Thursday, 22 March 2018

How Will Mistakes Be Removed From Credit Report

Humans are bound to make mistakes. And there is no issue in making them. The only thing one should do is acknowledge that mistake and not repeat it. Once a person has acknowledged the mistake, now is the turn to ratify it. May it be personal life, professional life or credit health? One should never show the negligence over any kind of mistakes because at any given point of time you have to deal back with them. But if the damage is too big or too serious, the reversal is equally tiring and time consuming.
                Rekha and Vinit are business partners. They are doing the consultancy business since last 8 years. They started their business 7 years ago, with great passion and a tremendous amount of knowledge they had. With their great marketing skills and research, they are constantly growing day by day. For the fundings, they took the business loan to start their venture. They always made sure that the credit is paid on time and there is not even a single chance for them to enter loan defaulters list. They had taken A huge risk while they started this business, but they had a faith that it will work!
                To their expectation, it really did well. Now while credit health being too important now and too much talked upon these days, they thought of checking their credit score. While getting the credit score they had the same excitement as kids have in getting the result when they know they are going to score well. They both had never made any late payments, never had they missed any date of payments, neither did the over use the credit card. But it was a terror when they saw the score as the score was 580 and 610 for them. Now, as they were thinking, there couldn't have been a single place where they must have done anything which could get the score so low. So they planned to have a detailed report check.
                While they checked the detailed report they came across few of the things which were incorrect. They were wrongly updated or mis-updated. With a lot of confusion, they went to a credit advisory company like credit Sudhaar to check what can be done in this case. Following are the advice they got for the same.
                1. Request your detailed report
                                As stated above, please ask for the detailed report if you find there is any issue with the score you received while doing the credit score check.
                2. If any errors, get the documents to prove
                                If, you see the report and find that there are few or many things which are not updated properly, please get the documents which would prove that the things updated in the report are not true and needs the change to be applied.
                3. Do Raise a Dispute
                                If the documents you get are 100% validated, please raise a dispute and put the documents in support with an application stating the error details.
4. Do not fill online complaint forms.
                                If you get online complaint form for the things which are wrongly updated from the other hand, may be by the credit company or a credit bureau, submit everything in a physical copy. Do not fill any kind of online complaint form.
5. Wait and Track the Report
                                On regular bases (try not too frequently) please check and track the report. If there are changes happening, which you had asked for.
You can do the above mentioned things when you find the error, but with this, make sure you do not do the things mentioned below:
1. Dispute the matter only with the lender and not credit bureaus.
2. After buying a report from bureaus, and not reading it thoroughly.
3. Please do not misplace the supporting documents
4. Do not miss including enough data in the dispute you raise against the bureaus.
Follow these 7 steps, and in very small time, you will definitely get a proper score when you do your CIBIL Score Check. Work patiently and delinquently to achieve the great credit health!

Thursday, 15 March 2018

Are The Credit Scores Real

What’s real and what’s not? What’s true and what is not? I am correct or not? When there is anything which is very critical and sensitive, these are the question which is bound to emerge. While talking about credit health, these are the obvious question which arrives in anyone’s mind. That what kind of score is perfect. What is my real score? Does my report really say everything true about myself? Is it best to invest in a loan or a credit card to get a better score? For that matter, is my score real?

                Let’s discuss the part which asks if the credit score is real. Rest everything will be answered automatically. To know how exactly credit report is made and how is the score calculated. The credit report is made op various segment which has your personal information. This includes all KYC details like :
  • Your Name
  • Your Address
  • You mobile Number
  • Your Pan CARD Number
  • Your Aadhar Card Number
Along with this, it has all the detailed details of the credits you have
  • Loans which are taken till date (both will be shown, the one which are running currently and once which are closed.)
  • Credit cards with their details. (both, the one which is existing and the one which is expired or closed)
  • The payments which are pending.
  • Hard inquiries which you have made.
These are the things which a report has. Now let’s understand that how is credit score made. The credit score has basic 5 things, of which it is made-up of:
  1. The payment history – 35%
  2. The amount owed – 30%
  3. Length of the credit history – 15%
  4. Credit Mix – 10%
  5. New credit – 10%

                With this, a person can understand the basic, of the credit report and credit score is made or what does it consist of. Now the fact, that whatever you do in terms of credit, is reflected in your report. If you make the timely payments, if you do not do timely payments, if the amount what you owe is genuine if you have many older credit accounts which are still in running or they have been closed, is the credit available with you is of secured and unsecured type of credit or not. Haves you applied for new credit, or you have applied for too many credits; all of this is reflected on the basis of the data banks, financial institutions and insurance companies give to the credit bureaus. This is because, a Pan Card is must when you get any of the credits, and with that information, every thing is reflected in report.

                Parallely it is very important for anyone to know that credit score is given by credit bureaus, but the information what bureaus get to generate the credit score is given by banks, financial institution and insurance companies. They update the bureaus about your payment history if you have made the payments on perfect time, if they are made late. If there are late payments then its late by how many days? Now all these informations are the facts which is your behavior in repaying the credits. So there is no scope that they are not real.

                There are 4 bureaus in India. CIBIL, Experian, Equifax and Crif Highmark. All these 4 bureaus have a slight difference in how they calculate the score. The basic 5 parameters are the same, the only difference is the % weight-age they give to each factor. However, the major 2 factors, viz Payment History and Amount Owed will always be the maximum holder of the score, but other factors are a little here and there. If you compare all the credit score, theere can be an average 50 points difference. If in case it more than that, please check your detailed credit report and make sure the all the entries tally in both the report.

                Be responsible enough to pay the credits on time, for the matter that thats the basic thing your credit behavior displays!

Thursday, 8 March 2018

5 Credit Score Myths

“So Today, I am very happy. I and my wife and our 2 children are moving to the most awaited moment our lives. Its been 15 years of wait, and finally, the day has arrived. We are moving to our own Duplex house of our dreams. This was not just my dream, but it was our dream. The dream which we saw ever since we are together. The smile on everyone’s face is mesmerizing, the one which I will cherish all my life!” - Venkat B.

Venkat is 35year old Telugu actor from Andhra Pradesh. Started from a small desk job, following his passion, and few investments he has reached a level today where he is a proud owner of a 5BHK pent house with the lavish interior. Home Loans was one thing which helped him achieve his goal. However, In this process of selecting the best suitable home loan for him and getting a house, there were many things which changed the way he normally thought. And there were many myths which broke!

The first thing which banks see when you put an inquiry to take a loan is to check the credit score. There are 4 bureaus which help you in getting your score. A credit score is a 3-digit number which shows your credit repayment responsibilities. The score ranges from 300-900. A score which is 750 plus is considered a good score. But how to check the score? RBI has passed a rule, according to which all the credit bureau have to give one free credit report which offers a free credit score to every individual. Now how this score is made also has many myths and misconception about it. Let’s go through major 5 myths of credit score.

1. 1 Late payment won’t make any difference
                It’s true that only one late payment won’t make any difference. But it’s about the habit one cultivates. Once if you made a late payment, and nothing happened. It would tempt you to do the same thing over and over again, which definitely would make a huge difference to your score.

2. I can use all the credit available in credit card till the time I am paying the amount on time.

                It is very important to know the concept of credit utilization ratio. This means that how much can one use from the amount or the maximum limit they have. It’s generally 30%-40% of the total limit. That means if you have a credit card with 1 lakh limit, you should use 30,000-40,000 in order to maintain the good cibil score. So if you have the misconception of using the credit card upto the maximum limit, please do not do that,

3. Closing the older accounts will help me in getting score better

                There is a concept called as “length of credit history or account age” which is one of the most important aspects in the making of credit score and has 15% importance in making of one’s score. So it is directly proportional to your score. Older the account, better is it’s effect on your score. So, even if you have made some errors in payments in past, please solve them and let the account stay. Closing it/them would cost you a lot!

4. My income affects my credit score.

                Your score is determined by various factors which mainly are around your credit repayment behavior.  Your income has nothing to do with how much you earn. There can be a possibility that the person earning 25lakhs per annum has the credit score below 600 if he/she must not have handled the payments properly and a person earning 3-4lakhs have their score beyond 750. It all depends on how one manages their credit and the repayments.

5. With a bad score, I can not ever get loan

                A Bad score does not come with the situation of not getting any loans or credit cards at all. If that is the case, how will one increase their score? With a bad score, it becomes difficult to get a loan but not impossible. You can get a loan but with higher interest rates. Banks might not seem too be interested in giving a loan to such people as it becomes a dead asset to them and the risk is too high, however, NBFCs like Credit Sudhaar Finance would help such people in giving loan and also help in making their score better.

Even Venkat had these myths, which got resolved when he fetched his free credit score and took help from credit advisory for the same and helped getting a perfect house for himself.

Tuesday, 27 February 2018

Secured Credit Cards: Best Way To Rebuilt Credit score

Priya is in her early 20s. Just her dream job with a great salary. She is achieving the milestones at such young age, which no one in her friend circle has achieved. With that, she also got an arrogant attitude towards everything and specially for her spendings. She had completed her studies by taking an education loan. The time had started where she had to start paying her loan Installments. Also, as her salary was 6 digits per month, she had great credit cards with various benefits. But little did she know that with great power comes the great responsibilities. Shopping, parties, lending money to friends, travels had become her lifestyle. She was happy! Then came a point where she thought of taking a personal loan. When she applied for a personal loan in the first bank, her application was rejected. She was surprised, inspite of having such a great salary, why was her application rejected? She applied in 2-3 other banks, but all her applications we rejected.

The low cibil score was the reason of all the rejection of her loans. With the recklessness; her payments for the education loan taken by her for the graduation, were not in time. The credit card utilization was way more. The credit card utilization ration was not maintained. Also, the credit income ration was totally off balance. Now, taking a personal loan was a requirement for Priya. So, with all the kind of research, she came across a solution of taking a credit improvement company's help. The credit improvement companies like Credit Sudhaar not only help in getting the score better but also help in getting the required loan with lesser interest rates. She was given an option of taking a secured credit card.

What are Secured Credit Cards?

Basically, there are 2 types of credit cards. Unsecured Credit Cards and Secured Credit Cards. Unsecured credit cards are the usual once where you are given credit for the specific time, (mostly a month) to spend first and pay later. There would not be any interest charged for that specific amount of time till the next bill cycle. In Secured Credit Cards, you have to keep a Fixed Deposit in a bank of any amount which bank offers. And you get the credit card on 80% or 90% of the value of FD.
It credit cycle still goes the same the way. Like, you swipe the card, use the money, have 1 month period and pay after a month. But the only difference here is that just in case you fail to pay on time, or you make a default payment and do not pay at all, the bank will deduct that amount from your FD and clear the payment.

How does Secured Credit Card help in rebuilding the credit?
As Mentioned above, in these types of card, the FD is kept as security. So even if the person fails the payment, the bank will make it by taking the money which was kept in fixed deposit. So there is no chance of not paying the amount used.
Also, as a human being, we get this alarm back in our head that even if we use the card recklessly, its only our money which is going to be disbursed in the account to clear the payment. So a little sense of responsibility also comes in picture.
Now looking at these both scenario,s if you pay the amount on time, or not, the payments will definitely be done. Which will not hamper the score in any of the cases, infact would help in building one.

Using the finances responsibly is the martinet, but due to some reasons, if you are unable to do so, Secure Credit Card will be a great way to start to rebuilt your score. Priya, in that case, got herself on the ground, started taking her finances seriously. The advice given to her by the credit maintenance agency worked, and they even helped he in settling an account. After a few months, they also helped her get a better deal in personal loan!

Thursday, 22 February 2018

Ways To Make Your Credit Score Less Scary

A credit score is a reflection of a person’s financial health. A poor score can put lenders off when one tries to get approved for a loan or a new credit card. You may either face a rejection or get loans at exorbitantly high interest rates. So if you haven’t bothered about this number till now and ruined your score because of bad credit habits, now is the time to work on it and improve your score. Here are some tips on how you can make your credit score less scary.

1.       Start making payments on time- If you haven’t been responsible for your payments in the past, do not assume that good credit behaviour will not help now. In fact one way you can try and improve your score is by working on establishing a good payment history. Regular on time payments of debts will help you gain points on the credit score. Pay off your past due accounts to prevent them from going into collections.

2.      Contact your lenders- If you are unable to make payments due to a financial crunch do not simply default on it without intimating the lender. It is better to talk to your lenders and explain them your situation. If the lender finds that your problem is genuine and temporary, he may agree to a new payment plan. This way you can prevent further damage that a default payment can cause to your credit score.

3.       Work on the credit utilization ratio- The percentage of the amount of credit limit that you use also goes in to determine the score. If this percentage goes beyond 30% it affects your score negatively.  Pay down your credit card balances in full and not just the minimum amount due, to avoid racking up too much debt. If you usually max out your limits, then make it a habit to pay twice a month. This way you will ensure that the statement balances aren’t too high. Alternatively, try to get a credit limit increase; as this will also help in reducing your credit utilization ratio.

4.      Dispute mistakes on the credit report- Sometimes your credit score gets ruined not because of your own bad credit habits, but because of mistakes on the part of the bureau. Get your free credit report from all the three bureaus and check for errors. If you find any inconsistencies, disputing them and getting them corrected can give a boost to your score.

5.      Seek help from a credit repair service- If your efforts fail to bring results, or all this sounds too confusing to you, and you just want someone else to handle this for you, you can consider hiring the services of a credit repair company. Such companies keep a careful track of your report and suggest the right measures that will make your score less scary. They may even sit down with your lenders to negotiate new agreements and payment terms that will be favourable to you.

Remember credit repair companies cannot take off bad remarks from the credit report, neither can they do a miracle that can improve your credit score in a day. There is no quick fix to raise your score in a short span of time. But these companies can definitely give you a workable solution and set you on the right track so that the credit situation improves over a period of time.

But if you cannot wait for the credit score to improve and need a loan immediately, do not despair. Loans for bad CIBIL score are also available. Many online lenders are ready to take the risk of lending to borrowers with a low score.  For this, they charge a comparatively high rate of interest. Taking such loans and then exhibiting responsible repayment behaviour will help improve your credit situation.

Friday, 16 February 2018

Can One Be Debt Free If They Have Good Score?

An excellent credit score secures the financial future of an individual. You must have heard this several times. The internet is flooded with information that tells how significant a credit score is and why it is important to ensure that you have a good CIBIL Score. Over the past few years, people have started doing a regular CIBIL score check as they have woken up to the fact , that a credit score ensures that their financial life is in order.

There are several advantages of having a good CIBIL rating. Is becoming debt free one of them? No, not at all! A good CIBIL score can only help you in the following ways.

Get approved for loans- A CIBIL score check is an integral part of evaluating the creditworthiness of a loan applicant. When you file a loan application banks check your score to understand how you have handled your past obligations. A high score helps in creating a good first impression that you have been responsibly managing your debts. A low CIBIL score raises the eyebrows of the lender, as it indicates either your inability or unwillingness to repay your past debts diligently. A good score will help you qualify for loans easily. In fact lenders welcome borrowers with a CIBIL score of more than 750 with open hands, as they are the least risky of all.

The lower rate of interest- A good CIBIL score gives you a greater bargaining power when you negotiate the terms and conditions and the interest rate that would be fixed for the loan. If you have a high score, you will have an upper hand in such discussions. Since the lenders would be keen to offer you money, they would agree on a lower rate of interest. This benefit helps you save thousands of bucks over the loan tenure. In case you are planning to take a home loan in near future, a difference of even half a percentage of interest will mean savings of significant amount of money, as a home loan usually lasts for 10-20 years. You can also qualify for low interest rates credit cards and other cards with rewards and special benefits.

A lower rate of interest reduced the amount of EMI that you pay every month. Alternatively, you can increase the EMI amount and pay off your debt sooner. That’s the only way a credit score can help in paying off debts.  A good credit score, will not reward you by waving off your instalment EMIs or credit card balances. You will be responsible for timely payment of your debts whatever your score maybe.

Becoming debt free shouldn’t actually be your goal, if you wish to have a good Credit score. Your score is dependent on how well you manage your debt obligations and your payment behaviour. Taking some instalment loans help you to exhibit good credit behaviour that improves your score. The only way you can remain debt free and still have a good score is if you maintain at least one active credit card account. Using that card for small purchases will help build some credit history even if you pay the balance in full at the end of the billing cycle. When you do not carry any balances to the next month you help in keeping the utilization levels low. Low Credit utilization ratio together with on time payments gives a boost to your score.

Hence a good CIBIL sore will help you get approved for credit cards and loans at a low rate of interest. It will not help you become debt free in any way. 

Thursday, 8 February 2018

Is There Anything Like Best Credit Bureau?

 In the year 2000 CIBIL was formed. CIBIL stands for Credit Information Bureau India Limited. CIBIL was the first bureau in India who introduced the credit score. CIBIL, however, is not a sole company but it is in tie up with Trans Unioun from the US. Initially, there was no awareness about what is credit score? How is it made? What is the importance of it?
Post the CIBIL was established Equifax, Experian and CRIF High Mark were introduced in the year 2010. So now, India has total 4 credit bureaus.

Which is the best bureau?

            Now, out of these four which is the best credit bureau? Or for that matter is there anything like the perfect credit bureau? The answer to this is a “NO”. There is nothing like the best credit bureau or not so good credit bureau. The job of all this bureau is to give you the credit score. All these 4 bureaus give the credit score of an individual depending on the person’s past history of making the payments and handling the finances. All these bureaus have a different set of algorithms by which they calculate the credit scores.

How is Credit Score calculated?

            As mentioned earlier, there is an algorithm via which the credit score is calculated. Different things are given different weightage on which the calculations are made. Majorly it comprises of:
1.       Payment History
2.       Outstanding Balance
3.       Account Age
4.       Inquiry
5.       Types of Credit
These are the 5 parameters on how the credit score is calculated. The major these 5 factors remains the same with all the algorithm of all the bureaus, but the weightage given to all of them might slightly differ. Let us look at an example.

Pratik is an enthusiast. He is very passionate in whatever he does. He is 35 and lives in Mumbai with his wife and 2 children. He has a package of 25 Lakhs per annul in a good MNC company. He is currently living in a rented house at a great location in Mumbai, which is a place that is very near to where he works, where his children’s school is nearby and even his wife’s office is not that far. Now since everything is set, He is planning to secure his savings and buy a House which was always in his dreams. The current flat where he is staying is much of that kind. But it is not of the budget what he has in his mind to buy a house. So, now he plans to take a Home Loan.
As said, He is passionate and dedicated in whatever he does, He was always responsible in paying his bills. So, while he thought of applying for the loan he went and checked his credit score. He typed “Credit Score Check” on the search engine and entered. There were various links option which said, get your credit score for free!

According to the RBI rules, all the credit bureaus are entitled to provide a free credit report every year to all the individuals. So, as for the safety, he clicked on 2 of the links which appeared in his search. Now to his surprise, his score was different on both those website. So the question arises.

Why is the credit score different in various bureaus?

            As said, the algorithm is different in the bureaus, there are other factors as well which matter for the score. Your credit score basically comprises of the credit card payments, loan repayments, and few of the utilities. But how will the bureau get all these information? All the banks and the financial institutions give these information to the bureau. And thats how your credit score is calculated. Sometimes, few of these banks or NBFCs forget giving your information to the bureau. So there is a slight difference in the details mentioned. Do not get worried if your score differs with 50-100 points on any report. It is just because of the 2 factors. 1. Algorithm 2. Information in bureau from banks

So basically, there is nothing like a good credit bureau or best credit bureau. All the bureaus are good and have the similar score. All you need to manage is making your payments regulated and on time so you do not get defaulted anywhere and that would not impact your score in any of the bureau.