Just entered your first job – Start Building your Credit History too

It is simply a great feeling when your first salary gets credited into your bank account. Getting financially independent is certainly an achievement, but at the same time, it comes with equal responsibilities. Knowing one’s urge to spend and more so these days over digital means, banks start approaching you for credit cards and you also start getting excited and apply for a couple of most rewarding credit cards. But alas! the credit card application gets rejected. The Reason, you don’t have any credit score – i.e. no history found in credit bureau. However, you shouldn’t worry, as building a credit history is not a tough thing to do.

The first steps to Building a Credit Score

The best thing you can do is to just start off with applying for a credit card with the banks you are holding a Savings Account already or where you open your Salary account. You can also apply for one of the basic cards, to begin with rather than going for the most premium card the bank has to offer. Specially designed credit cards are now being offered by banks to those who have just joined the workforce. If you are employed in the public sector or with reputed private companies, you may be eligible for a credit card based on your salary slip. If you are not getting a credit card even from the bank where you have salary account, you can apply for a secured credit card against a fixed deposit – you can begin with as low as Rs. 20,000.

Another way of building your credit score could be exploring the exciting zero-cost EMI offers offered by financiers for mobile, bike or laptop. These also require a credit score for approval, however, many of the lenders approve loans for people with no credit score.

Maintaining a good Credit Score: Since now you have begun building your credit history, here are a few tips to maintain a good credit score too:

  • Use your Credit Card, though control your spends: Just getting the credit card will not get you good credit score. Try spending only up to 40% of your credit limit to keep the balance low it will help you repay the full amount on the due date.
  • Repay your card dues and EMIs in time: A consistent regular repayment on your card dues and EMIs will definitely help you with a good score. If you took an education loan, repaying when EMI’s become due also helps you build a credit score. If you become delinquent and default on your education loans, your credit score will be negatively impacted because the lender will report that you are not in compliance with the terms of your loans.
  • Limit Your Applications for New Card or Loan: Too many credit inquiries on your profile by banks whether they be for a credit card or a loan also can also bring down your score, so make sure you’re only applying for credit only when it really is necessary. Select a credit card and a bank after doing research rather than blindly applying for credit with many banks.
  • Checking your Credit Score regularly: Don’t lose the good credit score you’ve worked for! Just like a car that fails to work if not maintained, credit history too can fail to work if it is not maintained. Tracking your credit score every quarter helps you stay on top of your own credit report and thus, maintain a good credit score.

Now that you have mastered the art of building and maintaining a good credit score, pat yourself on the back and start dreaming for the better things in life, right from the newly launched bike to the latest I-Phone to a swankier car and a beautiful house, you can have it all…!!

4 Proven Hacks to Build a Great Credit Score

Building a good credit score is very similar to building a good reputation; both require an immense amount of work and patience. Loans are a crucial part of the modern man’s life and building a rock-solid credit history is of paramount importance for getting a big loan approved. If you are successful in maintaining a high credit score your quality of life will take a 180-degree turn as you will be able to buy all the luxuries in the world for yourself and your family.

But the sad part of the story is that your scores can drop real quick for the smallest of the reasons. It can be disheartening to know that you have a low score when you open your credit report. But hey, do not be discouraged, you can still work things out! Wondering how? Look no further, we have compiled a list of 4 things you can do to build a great credit score.

Repay your card dues and EMIs in time:
Yes, however stereotypical this suggestion sounds it is actually true. Every credit risk analytics expert swears by this strategy. A consistent regular repayment on your card dues and EMIs will definitely help you with a good credit score. If you become delinquent and default on your loans, your credit score will be negatively impacted because the lender will report that you are not in compliance with the terms of your loans. Even if you missed a payment, do not sulk in worry. Get up and bring your loan to regularity now.

Utilize your card with caution Don’t use the card to its full capacity:
Having a credit card is not your ticket to go overboard on shopping! Things can take a detour and you may soon find yourself in a pool of debt. Using the card to its full capacity is never the right thing to do. Try spending only up to 40% of your credit limit to keep the balance low it will help you repay the full amount on the due date and also keep your credit score in low.

Limit your credit card applications or loan:
Too many credit inquiries on your profile by banks ‘whether they be for a credit card or a loan’ also can also bring down your score, so make sure you’re only applying for credit only when it really is necessary. Select a credit card and a bank after doing research rather than blindly applying for credit with many banks.

Checking your Credit Score regularly:
Don’t lose the good credit score you’ve worked for! Now’s definitely a good time to ask yourself if you’re being proactive about protecting your financial health. Management guru Peter Drucker said that you can’t manage what you can’t measure. To manage over your credit and your financial life, you must measure your creditworthiness through the credit score regularly. Tracking your credit score every quarter helps you stay on top of your own credit report and thus, maintain a good credit score.

So there you have it, all you need to do is blend these simple steps together and make a great recipe for a good credit score! If you still feel uncertain about how to build and maintain your credit score, you can read our BLOG or feel free to get in touch with us!

 

4 Ways Credit Score Can Impact Your Financial Life

Credit Bureaus such as CRIF are dedicated organizations set up to assess the risk of a loan being given to an individual or a business by banks and financial institutions. Various factors like paying your EMI’s and card dues on time, how long you have had and used credit, number of credit inquiries you have made in a particular amount of time etc. are considered to determine a person’s credit score.

Having a good score with credit bureaus is one of the most prominent characteristics of a responsible person. A good credit history indicates that a person is in control of his/her finances and has made past payments on time without any negative remark. Generally, the higher the number, the more trustworthy you appear to lenders. The lower your score, the more difficulty you will face. We take you through the potential effects a credit score can have on your financial life:

1. Incurring Lower Interest Rates on Loans
If you are in the good books of credit bureaus, then you’re most likely to incur lower interest rates on loans while, on the other hand, you might not get a loan at all if you have a poor credit score. For a score with a range between 300-900, a credit score of 700 or above is generally considered good. People who keep paying timely installments on their loans and credit card dues get extensions on limits subsequently when their credit limit gets stretched. A good credit gives you the negotiating power when applying for a loan in terms of interest rate and loan amount.

2. Get Home Loans Processed Swiftly
Owning a home sweet home is the dream of every individual. If you are looking to buy your dream apartment, there are two things you consider: a pretty home and a not-so-pretty home loan. However, what matters the most in swift approval of your home loan is your credit score. Home loan limits are dependent on income but a poor credit history might cancel out / nullify your chances of getting one irrespective of how much you are currently earning. On the other hand, with a good credit score, the chances of loan approval are higher. This is because the lenders consider you as trustworthy. Read our blog 4 things to consider Before You Apply for a Home Loan to land into your dream apartment.

3. Employment Prospects
The penetration of credit score has gone beyond as an integral part of the loan approval process for banks. It is increasingly being used as the selection criteria before scheduling interviews. Employers in banking and financial services (BFSI) are checking credit scores of candidates as a part of their employee verification process before hiring them. So if you are searching out for a job, then not only preparing for the job interview but checking your credit score and improving it also becomes indispensable. A lower score can thrash your desires of a dream job.

4. Others
Globally a credit score is also used by the insurance firms to set the premium charges on their policies. Even telecom companies use it to set the security deposit that they require before giving a connection or decide the credit limit. this is beginning to happen in India as well, as insurance and telecom companies have begun using credit scores. We are already seeing early use of Credit Scores to establish credibility of the groom in case of arranged marriages and of the tenant in case of rentals.

Hence a bad credit score affects many more aspects of your life than what you must have imagined. Any bad credit decisions will keep you on the back foot. It may not put an end to your financial journey, but it definitely slows it down. Though there are lenders who might be willing to offer loans even with a low credit score the rate of interest tends to be significantly higher in such cases. Hence it is prudent to maintain a good credit history. Like an annual health check-up do a regular credit score check too, to take charge of your financial life. You can get your credit scores in a few simple steps by visiting https://cir.crifhighmark.com

 

4 Things to Consider Before You Apply For A Home Loan

A home sweet home is a personal asset that you have dreamt of owning for a long time now. If you are planning to buy a home, there are two things that you think of: a pretty home and a not-so-pretty usually-unavoidable home loan. However, what matters the most is qualifying for the home loan. It is very important for lenders to assess your repayment ability, which is essentially evaluated on the basis of your earnings, expenses, savings, work profile, financial capability and repayment history of loans and other dues. A bad credit score and the ghosts from the past, i.e. your credit debts or poor payment history can pose a problem while qualifying for a home loan. Here are 4 important tips to check before you go for a home loan:

1. Check Your Credit Score: A credit score lays the foundation for your easy home loan application process. This score depends on how consistent you are or how good your record is for paying your EMIs and credit card dues. The credit information report (CIR), which contains your Credit Score, is basically the credit history of your borrowings from different institutions such as banks or NBFCs (Non-Banking Financial Company) or Housing Finance Companies (HFCs). A trusted credit bureau prepares and maintains your credit records and shares it with the banks/lenders whenever an enquiry is made by the loan provider. The higher the credit score, the higher the chances of the loan getting approved. And also once can expect the best rate of interest on the home loan as a bonus. Ensure you check your credit score at least six months, preferably 12 months, before you plan to buy a home.

2. Consider your budget, down payment and EMI: Define your budget for buying a home, how much money you can consider for down payment and how much of home loan would you require. Typically, you can get 80% of the value of the property as a home loan if your income seems sufficient. Identify the EMI range that you are comfortable with, as that will help you decide the tenure of the loan. You can use online EMI calculators to play with various options in helping you here. In case your income is not sufficient, you can think of adding your parents or spouse as a co-borrower.

3. Documents Required for Home Loan: Before you go and apply for a home loan, it is necessary to understand the necessary documents required and ensure they are available before you approach a bank or housing finance company. Here is a list of documents that you should be ready with:

  • Income Tax Returns or Form 16 for past 2-3 years make sure all taxes are filed
  • PAN Card – the lender would carry out a PAN Verification to know its authenticity
  • Aadhar Card – the bank would also do an Aadhaar verification to verify your identity
  • Bank Statements for past 6-12 months for a bank account where your income and expenses reflect. Make sure you maintain a reasonable balance in this account over past 6 months.
    – Last 3 Months Salary Slips if you are salaried
    – Application Form with Photograph Duly Signed

4. Identify the right banks and lenders: Avoid applying to many lenders at the same time, as many credit inquiries can negatively impact your Credit Score. It doesn’t mean that you should not compare your options. Identify the banks or housing finance companies which have pre-approved the property where you plan to buy a house as that can reduce your loan approval time. Understand the eligibility criteria of such lenders in terms of the cutoff for credit score and the loan scheme (processing fees, the rate of interest etc.). Select one or two lenders which best match your requirements and get your loan sanctioned from them before booking the property.

Taking into consideration all the above points will prepare you well for your home loan and thus, improve your chances for a quick home loan approval. If co-borrowers are being considered for, do ensure you prepare them to check their credit score and keep their documents handy.

Take the first step now towards your dream home. Check your credit score on CRIF today!