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.

Things You Must Know About Top-Up Loans

Mr. Arora took a home loan with a 15-year tenure at an attractive interest rate. However, after 7 years he realized he felt the need of renovating his house. So, just like most people he thought a personal loan would be a good idea to cover the expenses and started looking for a good deal. Unfortunately, he couldn’t find a personal loan with an affordable interest rate even though he didn’t have a problem of a bad CIBIL score or bad credit history.

With the burden of this loan already on his shoulders, Mr. Arora desperately needed to arrange the funds for his home renovation in a way that it didn’t burn a hole in his pocket. This is when his friend told him about it.

What’s a Top Up Loan?

A top-up loan is a small loan you get on top of your primary loan- mainly a housing loan. The interest rate on a these loan is usually smaller than a full-fledged personal loan. Moreover, you can also enjoy tax benefits with a top-up loan.

The following are some of the things you must know about top-up loans:

  1. Qualification

These loans have their benefits, but just because you are repaying a house loan, it doesn’t mean that you automatically qualify for them. Your lender will inquire about your reason for a it and will make a decision at their discretion.

The following are some of the good reasons:

  • Medical expenses
  • Home renovation
  • Land purchasing
  • Education expenses
  • Business Expansion
  1. Collateral

Since a top-up loan is provided on the basis of a primary loan i.e. a house loan you don’t need to provide security for the same. The bank uses the house as collateral. However, this means that even after you have repaid your loan you have to wait until you have repaid the top up loan as well to get back the rights to your house from your bank.

  1. Interest Rate

The interest rate on a top-up loan is 1% to 2% higher than the housing loan. However, it’s still lower than most personal loans available. You may also get to pay a smaller processing fee.

  1. Tax Benefits

If you are using it for acquire/renew/construct/ or repair a property then you are eligible for tax deductions on the amount paid for the principal amount and the amount paid for the interest on the loan as per Section 80C and Section 24 respectively.

Top-up Loans Conditions

Although the eligibility criteria for a varies from one bank to another, the following are some general conditions:

  • You should be availing a home loan from the bank/ financial institution.
  • Most banks require you to repay the home loan for 6 months to 12 months, or even more before you can apply. They do this to assess your repayment habits. Thus, you should not have a low CIBIL score or bad credit report. If that’s the case, you must take measures to CIBIL score before sending an application.
  • The usual permissible loan amount is calculated on the following basis:

permissible amount= 70% to 80% of the market value of the property- loan balance

So, if your house is worth Rs. 50 lakhs in the market and the pending debt is Rs. 25 lakhs, then you can only get a maximum of Rs. 10- 12 lakhs through it.

  • Many banks limit the tenure according to the outstanding term of your current loan. So, if your loan term ends in 9 years, then the maximum length of top up loan tenure would be 9 years.

If your credit history is good and you don’t need to improve CIBIL score then availing a top-up loan is an excellent option over others such as personal loans, etc. This is because the process of a top up loan is simple and easy. Moreover, you don’t have to offer another property as collateral with them.

Denied credit based on credit report? Here’s why

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Did you ever try to opt for a loan or a credit card and have been denied? Your credit history is recorded and filed as cibil report with credit bureaus. When you apply for a loan or a credit card the bank is likely to request for a credit record by the credit bureaus to understand if you have any default payments or unpaid debts. It also indicates whether you have filed for bankruptcy or arrested by to loan defaults. The reasons for denial of credit can be varied and different in every situation.

Here are some reasons why your credit can be denied:

High Debts

Any lender or creditor would like to see how you spend your earnings, if you have high debts or used maximum limit of your credit card could be a reason why your application can get rejected. Always try not to overspend from your credit card, many banks and organizations prefer people with people at least having 50% of limit available in their credit cards.

No credit history

A no credit history means you don’t have anything on your cibil report. This means you have never applied for any credit in your lifetime, which is a good thing. Many individuals prefer buying things in cash or without any line of credit which leads to a no credit history. In such cases many banks face hard time to sanction loans or credit cards without knowing the individual’s pattern of repayments. You can show your rent receipts if you are a tenant just to prove your reliability in making payments.

No credit activity 

When you have active accounts with banks it’s important to make small transactions with those accounts. If you have not made any transactions with such accounts it’s hard for a score to get generated. It’s suggested to make small payments or transactions to keep the scores activated and going.

Frequent credit report inquiries

If you have too many inquiries on your credit report and not many loans reflected on your report, the lender will come to a conclusion that you are trying for loans with multiple banks and organizations and there is something wrong with your current financial status.

 

Fraud cases

If you have done a fraud in terms of repayment, bad debts or you have been approached by an agency for money collection. This will severely damage your cibil report and will lead to a low cibil score. Always pay your debts on time and adhere to the EMIs so that you don’t face such circumstances. The collection agency approaches a customer if the credit balance has not been paid and its more than 6 months for the same.

If your application for a loan or a credit card is rejected, you may ask for the reasons why your application was rejected. If the information provided to you is inaccurate or false, you can file a dispute and the credit bureau has to correct the errors found.

It feels when you face such situations where you are denied for credit on the basis of a bad credit report but do not lose hopes, there is always a plan B. you will be able to find a lot of private lenders who will not consider you cibil rating. Start building your credit ratings from scratch and try maintaining a good score so that when time comes you can get easy access to loans. As we were told “small steps will lead to a bigger and better you”.

The Bad Credit Score Survival Advice

A red flag in the credit information report is like a fire in the jungle. You do not know how much damage it would make until it eases off. Surviving bad score is thus not easy. A lot of people might share the tricks of restoring credit score however the truth is, it is easier said than done.

Once ruined it would at least take six months to rebound the low CIBIL score. Many a times the damage stays on your report for years to come. All you can do is pacify the bad history with good history.

Let’s find out how you can cope with bad score and roll over the financial dice in your favor once again.

Seek professional advice on bad credit score survival.
After you come to know about your low score, the first step should be to seek a professional help. When you contact a Credit Improvement Agency, it would assess your credit report and guide accordingly the ways to improve the score.

If however you choose to do it yourself, go for free CIBIL check online and study your report. It will help you understand the gravity of the problem. After studying the report, if you find any errors eliminate them without a delay.

Make a budget and organize your finances
With bad score, your credit worthiness is hurt very badly. You need to take charge of financial conditional and analyze your expenses and incomes. Calculate your net income and know how much you actually have in hands to pay out the debts and installments. You should try to close the expensive cards and accounts first and try to save as much as possible.

Not to mention, you should try to add as much income avenues as possible and try to have some surplus every month. Your sole aim should be to become take your debt utilization ratio to 30% of the limit being granted to you.

Contact your creditors and make a repayment plan
When you have too many debts to manage, you should consider contacting your creditors in a hope to find an option to survive the bad account. Speaking with your lenders may help you find a middle path with lowered interest rate or a new repayment plan.

Raise additional loans to pay off loans / credit cards
After you limit the pressure of debts by closing expensive cards and refinancing of the loans, consider applying for new secured loan to survive the bad credit. You can use the amount to manage your finances and repay diligently all the installments. This would build a good history and gradually improve the score.

Use a co-signor or guarantor to avail low interest loan
When you have bad credit score with red flags in the credit report, it is unlikely that banks would offer you loans at low rate. With bad score you become a risky prospect for the bank and they want to lend only with a certain degree of security. Besides rejection of a loan application further ruins the score. Keeping both the facts in view, you should apply for loans with a co-signor or guarantor.

You can ask your friend, spouse or blood relative with high credit score to become a co applicant or guarantor for you. This would raise the chances of loan approval and that too at normal interest rate.

Use a high worth asset as collateral
With bad CIBIL score each unplanned financial activity would hurt your score further. Besides loan repayment and credit utilization ratio, the mix of loans and length of loans also affect your score. If you have home equity or other high value assets such as Gold, you can use these assets as collateral and raise a secured loan.

Consolidate your debt
When you have too many debts to pay and manage every month, you can consider consolidating them into a big umbrella loan that helps you close all accounts into one. You can consolidate loans as a long term personal loan using your home as collateral. The goal of consolidating loans is to make your monthly repayment affordable and save some surplus every month.

Rent a home/property
Last but not the least you can consider renting your home or part of your home to raise some extra funds and save some amount every month.

Using all these steps you can gradually improve your credit health.

Mistakes to be avoided when trying to improve CIBIL score

A credit score is something that reflects your credit history and thus it is something that cannot be built or destroyed in haste. A lot of factors contribute in making or breaking your credit rating. Being a responsible borrower is the simplest way to having a good cibil score; but if you have not done that then you will have to work on trying to get a better score. While there are certain things that can help you build your score, there are some other aspects that can pull it down. So here is a look at few things to avoid if you are looking at improving your score.

  • Excessive Use of Credit Card: Credit cards are a great convenience but their use may often be criticized as one can easily go overboard and regret it later. However one may think that if they manage to pay their full dues on time the credit card usage will never cause a problem, but this notion is wrong. Using your card judiciously is important if you are looking at improving your score. This means that you need to limit your credit card expenditure per cycle to 40% or less of the sanctioned cared limit. This is known as credit utilization ratio and this needs to be calculated per card wise as well as for all cards put together in case of multiple cards. High credit utilization can harm the score as the user appears to be credit hungry.
  • Making too Many Inquiries: When you apply for a loan, the lender seeks your CIR from the credit agency which is known as a hard inquiry. Each hard inquiry is recorded in the CIR and impacts the score negatively. Thus if you truly require a loan then make sure you research well before you actually apply for a loan. This will ensure that your loan application is not rejected which will eliminate the need to apply for a loan elsewhere. So for example if you want to buy a new car and need a loan for it, then carefully research about car loans Check which lender offers loans at what rates, what is the LTV ratio, what are the documents required, at what credit score they are willing to offer loans and so on. You should then approach a lender who you know meets your requirements and who will be willing to lend to you based on your rating and profile. Refrain from making unnecessary enquiries.
  • Settling an Account: Consider an example to understand this aspect. Priya is looking at improving her credit score so that she can apply for a home loan next year. She goes through her CIR and spots an old credit card debt; she decides to take care with an aim of improving her score. She got in touch with the credit card company and she paid the dues after some negotiation. Hoping to see her score improve she got her CIR but was dismayed that it had reduced further. If you are as confused as Priya that why did this happen then we have an explanation. When you pay old dues then the fate of your score depends on how this repayment is reported. If the account is reported as settled then it could mean trouble as it will raise a question mark in the minds of all future lenders about getting their money back in full. If the debt is reported as simply being paid then it will have an opposite impact.  
  • Guaranteeing a loan without thinking: Sometimes an applicant may find it difficult to get a loan on his/her own due to lack of proper documents, low score, not meeting the eligibility criteria and so on. In such a scenario they may ask someone to guarantee their loan. Well this can definitely ease out the problems for the person seeking the loan but may cause the guarantor to land in a tricky position without realizing so. If the applicant fails to pay his/her dues on time then the guarantor may be asked to do soon. What’s more each delayed payment can harm the score of the guarantor as well. So though you may be servicing all your loans on time you score may still be low because of a loan you guaranteed. Thus if you plan to guarantee a loan, do it after being sure about the applicant, you own ability to service it in case the applicant fails to so and also after you are sure about its impact on your own credit score.

Often small things can cause your score to dip. Thus make sure you steer clear from the above mistakes if you want to be credit healthy.

 

Reasons why errors on your CIBIL Report can be Destructive

Priya wanted to gift a new card to her parents on their anniversary. She chose the car, model and color keeping her parent’s choice and requirements in mind. She then applied for a loan, she knew it would not be difficult to get a loan as she had all the required documents and she had also maintained a good credit history. Her loan was rejected due to a low credit score and she was almost shocked as she had always been a responsible borrower. On going through her Credit Information Report she was shocked to see that there were delayed payments reported in it. She had never missed a payment and it turned out it was a reporting error by the lender.

So Priya missed a chance to gift her loved ones at the right occasion, this could have been avoided if she had been pre-emptive and had applied for a free CIBIL Score and checked if the score is acceptable to the lending agency. Despite being meticulous in her credit habits she had to face some problems.

How can errors in your CIBIL Report be Destructive?

While for Priya it was disappointment, a low CIBIL score can cause bigger problems too. It can result in financial loss, missed opportunities and a lot of wasted time and effort for no fault of yours. Being credit healthy is important and it could be doubly distressing if despite being a careful borrower your score is low due to an error in the report. While these errors can be rectified and once they are removed from your report they will enhance credit score but sometimes the delay can cause a lot of trouble and loss too. These errors could be wrong reporting of a default in payment, a loan or credit card that does not belong to you being reported under your name which will reduce your borrowing capacity and if there have been any defaults on that loan they will also be include in your score calculation.  Here are a few ways in which these errors can be destructive:

  • Cause Loan Rejection: If a lender reports that you have missed a payment or the loan is reported as settled erroneously then this could cause some serious trouble for you. Not only your credit rating will take a hit, a look at the CIR will scare away the lenders. No lender wants to lend to a person who does not pay on time or is a default risk. Thus the lender will not know that the reporting in the CIR is erroneous and they will reject your loan application without a second though whatsoever.
  • Harm your Job Prospects: This may not seem like the most obvious impact of an error in the CIR but could be more harmful then getting a loan rejected. Imagine not getting the dream job or losing out to a competitor in the final round of interviewing due to an error on your report which can cause you to appear like an untrustworthy candidate or somebody who is debt ridden. Increasing number of employers are seeking credit check of prospective employees along with a background check and a health check. This is to ensure that the employee that they hire is trustworthy and will not get into legal trouble due to unpaid dues. Thus an error could cost you dearly at a job interview.
  • Credit Card Application Rejection: An error in the CIR could also cause a new credit card application to be rejected. If your CIR show you have a high utilization ratio, missed payments or have a “settled” status account in your report even erroneously it could lead to the card company rejecting your application. While you can certainly apply for the card again after rectifying the error but sometimes the delay can cause more than expected trouble.
  • Make a loan more expensive: Errors on the CIR can lower your scores which can cause lenders to assume you to be a high risk borrower. This can make them charge you higher interest rates on loans then they would have charged otherwise. Higher the risk, higher the interest you are charged so you can end up paying more interest on a loan for no fault of yours.

The best way to avoid getting into a situation like this is to get your credit report from time to time so that you are aware of any errors in it and get sufficient time to rectify it. This will ensure that you do not suffer any losses because of these errors.

 

Is all the hype on credit score justified?

If one had applied for a loan a decade or so back, they would have required the relevant documents, knowing the bank manager or knowing somebody who knew the bank manager and could “introduce” the applicant. Knowing the manager or being introduced to the manager ensured that the lender knew about you being a reliable borrower or a trustworthy person which could not be established by simply looking at the documents. Lenders want to give money to those who can be trusted and this judgment was made in a subjective way in the past and often backfired. Things in today’s times have changed; now this “trustworthiness” or “creditworthiness” can be established in a more objective way; with the help of the credit score.

So What is a Credit Score?

Before focusing on the hype that surround the credit score and if it is justified or not we will try and understand what the credit score is. The credit score is a three digit number that reflects the creditworthiness and also the credit health of the individual. This rating is calculated based on the credit history of the individual; this history must be at least six months old and includes various aspects related to loans, credit cards and other credit behavior.

Based on five main parameters that are namely the repayment history, credit mix, credit utilization, inquiries and loan tenure the credit score is calculated. Amongst the five the repayment history is the most important parameter followed by credit utilization. These aspects are used to arrive at the credit score of the individual. The Credit Information Report which is a detailed contains a lot of information related to loans and the individual apart from the credit score.

Why is it Important?

So now we know how the score is calculated. So, why is it important? The score is important as it lets the prospective lender judge if the prospective borrower can be trusted or not. Let us start from the beginning. When an applicant applies for a loan, he/she submits an application along with the required documents. A financial institute will get hundreds of applications, they want to be sure that they lend the money to the right candidate, a person who can be trusted and is credit worthy. So how do they do this? This cannot be judged by simply look at the documents and the application form. This is what brings us to the credit rating.

The prospective lender will ask for the CIR of the applicant and based on the CIR the lender will decide whether to go on to the next step or not. The score is calculated based on the past credit behavior of an individual, thus the lender can make an assessment whether a person is likely to be a responsible borrower or not or is likely to default based on his past behavior and his current debt obligations.

Each financial institution will have its own set of rules and requirements when it comes to accepting a loan application or not. One of the criterions that the applicant has to comply with also concerns the credit rating of an individual. Thus those who have a score that is less than what is acceptable to the lender will not be sanctioned a loan, their application is likely to be rejected at the first step only. The acceptable credit score varies not only with the lender but also may differ depending on the loan type.

Generally a score of 750 is considered to be good enough to get a loan sanctioned. As per the statistics by CIBIL 79% of all loans sanctioned are to those people who have a score of 750 plus. If you are looking for a loan and have a score below this, it is a good idea to improve CIBIL score before you apply for a loan.

So is thy Hype Justified……

To clarify CIBIL or any other rating agency does not specify who should be given a loan or not, they just collect the data from various lenders and arrive at a score based on it. However, having said that almost all lenders look at an individual’s credit score before deciding whether to lend to him/her or not. Thus getting a loan or a credit card is heavily dependent on a healthy credit rating else your chances of getting a loan approved go down. Even if one were to get a loan with a low score it would be at higher interest rates. So yes the credit score is important and one must focus on keeping it healthy, not for the hype but for your own sake.

 

Is it Possible to Have a CIBIL Score Higher than 850?

If you are a smart credit user then you probably have a decent credit score already.  However, do you know how high it has to be to be considered good by a lending institution? A score higher than 750 is considered good by lending institutions, but the maximum you can get is 900, which is the limit. So, this begs the question- can you get a perfect 900 score, or at least higher than 850? The answer is “yes”. If you are willing to go to great lengths for scoring higher than 850 then you can certainly succeed in the endeavour.

Here are some of the things you must do to get a super high CIBIL score:

  1. Lowering Your Credit Utilization

High credit utilization has a direct affect on your score. Even if you have been paying your credit card bills on time, and making regular EMI payments, excess of credit usage can be detrimental for your CIBIL rating.

To get a perfect or near-perfect score you must cap your credit utilization at 30%-40%. If your credit requirement is high then you can also ask your lender to increase your overall credit limit so you can spend the same amount of money every month, but enjoy the benefit of lower credit utilization ratio.

  1. Automating the Repayments

If you want to improve CIBIL score and create an impressive credit report then paying your EMIs and credit card bills on time is a must. There is no workaround for it.

Since even a single late payment can hurt your credit score, it is best to not take any chances. So, one thing you can do is make an arrangement with your bank and have them set automated repayments. With this your EMIs and credit card payments will be deducted from your account automatically every month.

  1. Length of the Credit History

The longer is your credit history, the higher will your score. This is because a person will shorter credit history has a risky profile, and can’t be trusted by a bank easily. So, if you have several credit cards under your name and you have to cancel one out of them all, then choose the one that was issued most recently. If you will cancel an old credit card it could affect your score negatively.

  1. Being Careful When Applying for a New Loan

If you are planning to get a new home loan, personal loan, etc. then make sure that there is a gap of at least six months since your last loan application. When you apply for loans or credit cards frequently then lenders can consider this as a credit hungry behaviour and report it to CIBIL. This can hurt you score to a great extent.

  1. Checking Your Report Frequently

Are you trying your best to improve your credit score but are not observing any improvement? Maybe the problem is not with your efforts, but with your report itself. Many times credit users get a bad CIBIL rating because of errors or mistakes in their credit reports.

You can get a free credit report online to get an idea of where you stand. If you are not satisfied with the rating, you can apply for the actual CIBIL report by creating an account on the official website. If you find any discrepancies or mistakes in the report, you can intimate your bank about the same. They will inform CIBIL, which will make the changes accordingly. You should be able to see the improved rating within 30 to 45 days.

When it comes to credit score, you shouldn’t ever get comfortable. Financial institutions are becoming more and more stringent with their application procedures. More than that, a high credit score is also slowly becoming a part of the eligibility criteria for getting a job. Thus, you should always strive to improve your score no matter where you stand. Even if your score is higher than 750 (which is considered satisfactory), you can always improve it. With an excellent score you can get a loan or a credit card easily in the future. Plus, you can also enjoy low interest rates as well.

 

What is P2P Lending? Why is it Trending?

For many decades banks were the only financial institutions that offered home loans, student loans, etc.  on a commercial basis. Then gradually NBFSs (Non Banking Finance Companies) such as Fullerton Credit, Muthoot Finance, Bajaj Finserv. etc emerged. However, as cases of loan defaulting started to become more and more frequent, and the interest rates went high, people began to look for alternative solutions that could be easy on the pocket, and also easily accessible. This was accomplished by P2P lending, which is catching up quickly in India.

What is P2P lending?

P2P lending stands for Peer 2 (to) Peer lending. It is the ultimate urbanisation of loaning and financing, as it offers an easily accessible, fast, and simple solutions for all your loaning needs.

To get a P2P loan you can choose any P2P marketplace that is available on the Internet, check if you meet the eligibility criteria, upload a few necessary documents, and if your application goes through you can get the money within 24-48 hours, typically.

What are the Advantages of P2P Lending?

P2P has numerous advantages over traditional loaning options, which is the reason why it is quickly becoming the most preferred choice for loan seekers.

Here are some of the best advantages of P2P lending:

Accessibility: One of the biggest problems we had with traditional loans was accessibility. To get a loan a person had to go to a bank in person, and submit an application for the same. If there was a holiday then the person would even need to wait till the banks opened. P2P lending has solved the problem successfully by allowing users to apply for loans on the Internet. No matter where you are, and what time is it, you can easily apply for a loan from your laptop or a smart phone.

Faster Release of Funds: With a P2P loan you can get your loan amount within a day or two after verification of your documents. This was much needed, as banks, and even NBFCs, take a much longer time for funds disbursal, that too if your loan gets approved.

Easier Obtainment- To get a loan from a bank or NBFC you have to have a good CIBIL score, and a decent, if not impressive, credit history. This is why a number of people who didn’t meet these requirements have to struggle and spend a long time applying for a loan in multiple banks. But this was a thing of yesterday. Today, you can get a P2P loan even if your credit score is below average. P2P lenders are more forgiving than banks, and you have a far greater chances of securing a loan from them than any traditional lender.

Flexibility- P2P lending also offers you a lot of flexibility in terms of loan repayment. You are free to shape the payment structure for your loan, and choose the duration, and the number of instalments. Usually you also get attractive interest rates, which are way lower than standard rates offered by banks.

How is P2P Lending Changing the Banking Industry in India?

Even though P2P has been existing, and rather popular, in first world countries such as UK and USA, it is still quite new to India. However, it is trending fast, and it is estimated that by the year 2020 the entire P2P lending industry would be at Rs. 30,000 crores.

Considering the significance and value of P2P lending RBI has already extended its support towards it by releasing draft regulation guidelines that will ensure that both the borrowers and the lenders can be benefitted as much as possible.

What Does it Mean For You?

Not only P2P lending is here to stay, it is quite possible that it will dwarf the traditional loaning options banks have been offering so far. As more and more lenders are emerging you can expect competitive interest rates, and attractive schemes.

If you want to enjoy flexibility in loan repayment, best interest rates, quick access to funds, and faster loan approval then P2P lending is a really good option. You can easily compare various lenders online and settle for one that is most suitable for your requirements.

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

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

What is NOC for Loan Closure?

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

Why You Must Collect NOC Once You Have Paid a Loan

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

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

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

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

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