fact that scores affect many aspects of their financial life. So many people who have a low CIBIL score are now taking steps to improve and maintain it. They check their free credit score from all the three credit bureaus to keep track of their credit health. But is CIBIL score only a matter of concern to people looking for loan approvals. No, the importance of score goes much beyond that. But before we delve into that lets understand what a credit score is.

Three credit bureaus in India CIBIL, Equifax and Experian compile financial data shared by the member banks and other lending institutes relating to the credit taken by each individual. These bureaus prepare a credit report for each individual, which basically reflects your credit card and other loans repayment history. Based on your credit card usage and repayment track record the bureaus calculate a credit score. The way your marks had determined your level of knowledge in school, in the same way, the credit score determines the risk factor associated with a borrower.

Here are some places where your credit score will be evaluated

Loan approvals- Checking your credit score is one of the first things that lenders do to evaluate whether you are worthy of giving a loan. A high score helps in gaining lender’s trust and assures you of easy approvals. A low CIBIL score indicates that you haven’t dealt with your past debt obligations responsibly, hence lenders feel wary of lending you money. Even credit card approvals and credit limits get affected by your score. Hence a good score comes in handy in obtaining any kind of financial assistance.

Interest rate- An excellent CIBIL score not only helps in getting loan approvals, it also helps in bargaining for a better rate of interest. Lenders are ready to cut down on interest rates if the past records show that you are a diligent and responsible borrower. A low score costs you a lot, as banks charge a high interest rate to cover the risk that they are taking by lending you money. Hence your monthly interest outgo is directly impacted by your credit score.

Employment- Unheard of a few years ago, it is now increasingly becoming a common practice to check the CIBIL score of prospective employees. Credit checks are now an integral part of the hiring process  for jobs in the finance sector, or positions which require a person to handle company’s money. It is basically done to ascertain whether you are responsible in handling money. So if you are looking for a job, check your free credit score to see that your credit profile is in good shape.

Insurance premiums- Whether you are buying a home insurance or a car insurance your score will play an important role in determining the insurance premium that you pay on it. A low score can cost you thousands of rupees more than someone who has an excellent rating.

Renting property- Your CIBIL score can influence the rental opportunities that you have, as many landlords too check your score before letting you out their property. A landlord may not want to take the risk of not getting paid by renting his property to a person with a low CIBIL score. They want to be sure that they get their rent on time, so they prefer renting to a person with good credit who has shown responsible behaviour in the past.

You can order your free credit score from any of the bureaus once every year to monitor your credit situation. An excellent credit rating is anything higher than 750, but even if your score is between the range of 700-750, you can easily qualify for loans and bargain for low interest rates. A score less than 600 is considered as a low CIBIL score. If you fall into this category don’t lose heart. You can still get your financial life back on track if you take conscious efforts and work towards improving CIBIL score.

Credit Monitoring and Age: Are They Related?

With a significant rise in the cases relating to data breaches, data theft and identity theft there is a pressing need to take precaution and protect one’s credit record from such malignant activities. Credit monitoring is a defensive mechanism that aims to prevent, detect and resolve such kind of credit frauds.

Credit Monitoring essentially implies keeping track of an individual’s credit history and identifying any suspicious changes or activities. There are many companies that offer credit monitoring services and also provide you with a free credit score and report.

They notify the person whenever there is any new information in any of the credit reports like a credit inquiry, addition of a new loan account or delinquency. Such alerts enable the person to verify whether the changes made are genuine and accurate or not. If such developments are not initiated or authorized by the person then he can take necessary action right away to sort the issue before it becomes out of control. It reduces the chances of identity theft or any other kind of fraudulent activity.  It is an easy way of keeping a check on one’s credit health and score. These services also help in resolving and mitigating the damage if your account is breached. They also come handy if one is trying to improve credit score. Many credit monitoring companies offer an additional service of providing loans for low CIBIL score. Investing in such services is surely worth it as protection from fraud gives one peace of mind.

But should you think of signing up for such services at a particular age. Well ask yourself; at what age do you think you will be vulnerable to become a target of identity theft. It could in fact be at any age. Young and old, both are equally susceptible to become victims of identity theft. Thieves do not have any age preference. They are only concerned with making profit by using someone else’s personal information. Hence monitoring credit is extremely important irrespective of one’s age. It will alert you if there are any signs of your personal information being compromised.

Let’s see how credit monitoring helps in the young age when you start building your credit. Credit reporting errors like incorrect spelling of name, address, incorrect payment transactions are very common. These errors can do a big damage to your credit score. It is necessary that you get these errors corrected. But without proper monitoring, you will not even know that such errors exist.

Credit monitoring services also help in credit repair. They grade you on each of the factors that determine your credit rating. This helps you to identify your weak areas so that you can work upon them and improve your credit score. They guide you about what financial approach you should take so as to improve your rating. They also provide you with free credit score , so that you can track your progress on a regular basis. So if you wish to take a loan in the near future you should definitely think about approaching a credit monitoring firm, whatever be your age.

In old age financial aspects start taking a backseat, and people become less worried about their credit standing. But beware, the older generation is an easy target for the identity thieves. With high savings, big assets and excellent credit scores the senior adults become the perfect targets for criminals. So they too need a protection from such crimes. Lackadaisical attitude can destroy their impeccable credit history that took years to build. If a thief opens a fake credit card account in their name and starts charging purchases to the card without making the payments their score will plummet. Without proper monitoring, they may not even notice such activities for many months or years. With credit monitoring one can be alerted each time a new account is opened in one’s name. This way one can sort out things before they go out of hand.

Maintaining a good credit standing will give you better access to loans in times of need. You can obtain the best credit card reward offers and interest rates. Hiring a credit monitoring company can also save you from becoming a victim of identity theft. Hence monitor your credit reports and scores on a consistent basis whatever be your age.

How Can a Free Credit Report Help Indian Credit Users?

Are you planning to get a loan? If your answer is “yes”, then maybe you should take a look at your credit report first. You will be surprised to know how many loans get rejected on the account of a poor credit score.

There are countless Indian citizens who use credit cards, or have a loan under their name, but few realize the importance of their credit rating, which is affected by their credit behaviour. The following are the major credit bureaus of India that provide standard credit reports to the banks for consideration. If you have ever applied for a loan or a credit card, then be sure that your bank obtained your credit report from one of the following credit bureaus:

  1. Credit Information Bureau India Limited(CIBIL)

CIBIL is the most popular credit bureaus of India that the majority of lending institutions are associated with. It was the first credit bureau of India, and had recently partnered with TransUnion, which itself is one of the world’s most reputed credit rating and analytics companies.

CIBIL works along with TransUnion to provide credit reports of Indian citizens to private and government banks, along with other NBFCs. A CIBIL score ranges from 300-900, and is based on your credit usage, and repayment history.

  1. CRIF High Mark

CRIF High Mark is another highly recognized credit bureau of India that calculates credit score on the scale of 300-900, just like CIBIL. While the company is one of the top finance companies in the continental Europe, in India also the company has quite a reputation for its credit calculation and analytics standards.

You can obtain your CRIF High Mark score online for a modest fee.

  1. Equifax

Equifax is a US-based company that specializes in solutions for consumer, commercial, and workforce domains. In India the company works under the name ECIS, which stands for Equifax Credit Information Services Private Limited. It was renamed as the company collaborated with other financial institutions, namely Religare Finvest Limited, Sundaram Finance Limited, Union Bank of India, etc.  Just like other credit bureaus, you can get a copy of your credit report from ECIS online.

  1. Experian

Experian India is a fully owned subsidiary of Dublin, an Ireland-based Experian LLC, and operates as Experian Credit Information Company of India Private Limited. One of the reasons why Experian stands out from other credit information companies, is its proprietary statistical algorithm. This is why your credit score provided by Experian could be quite different than the one provided by other credit bureaus.

All the four major credit bureaus of India charge a certain fee for providing your credit report. However, there is a thing called “free credit report India” too. There are several websites that can calculate your approximate credit score by analyzing your payment history, credit usage, and some other factors that affect your score. While this leaves some room for error, you can certainly get a general idea of where you stand with your creditworthiness.

Here are a few ways a free credit report can be helpful to you:

  • Credit Health: A free credit report allows you to understand your credit health in a simple manner. The standard credit report can be quite complex for an average person to understand, but free credit report is simple and intuitive. Without going into unnecessary details it simply highlights what’s relevant to you.
  • Analytics: With a free credit report you can track your payment history, and your current stand with loan and credit card debt. Using it you can manage your payments accordingly. You can also check the score variation by month, and pinpoint the weak areas thus.
  • Credit monitoring: Of course, one of the best advantages of using free credit report is that you can use it to monitor your score easily. Before apply for a loan or a credit card you can check your report first, and if your score is low, then you can improve it first. With a high score your loan approval chance increases greatly.

If you are looking for an easy-to-understand yet premium free credit report tool, then simply fill out the form at freescoreindia. It offers an almost-accurate credit report which you can refer to if you don’t want to pay for the standard report, or just want something simpler.

Should You Check Your Credit Score?

Credit score was something that was unheard till almost a decade and a half back.  Now it is not only discussed occasionally but it has become almost a necessity if one wants access to formal credit. If one were to approach any bank or financial institution for a loan the first thing that the prospective lender will do is get the applicant’s Credit Information Report (CIR). All financial institutes access the CIR when they want to assess a prospective client but you as an individual if you want to see how your credit health is or you want to know how to boost your credit score by looking at the grey areas in it then should you do it? Will checking you CIR have any impact on it? Is it a good idea to check your score? Well if you have any doubts the ensuing discussion is just for you.

 

Hard Enquiry V/S Soft Enquiry

To understand whether checking one’s credit rating impacts it in any way let us understand the difference between a hard enquiry and a soft enquiry. When a Financial Institution or a bank ask for the CIR of an individual it is known as a hard enquiry and as the chart alongside shows it has a 10% bearing on the score calculation.  When an individual checks his/her credit score then it is known as a soft enquiry and has no bearing whatsoever on the calculation. So checking your own score will not impact the credit rating unlike a hard enquiry; too many enquiries can impact the credit rating adversely. In fact one has the option of getting a free credit score also; you should check you score from time to time owing to the reasons explained in the following paragraph.

 

Why Should You Check Your Credit Score?

Now that we have established that checking your own score does not impact it negatively let us focus on why is it beneficial to check your own score periodically. Let us assume that you want to buy a new car during the coming festival season and you apply for a car loan; the loan application is rejected due to a low CIBIL score and you end up missing the special discounts.

Checking you score from time to time makes your prepared for a situation when you may require a loan in the future and beyond loans also if you apply for certain jobs. Yes! You read it correct a poor credit rating could hinder your job prospects too just like it hinders the borrowing prospects. Recently in their recruitment advertisement SBI had asked applicants to check their score before applying. If the rating is low due to some reason, being prepared in advance gives you sufficient time to try and increase the score and be ready to apply for a loan and a job too.

Accessing you CIR also gives you a comprehensive picture of your financial health. Thus beyond loans it could help you in financial planning and also course correction if you are too over leveraged, are late in making payments or there is some unpaid due which you have forgotten about. Looking at your credit report you get a summary of all your open loans, their remaining tenure and so on which can help you prepare for your future. Sometimes there may be an erroneous reporting in the CIR which may impact the score negatively although you might not be at fault. An occasional look at the CIBIL Score can warn you of such a situation and you can take timely remedial action.

So to answer the question asked at the start of this discussion; yes one should check their credit score. Checking you score in no way impacts it negatively; on the contrary it can help you by being prepared to deal with any situation and can also aid in financial planning.

The Importance of Your Credit Score When Looking For a Home Loan

Real estate prices in India have scaled to unbelievable heights. Buying a house, atleast in the major cosmopolitans in India seems like a distant dream for most especially because the prices have exceeded a common man’s affordability. Inspite of the recent trends in property prices in India showing a marginal downturn, they still remain far above the ground.

To cover the gap between what a common man’s pocket can allow and what home sellers are asking for, a home loan must be sought. This article will quickly walk you through on why your credit score is such a big deal when you are looking for a home loan.

How to proceed when looking for a home loan?

It is important to mention here that banks and other non banking institutions that provide housing loan and are also member of CIBIL, withdraw a loan applicant’s credit report as a first step in evaluation of the loan application. Whether the applicant is seeking a secured debt or an unsecured debt it does not matter. Even for a thing as minor as a request for an upward revision of the credit limit on your credit card, sends a bank looking for your credit report. Most banks and other lenders are known to grant credit to those who have scores greater than or equal to atleast 750. Thus, what’s applicable for any other loan is applicable for home loan too. You should do a cibil score check every year to keep a eye on your score.

Banks and other non banking financial institutions do have their internal policies on credit scores and reports but none of them have ever openly disclosed their criteria. However, by and large 750+ scores are considered as very good score to get through the loan process at any bank, unless you lack a document or fail on other parameters of the lender.

How do I know my score?

Knowing your score is not complicated at all. You can get online and go to cibil’s website . Here you can request your copy of CIBIL report. After a payment of Rs. 550/- you can easily and instantly get yourself access to your score and report. Incase you do not want to invest money in withdrawing your report then you can also go to http://www.freescoreindia.com and request for a free credit score. Although free but you will receive it only three days after you have submitted a complete request. So, if you are not in a hurry, you may consider this alternative.

I know my score, now what?

Once you have received your copy of the report then give it a thorough look. Look at all the details carefully and make sure that they are all correct. Incase you find any false information then it is best to raise a CIBIL dispute and request for a rectification. The reason why you should be so cautious about all the details to be right is because there could be information that is hampering your score. Upon correction of that misleading information, not only will your score improve but also it will become easier for you to impress upon your prospective lenders.

For example, you may have paid in full an old used car loan some time ago but the lender has not reported this to CIBIL. However, the report shows the loan account as still “open” and running. Since CIBIL’s authority is limited to only collating data from its various members, it cannot update unless it has been notified from the bank itself. Thus, by having your data corrected, it will bring down your used credit limit and help increase your score.

I have a good score. Can I use it to my advantage?

Ofcourse! It may come as a pleasant surprise and it is true. Often we have heard that people with poor scores need to worry and not those with good scores. But that is so untrue. The truth is a good score helps the borrower more than the lender. This is so because it not only it means that you can easily seek credit upto the limit of your eligibility but also you can negotiate for favourable terms and a lower rate of interest. Banks and other lenders will be vying for your loan portfolio incase you have a good score. Therefore, you can certainly take advantage of competitive rates.

Are there any loans for someone with a poor score?

Well, ofcourse. Even with bad credit home loans can be acquired. There is a good chance that you may have to pay an interest rate higher than standard rates or you may have to get a guarantor on board or perhaps, get someone with a good credit standing to co-sign your application, but you certainly do not need to deprive yourself of a home loan.

Incase, unfortunately you do not hold a good score then do not lose heart. You can adopt credit healthy ways and work on improving your score. We have covered on our blog on how you can repair your broken credit.

Rejuvenate the power in your credit score

Like they say, “better late than never”.  Despite a poor score, by bringing discipline in your finances and making a fresh start will help you achieve a better score over a period of time. Avoid being nonchalant about your score, have patience and work on it actively. Once better then go after that loan you always wanted.

There may be chances that you do not have the skill required to negotiate on interest rates or you do not understand how you can bring in discipline in your investments. In this case, you must seek expertise of credit consulting companies who can do this job for you. Find comfort in the company of an expert and follow their advice.

Stay tuned for more credit updates!

Important tips for first time home buyers

Congratulations! Now that you have decided to take that all-important first step towards purchasing your long-dreamt of asset – your first home – it’s time to look into all the details with a magnifying glass. It is no doubt an exciting prospect, but it can be overwhelming too, if you do not walk into the loan buying process adequately armed.

Let us quickly walk through the must-dos that every first time home buyer should evaluate before signing on the dotted line.

Check your credit score – A very critical aspect of the home buying process, this vital piece of information can often be the reason for your application to be reviewed favourably or otherwise. A high credit score typically translates into a loan at the most competitive terms, and can mean that over the long term you wind up saving a significant chunk of money. It would therefore be prudent to do a cibil score check and call for a copy of your credit report and know where you stand and if required, take adequate steps to better your score.

Select your home loan provider – There are quite a few lenders out there, be it banks or other financial institutions. Do your homework and select a lender that closely matches your thoughts and philosophies. This is because you will be associated with the lender for a reasonable amount of time (given that home loan tenures are rather lengthy) and you want to work with a lender that offers you comfort and impeccable customer service.

Avoid overspending – Know what you can comfortably afford, and stick to it. While it may seem a dream come true to have that 5 bedroom apartment you always wanted, remember that it comes at a cost – not only do you have to pay your EMI each month, but you likely have other commitments that need to be met as well. Hence, keep it real and buy a house that you can comfortably afford at the time.

Determine your loan eligibility – Prior to applying for a loan, run a quick check to roughly determine the loan amount you would be offered basis your current financial standing. This can easily be done using a number of tools such as a home loan calculator that are available online.

Know the interest rate – Given the sheer number of years you are likely to spend repaying this loan, compare home loans and see how much the property is going to cost you.

Know the paperwork – You should understand in depth the formalities to be followed, both at this stage and throughout the life cycle of the loan and home buying process. This will include valuation and verification checks carried out by the loan provider. Check that all legal documentation is in place. This includes the title and search report, development agreement, Power of Attorney (if applicable), commencement certificate, approved sanction plan from the relevant authority, occupation certificate, NOC etc.

Identify properties – As per your requirement, select properties that you believe you would be interested in. Shortlist/ narrow down prospective properties and focus on those. Meet with the builder (in case of under construction/ new construction) or the present home owner (in case of resale property) to view the property. If selected, make an offer and negotiate the sale amount. The seller (in case of a resale property) may have a particular price in mind. Once you have a fair idea of the value of the property, make an offer to the seller. Have the home appraised and inspected to ensure everything is in place structurally.

Check property documentation – You would need to thoroughly examine the documentation available with the seller, to ensure you are legally in the right. For example, in case of a resale property, the title deeds including the previous chain of documents, copy of the agreement to sell (if already executed between the buyer and seller) etc. are required for loan processing.

Consider the resale value – While they say that property always tends to appreciate, you ought to prepare yourself for any eventuality. Hence, when you buy a house also do factor in its resale value, and whether you are likely to be able to sell it easily, or would it take more time to liquidate.

Property registration – Once the sale has gone through, you would have to sign the sale deed and complete the related registration formalities (including payment towards stamp duty, etc.). Remember that property registration is a must under Section 17 of the Indian Registration Act, 1908. Determine the stamping requirements (as a percentage of the value of the property) and pay the registration charges for a sale deed. In case of a new property being purchased directly from the developer, the developer will convey the title in the name of the society. In case of resale property, then NOC from the society is required. When the sale deed is executed, before handing over complete payment to the seller, all title documents need to be collected from the buyer.

In conclusion

Let your home buying process be a pleasant experience, with no glitches to bog you down. It is therefore important to do all your groundwork thoroughly before proceeding with the purchase.

Remember that as with all loans, here too a good credit score is very important, and hence being credit healthy is one of the starting points to make buying smoother.

What are credit bureaus

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Mrs. Bakshi works for the IT sector at a senior position and draws a monthly income of INR 1,30,000. She is servicing three credit cards, one education loan for her daughter and a car loan. All of these have been procured from different banks. She now wants to know her performance on all of these loans and also wants to find out, how much is the outstanding on her loans and credit cards, to manage her finances properly.

What would she do to procure information on her loan accounts from all these banks? Run around to all the banks and ask for information?

Well, there is a single window / platform from where, this information about multiple loan accounts can be procured. It is known as ‘credit information bureau’. In India, the most well-known bureau is Credit Information Bureau (India) Ltd. Abbreviated as CIBIL. Let’s know more about these ‘credit bureaus’.

Credit Information Bureaus are the repository of credit and loan related information of borrowers. This is the information submitted by banks and lending institutions to the bureaus – about those customers who have – either single or multiple – loan accounts.

A customer who has multiple loan accounts at different banks, and wishes to draw information on all of those, may find it challenging & time consuming to do so. Whereas, if there is just one institute that provides all the information on all loan accounts of a particular customer, it is very convenient and also quick to seek such information.

This loan account information is known as “credit information report” and is prepared by credit bureaus based on the details submitted by the banks / NBFCs. A credit report can be of either individual customers, business enterprises or organizations & institutes. On the basis of information submitted by the banks, the credit bureaus compute credit score that marks the credit worthiness of the account holder.

How can one single bureau have all the information of Mrs. Bakshi’s loans and credit cards?

All the banks who lend money in the form of either loans or credit cards, have to compulsorily submit such information to the credit bureaus on a regular basis. Hence, any bureau will have all the information on a particular customer’s credit history whether it is a loan or a credit card; or whether they have taken loan from a single bank or more than one bank.

Is there only CIBIL or are there more credit bureaus in India?

There are four Bureaus operational in India, to whom all the banks report their loan information. Credit Information Bureau (India) Ltd. or CIBIL , Equifax Credit Information Services, Experian Credit Information Company and Crif High Mark Credit Information Services. A customer can seek their credit report from any of these bureaus. These credit bureaus charge a nominal fee to provide customers their credit information report and credit scores.

CIBIL charges INR 500.

Equifax charges INR 400.

Experian charges INR 400.

Highmark charges INR 300.

Many people wrongly believe that a bureau will provide them their credit information for free. There is no such a thing as free credit report or free credit score. One has to pay for such service.