Monday, 11 December 2017

4 Credit Mistakes Senior Citizens Make

Credit is an integral part of lives today, so much so that it continues to be important in the twilight years of one’s life too! Just like being careful about credit health is important in the prime years, it is equally important that one follows some basic rules when they are in the later part of their life too. So what are the common credit mistakes that older people are likely to make and why should these mistakes be avoided?
1.       Staying Away from Credit :
A lot of senior citizens may belong to the old school of thought where no credit is considered a good thing but this is not the case anymore. Senior citizens may avoid using credit cards even if they have one due to a mental block against credit cards or because they may find it cumbersome to use it. Senior citizens may also assume that they are not likely to require credit at this stage in life because they may already have a house that is paid for and a car that is debt free. However, life can be unpredictable and they may require a car loan because they need a new car or may have to take a personal loan to take care of medical or some other emergency. They may want to get a credit card issued because they might want to visit overseas and they might find getting a credit card issued or loan approved because they do not have any credit history.

2.       Guaranteeing a Loan:
There may be times when elders may not need funds for themselves but they may guarantee a loan for a younger loved one without being fully aware of the implications. A grandchild may need an education loan or the child may need a loan for buying a house and there may be times applicant may find it difficult to get a loan on their own. In such a scenario they may approach the parent or the grand parent to guarantee a loan. While helping out your loved ones is perfectly fine but the elders need to keep in mind the fact that the guaranteed loan will become linked to their credit history. If the borrower does not pay on time the guarantor along with the borrower will be put on the loan defaulters list. Thus before guaranteeing a loan check your own finances and also ensure that the borrower has the capacity to repay the loan.

3.       Failing to Check your Credit Score:
Senior citizens may assume that at this stage in their life they have no need to worry about the credit score as they will not need any more credit. There may be instances when they may simply not be aware of the importance of the credit rating since it has acquired so much importance only in the last decade or so. Owning to these two reasons they may fail to check their credit report from time to time as is recommended. Thus if they ever feel the need to access the credit they could be denied a loan or a credit card because their scores may be a loan or they may have no credit trail. Thus like everyone elders should also regularly go through their CIBIL Report and work on their scores if required.

4.       Being Overburdened with Loan:
Being overburdened with debt will be harmful at any stage in life but it can be especially so for senior citizens. At any other stage in life, the likelihood of the borrower’s earning increasing with time and he/she being able to manage the debt burden is better than when someone is at a later stage in life. It is likely that elders will be retired so they would be relying on their savings for their day to day expenditure. Thus it is important the not only should they endeavor to pay off all debt before they retire but also ensure that they acquire fresh debt only after careful thought and planning.

So be smart and avoid any of the above mistakes to stay credit healthy always whether you are young or old! 

Tuesday, 5 December 2017

You May Be Able to Get Collection Accounts Off Your Credit Report Sooner Than You Can Think

Any sort of credit/loan delinquency makes your credit report vulnerable to lender’s rigorous collection attempts. The negative history would stay with you for next seven years and you could be denied credit owing to past credit history.
Mostly when lenders fail to collect the payment they turn over to a third party collector and a collection accounts is flagged on your credit report. With red flag in your report you can not advance loan any further.

While most of us despise legal hassles and hearing, settling collection account could have its own set of benefits for you. By resolving the issues you can successfully get the accounts off your credit report. When your credit account is charged off and sold to the third party it leads to additional stress besides hurting your credit report.

However the decision to settle account entirely depends on the status of your account.

Preparation

Before you agree to settle the account it is important to study your credit report. You must pull out your free CIBIL report and recall the final status (history) of delinquent account.
It is important to check the status of the account as per your records. Verify account number and status.You need to check the validity of the claims and status on your credit report.

Dispute the error
Sometimes accounts are mistakenly charged off despite the full payment. In such cases it is important to gather proof of payment and then dispute the error.
You simply need to report to CIBIL about the misreport on your credit profile and same would be omitted after verifying the status. The changes would generally be made within 30 days of the application.
For swifter action you can also contact the collector and ask them to validate the status.
Such error also occurs in case of late payment of final installments as the lender may miss reporting to the bureau about the same. For such accounts too, you would need to request the collector to omit the error as “goodwill deletion.”
As the account is updated your score would take its previous position. However the late payment mark can hurt the score minutely.
Settle the Debts
The collection agencies are basically involved to clear the accounts. Thus you can negotiate and settle the accounts off your report for better credit future. By getting collection accounts off your credit report you will improve CIBIL score.

Cleaning CIBIL report also ensures that you could borrow home loan and are future ready for credit.

While you decide to fix the red flag off your report, keep following things in mind:
·                     Do not forget to check your personal records of repayments. In many old accounts there is a possibility of overcharged bills including late payment fees and other charges. You must assess how much is actually due and figure out the outstanding amount.
·                     If it turns out to be bad loan and you are short of funds for the same, never opt for bad credit loans such as payday loans or high cost personal loans for settling the dispute. For this could further destroy your credit profile. Instead consider using professional credit counseling agency’s support.
·                     Always have a step by step plan. It is better to discuss your financial status with the collection agency and avail flexible repayment option.
·                     Do not apply for fresh loans with a collector’s red flag. You would need to wait for a couple of months to let the red mark wade off your credit report.

·                     When you manage to settle the account, have a paper agreement with the collector agency so as to possess a legal proof for loan settlement.

Thursday, 30 November 2017

10 hacks to improve the credit score

Loans have become an integral part of the financial life of most Indians.  At some point in our life, whether while buying a car or a house, for wedding, or for educational purposes we may need to borrow funds. A good CIBIL score helps in securing easy approval for loans at a low rate of interest. So if you are planning to take a loan in the near future and wish to improve your credit score here are some tips. 

1. Check your CIBIL report

Understanding your current credit situation is the first step to improve credit score. Order your credit report and score to see what your lenders use to determine your creditworthiness. Scrutinize each and every detail carefully and identify the areas on which you need to work upon. Check for errors in the report and approach the bureau to get them rectified. Mistakes on the part of the bureau are fairly common. These errors may be the reason for a low credit score. Once you get them fixed, you can see a rise in the score.

2. Get current on payments

Missed payments of last month may have pulled down your credit score by 50-100 points. If you clear your past dues and start making all payments on time from now on, then your score will definitely get a boost.

3. Live within your means and stick to a budget

Manage your personal finances well by preparing a realistic budget and sticking to it. Use credit cards only for convenience and not for spending more than what you can afford. Consider your incomes and expenses and do not spend more than what you can repay at the end of the month. Carrying huge balances month after month will bring down your score.

4. Reduce credit utilization

Credit utilization is the amount of available credit that you have used on the credit card. This factor contributes significantly to the credit score of an individual. Work on reducing the balances on the card to ensure that the utilization level stays below 30%. If you knock of the debts on the cards that were maxed out, you will see a significant improvement in the score.

5. Pay twice a month

If you charge a number of expenses to your card and almost reach the limit, then it might hurt your score even if you pay the balance in full when the credit statement arrives. That is because the debt utilized amount that is sent to the bureau at a particular point in time may differ from the statement balance. By making two payments in a month you can reduce the balance that will be reported to the bureau.

6. Clear your card balance by taking a personal loan

If you do not have sufficient cash right now to pay off your credit card balances, then take a personal loan of a lower rate of interest to do so. Paying off the credit card debt will not only save you from high interest costs but it will also reduce the credit utilization levels. This will give an immediate boost to your CIBIL score.

7. Request for a raise in the credit limit

Another way of reducing the utilization level is to get a raise in the credit card limit. Ask the bank if you can qualify for a credit line increase. You will need to ensure that you do not increase your spending so that your existing debt constitutes a lesser percentage of available credit.

8. Talk to your creditor

If you have negative items on your report which you have now paid, then talk to your creditors if they can remove those entries out of goodwill. For accounts that have gone to collections, you can work out an arrangement with the creditors, wherein you pay the account balance in full and in exchange the lender deletes the entry from the credit report.

9. Do not close old credit cards

Length of the credit history plays an important role in determining your credit score. Old accounts increase the average age of your accounts. So do not close old cards even if you do not use them often. Just keep them active by charging a small monthly expense and then pay it in full. 

10. Use a secured credit card

If your score isn’t good enough that you qualify for a regular credit card, then apply for a secure credit card that does not require you to have a very good credit score. Use this card responsibly to display positive credit behaviour. Over a period of time you will build good credit and see improvement in score.
It will take a few months before your positive habits results start showing up in the report. Hence in addition to these hacks that will help you improve credit score, you will need a lot of patience and dedication.

Tuesday, 21 November 2017

How Can one Pull a Deceased Family Member’s Credit Report?

Humans are mortals, but not their deeds. All through its path, human life revolves around money and after the final call, the body meets the soil but the money parts its way. And in its course, it also parts the way for the deceased debts. For anyone who has lost the loved one, pulling out deceased family member’s credit report is as significant as reading out their will.

Why it is important to pull out a deceased person’s credit report?

A credit report is a systematic and recognized record of a person’s credit history. A Credit Bureau records the credit history of a person to adjudge their credit worthiness. They calculate a credit score for every individual and business according to their financial activity. Based on this score, the lenders extend financial assistance such as loans and credit products to each entity.

After the person is deceased, it is important to pull out their credit report for two reasons;
1.       To inform the credit agency about the death.
It is important to mark the report of the deceased so that the activity on the report is flagged. As the concerned parties (lenders) are informed about the death of the beneficiary, they can contact the family or immediate beneficiaries and claim their dues. This protects the unwarranted activity on a deceased’s credit report.

2.       To safeguard the person’s entity from identity theft
As the credit bureau is informed about the death of the individual, they update their records about the status of death. Owing to the update, any activity on the credit report would cause an alarm and thus safeguard’s identity theft on the deceased’s name. The unscrupulous people active online are always on a look out for victims for online theft. It is thus mandatory for family members to update the deceased’s status on the records. The same holds true even when the person has no credit dues.
How to pull out credit report of a deceased person?
1. Contact CIBIL
You can contact CIBIL online or call them to enquire what all documents are required to be submitted. The documents may differ according to your relationship with the deceased. It is advisable to contact all bureaus such as CIBIL, Equifax, Experian and Highmark so that there is no loop left out.
2. Request report
Now attach all the documents and request for CIBIL report. You can either mail the letter with documents or use an email. You would also need to send a copy of the death certificate along with proof of your relation with the deceased.
3. Inform the lenders
While informing the credit bureau would certainly begin a systematic process to update the financial status of the deceased. However it is recommended to contact the lenders in case you are aware about the current accounts of the person. Whether it is a personal loan or a car loan, you should inform the lender and close the account.

If the person who died had a will and assets, the outstanding debts would be settled accordingly. Or you can handle those systematically.

After CIBIL puts a deceased label on the person’s report, the account is deleted after a year. As you report to the CIBIL about the death, they would keep deleting the accounts as they are settled. After one year, you would not be able to apply for another copy of report again. Further requests would be answered in negation with a reply that the beneficiary has died and the report is deleted.

In some rare cases, where a joint applicant was also involved with the deceased could be marked as inadvertently as deceased on their account. It is thus important to identify yourself (alive co applicant) and request lender to remove the label on the report.

Tuesday, 14 November 2017

Financial Resolutions to buy that dream home this year

Each year, the New Year embarks the “new” beginnings. We tend to welcome the year with a list of new resolutions. Globally working population plans addition of new assets every Year. If you look closely, you will be amused to find a plethora of marketing campaigns planned to target the dawn of upcoming Year making a Sales hallway.

One such close industry that welcomes the consumers wholeheartedly is the Real Estate. However home buying is always an emotional decision. Many of our forefathers have spent their whole lives embroiling the mathematics behind buying a dream home. The times have changed and so are the financial equations. Credit is readily available to meet your heart’s desire and that too as you begin to earn.

If you too are planning to buy that dream home this coming year, here are the top 7 financial resolutions you would need to meet with, to reach your heart’s desire.
1.       Build good credit history
As you decide to buy your home, you must begin efforts in that direction. Credit is the crucial aspect of any home deal. Whether you are a high net worth individual or on the leaner side, you would need a home loan for the purpose. To raise low cost credit, it is important to pay attention to your CIBIL rating. You need to ensure that you take steps that boost your credit score and increase your credit worthiness.

2.       Payoff outstanding debts
Before you approach a lender for enquiring about loan eligibility it is important to work on your debt to income ratio. If you had have any current credit accounts, it is prudent to close them before applying for home loan. It is common to apply for 70 to 80 per cent value of property and thus you would require huge potential to borrow.

3.       Do not raise credit enquiries
Every loan query you make is reported on your credit report. Thus you should ensure that you do not make credit queries at least six month prior your home loan application. The more enquires you make, the more impact it would make on your credit report.

4.       Become pre-approved for loan
By maintaining apt credit utilization ratio and repaying your loans and credit bills on time, you would build a good history. In the meantime the good history would make you preapproved for loan. When you are pre-approved for a loan, say ICICI home loan, you directly get to see all the benefits of the deal right in your inbox. Generally lenders contact you online to inform you about the preapproval for credit products. With loan pre-approval you get more choice and flexibility to choose loan terms.
5.       Save for wet days
Home loan sums are huge. These are thus long term obligations. You should always plan ahead of time. It is important to ensure the backup plan for loan instalments much in advance. Whether it calls for frugal living or saving every day, you must have a surplus amount for at least next three instalments.

6.       Research and make lists of available offers
While each of your loan query is recorded on your credit report, you can still ensure an escape from this. You need to ensure only soft queries while searching for interest rates and other loan queries from bank. Herein you can either ask the bank officials to raise soft query or hire a professional broking firm or credit counseling agency to help you. They have contacts and they can search a cheap deal without making footprint in your credit report.


7.       Credit planning
All in all it would take a 360 degree credit planning before you home in your dream possession. As important it would be to research the best of the deals in your preferred location, as would be planning for adequate funds for the same. Using these tips you could successfully reach the target.

Tuesday, 7 November 2017

Are Mistakes Ruining the Credit Report?

Mr. Mehta applied for a car loan, he had a few credit cards that he used carefully and always paid on time. He had also been always on time when paying his personal loan dues. Thus it came as a surprise to him when his loan application was rejected due to a low score. He sought his Credit Information Report (CIR) and was surprised to discover the reason for his low score. He had guaranteed an education loan for his younger brother who had failed to pay his dues for the last couple of months. This has caused Mr. Mehta’s score to be low as the education loan was included in his score calculation too.
Like in the above example, despite being careful about your borrowings some mistakes can cause problems in your CIBIL Report. Here we discuss a few mistakes that can ruin your credit report.
Ø  Guaranteeing a Loan:
There might be times when somebody in your family or circle of friends may be unable to get a loan due to some problem like poor credit score or not meeting the other eligibility criteria. In such a case the lender may ask the prospective borrower to get a guarantor who can vouch for him and also serve as a backup plan if the borrower does not pay. While it does solve the problem for the borrower it may create a problem for the guarantor in the future. If the borrower does not pay on time, then the guarantor will be called to pay. Defaulting on the EMIs not only puts the borrower on the loan defaulter list but the guarantor’s CIBIL report is also negatively affected and it features on his/her report too!
Ø  Overusing Your Credit Card:
Credit cards come with a sanctioned limit; this is the upper limit of the amount that you can spend using your credit card without paying the dues. Well, it may seem only fair that as long as you pay the dues the proportion of the limit that you use should not matter. However this is not the case; even if you do pay your dues on time but the card usage is usually more than 30%-35% of the sanctioned limit then it could be a cause of low scores. A high credit utilization ratio is an indicator of credit hungry and high risk behavior; hence it is advisable to keep you spending less that 30%-35% of your credit card sanctioned limit.
Ø  Settling Old Dues:
If one has old dues which keep popping up in each of your CIBIL Report then one might feel that settling these dues with the lender can take care of the problem but think carefully before you do so! Settling any dues by making a part payment will not have a positive impact on your rating. The loan status will reflect as “settled” which will always raise red flags for future lenders. So if you want to pay some old dues, negotiate with the lender to report the loan as “paid” or “closed” and not “settled”.
Ø  Mistakes in Reporting:
What we discussed above for errors that the borrower could make and which could harm his/her credit score. However sometimes there are times when the credit report could be poor due to mistakes made by others too. Sometimes the lender/s may make some errors while reporting (late payments, a loan that does not belong to you, a closed loan reported as open and so on); there may be error at the time of data entry at the rating agency or some other omission or commission. Depending on the mistake there could be an impact on the score or not, some errors like inaccurate reporting of contact details or personal details will not cause a problem in the rating. Regardless of what the error is and whether it impacts the score or not it should be rectified at the earliest by getting in touch with the rating agency.

Thus it is important that one keeps a regular eye on their credit report to see if any mistakes made by your or others are causing it to fall. This will ensure that you take timely action to rectify these errors and get your score back on track. 

Thursday, 2 November 2017

Top 5 Bankruptcy Myths Debunked

When people get under insurmountable debt and keeping up with loan repayments and credit card bills, etc. become almost impossible, then bankruptcy offers them a chance for a clean slate- to start fresh and bring the situation under control. 
What is Bankruptcy?
When an individual or organization is incapable of honouring their financial obligations, they can file for bankruptcy. For this, they have to file a petition in the court where all their outstanding debts are assessed and removed.
Although bankruptcy is a fairly common concept, there are many myths surrounding it, some of which are:
1. Bankruptcy Makes You Lose Everything
Many people tend to develop a fear for home loans, personal loans, etc. thinking if they couldn’t repay, they can end up becoming bankruptcy and lose everything- their house, money, other assets, etc. However, nothing could be further from the truth.
While it’s true that going bankrupt isn’t quite a bed of roses, it’s certainly the best option when your finances are out of control and you are unable to bear the strain of debt. Most importantly, it’s your best shot at saving your precious assets. In a large number of cases, the government or the concerned financial institution allows the bankrupt person to repay their debt on the terms that they are comfortable with.
2. Bankruptcy Removes all your Debts
This is probably one of the most harmful myths that have been floating around for quite some time. Many people are led to believe that bankruptcy will solve all their problems and simply make all of their loans and other forms of debts disappear. However, this is a grey area which they must learn about.
While it’s true that bankruptcy can help wipe away debts like credit card debt through a discharge, there are certain debts like tax debts, child support, and misc. fees etc. which cannot be discharged.
3. Bankruptcy Makes your Life Hell
There is a stigma attached to bankruptcy in the society. When someone files for bankruptcy, people jump to the conclusion that the person is irresponsible towards their credit management, and it’s their own fault that their CIBIL rating is damaged and they are under high stress. However, it’s only in few cases when people run into serious issues like divorce, job loss, or a serious illness.
Bankruptcy is meant to improve your financial situation and not worsen it further. So, it should not be looked upon at otherwise.
4. Bankruptcy Ruins your Credit Permanently
There is no denying that bankruptcy greatly affects your CIBIL rating. However, the idea that its nature is permanent, is nothing but a delusion.
People make credit-related mistakes all the time. They make late payments on a consistent basis, stick to making minimum payments on their credit cards, default on loans, and what not. However, it’s rare that the damage done is permanent. In most cases, including bankruptcy, you can always start over and restore your creditworthiness.
5. Bankruptcy Makes It Impossible to Buy a Home Again
People fear that after going bankrupt they won’t be able to apply for a home loan ever again. They think that no bank would ever trust them. However, truth is that many people do get home loans even after going bankrupt. They work on their credit report and build a high score. Thus, when they do apply for a loan, banks observe their efforts and don’t mind giving them a second chance.
So, these were the top bankruptcy myths that misguide the people and influence them towards making wrong decisions. This only proves that informing yourself with the right credit management practices and bankruptcy laws is important.

If you don’t want to see a day when you have to file for bankruptcy, then make it a point to manage your finances responsibly. Always monitor your credit card usage and maintain a monthly budget so that you know how much you are spending and how much you are saving. Simple things like these alone can greatly prevent an instance of bankruptcy in the future.