Credit Reports

Let’s Answer 5 Frequently Asked Questions About Credit Score!

Three digits that have the power to shape your world: your credit score. The higher the score the better are your chances of dreams becoming true. Not only you will have easy access to loans but will also be offered lower interest rate, which means taking the loan will cost you less overall and you could save a substantial amount over the course of a lifetime.

And when something impacts your life that much, don’t you think you should be familiar with it? The sad story is that tens of millions of Indians are taking a blind approach to their money. Everyone wants their finances to be in good shape, but only a few tend to work towards maintaining a good credit history.

Here we list down 5 important and basic questions about credit score to get you started:

1. What is on a credit report?
The short answer to that question is: A lot! A typical credit report will include personal identifying information: a list of credit accounts (including credit limit), type of account (credit card, home loan, auto loan, etc.), and your payment history on those accounts. Each of the four major credit reporting bureaus compiles data from sources such as banks, NBFCs etc that extend you credit. Based on all this data, companies may calculate a credit score to reflect your creditworthiness. Since each of the credit reporting bureaus provides a score, you may have at least four scores. Bits and pieces of your credit history may vary slightly among the four companies because not all businesses supply information to all three agencies. However, the broad picture of your credit history should be relatively consistent.

2. What Types of Information Can Impact Your Credit Scores?
The two most crucial factors that affect your credit score is your repayment of the loan and how timely you pay your EMIs and card dues. If you are a month late in paying your dues, then your credit score might drop by 80 points. Next up is, credit inquiries. They can affect your credit score in a major way. There are two types of credit inquiries, soft and hard. Soft Inquiries are harmless to your credit score but the hard inquiries that are often done by lenders before lending money to you can bring a change in your credit score even if you do not get the loan in the end.

Opening new credit accounts can or taking new loans also affect but it can be fixed with regular and timely repayments. Lenders evaluate the credibility of the borrower at their own discretion. They may use whichever scores they’d like and measure those scores on a scale that is unique to them. It’s also possible that they may not even consider credit scores at all but just the contents of the credit report.

3. Your Score Is Less Than 700. Now What?
Check your credit score yearly, at least to avoid surprises! With CRIF you are entitled to one free credit report every year. And no, your credit won’t take a blow if you do this – it’s considered a “soft” inquiry. If your credit score is lower than 700 then you should dig deep in your credit report and find out the reasons for bad credit score. Look at your credit card balances and credit utilization ratio. The closer you are to hitting your maximum limit, the more it may lower your score, so pay down those balances if you can. Check out for errors/information listed in the credit report not undertaken by you, in that case, you should immediately report to the credit bureau or the banks to update your information.

Abruptly closing your credit cards with a long credit history can affect your credit score in a negative way. How long you’ve been borrowing affects your score. The longer the better.

4. How long does a bad credit rating last?
Debts have a finite duration, and so does negative information that appears on your credit report. All negative information on the credit information after 7 years often start to value less for the credit score. Make sure all your payments and your credit activities are timely and regular to show stability in your credit behaviour and eventually pushing your credit score towards the good side.

5. Who Can See Your Credit Report?
Your credit report information is not available to the public and can be accessed only you’re your permission. When you apply for a loan and credit card then your permission is required as the lenders and banks need to investigate the information to determine your creditworthiness and your potential and ability to pay back the borrowed amount.

Now that we have explained the basics of Credit Score, wait no longer, follow these steps and start building a good credit history now!

How to Find Your CRIF Credit Score?

A credit report is a testimonial of how well (or unwell) you manage your money. These reports contain a history of balances, payments, accounts, inquiries and other pieces of personal information that are referred by lenders to decide whether to lend you money. Credit scores are calculated from the data contained in your credit report. In India, scores range between 300 and 900. The higher the number, the better the score.

There are four credit bureaus in India from where you can download your credit report and find out your credit score. By law, you are entitled to a free credit report from all the four credit information companies at least once a year. Alternatively, you can also check your credit score either free of cost from online websites which have tied up with one or more of these credit bureaus.

Let’s find out how you can get your CRIF score in the following 3 easy steps from CRIF High Mark’s website:

1. Fill in your Details, Identification Proofs, and Address: You will be asked to provide your email ID first; Post which you will be presented with a form requiring the rest of the details such as Full Name, Mobile Number, Date of Birth, Residence Address & Gender. You will also have to submit your identification details such as PAN number, Voter’s ID, Passport Number, Driving License, or any other ID.

2. Review your Report type:
Here you are presented with two options of downloading credit report; you can either BUY an instant credit report or you can opt for a FREE credit report. An instant credit report can be ready to download within 5 minutes but will cost you around Rs. 400 where as a FREE credit report can take up to 3 working days to get ready for your viewing.

3. Authenticate your inquiry: Once you fill in all the details and select your report type, you will be asked to answer a multiple-choice question to confirm your identity. You will get a set of three questions based on your past loans or credit cards. Upon a successful answer to one of these three questions, you will be presented with your report on your registered email ID.

How often should you check your credit score

You can check your credit score as often as you want to. The common misconception that checking frequently negatively impacts your score is just a myth. A Credit score can affect aspects of your financial life such as the ability to buy a home or car or even get a credit card. Here are a few more reasons you should know your credit score:

• Knowing your financial value: Credit score is an indicator of your financial health. By knowing your credit score, you know financial standing in the market. If you have a low score, you can take corrective measures to improve it. If you have a high score, you can take pride, rejoice and try to maintain it.

• Get better interest rates: A good credit score not just helps you secure a loan, but also reduces your interest rates. A bad score may render you unqualified for a loan or in the least give you a tough time.

• Get rewarded: If you have a credit score, you might well expect occasional rewards in the form of discounts, credit increment and other benefits owing to your clean conduct.

While being aware of your credit score and routinely checking one will keep you well informed and ahead of your counterparts, make sure you don’t make overdo it to the point that it starts causing anxiety!

As An Immigrant, Here’s How You Can Build an International Credit Score in the US

If you are planning immigration to the US, credit score is probably one of the last things you would worry about. However, in the US, many of the essential expenses such as renting an apartment, buying a car, signing up for a cellphone plan or applying for a credit card, requires you to have a personal credit score.

Worrying whether it’s possible or not? The great news is that it is possible to establish credit in the U.S. It may take work but with right credit decisions, you can definitely sail your boat. This guide can help you get started with the steps you need take to build your credit in the United States:

Apply for a secured credit card: The international banks are not likely to provide you any credit card directly, considering they cannot have a credit check on you without a credit history. The only option you have is to apply for a secured credit card (one that is backed up by funds) with a credit union or a local financial institute. If you manage to get yourself a credit card like a Macy’s or an American Express card, it can be used to purchase at the Macy’s retail stores or online, wherever the cards are accepted. Once in possession, try to make minor bills such as $30 to $50 with the card and repay back the full amount immediately. In this way, you will start creating a good credit history.

Subscribe for auto payments: Subscribing yourself for auto deductions ensures that your bill payments are done in a timely manner. The credit information companies in the US consider mobile and utility bill payments while building your credit report.

Use your spouse’s good history: If your spouse happens to be a US citizen with a good credit history, rejoice, for they have won half the game for you. You can apply for a joint account with them or become an authorized user on your spouse’s credit card. You can then buy a car or rent a house together!

Talk to the lender in person: It is always better to talk to the lender in person as then you can better explain your situation. This also helps establish your legitimacy with the lender and they can better analyze you.

Report your rents: Make sure you are paying your house rents electronically as you can now report the rent to the credit bureau. This is one good way to build your history.

Leverage your home bank relations: If you were a credit card owner with an international bank in India, you might be able to call the bank and get them to issue you a U.S. credit card based on your past relationship.

Do not share your SSN: The social security number in the US is like the Aadhar number in India. It is a unique number assigned to each individual and is connected with all your dealings. Your Social security number is required while buying something. Let’s say you share the number with someone who requires a telephone connection on that number. In the case that they were to default on paying their bills on time, it would reflect badly on your credit report and will hamper your credit score.

If you follow the above pointers, you will be smartly prepared for your stay in the US. But wait, there’s more! Always keep an eye on all accounts so you can identify and resolve problems quickly. Check your credit score regularly to track your progress. Pull your credit report at least once a year from any of the approved credit bureaus. It’s free and seeing what is being reported about you is illuminating. All the best!

5 Top Myths About Credit Scores – An Infographic

Today’s goal: To debunk credit myths with credit facts – especially when it comes to your credit Scores. When you hear or read something about credit or finance, how do you know it’s true? How can you be sure it’s not a credit myth – something someone is merely passing along without checking its accuracy? Today we’ll try to reduce the amount of research you may otherwise have to do by pointing out some common credit myths . These are some common statements you might have thought were facts, until today. Let’s start with…

Ways To Maintain Your Credit Score – An Infographic

If you need to maintain your credit score, it won’t happen overnight.Credit scores take into account years of past behavior you can find on your credit report, and not just your present actions. But there are some steps you can take now to start on the path to better credit, read our infographic to know more..

Planning to buy that fridge, TV or mobile phone on EMI? 3 Tips to consider for Christmas shopping!

We are in the midst of the festive season and discounts are flashing everywhere you turn your face. As such, you would be tempted to buy that TV or fridge or phone you were ardently longing for, but couldn’t lay your hands on them considering the enormous price. “Not anymore!” — proclaims one of the advertises on a famous online e-commerce website. These concerns no longer exist because of the advent of EMI facilities on expensive online products.

EMI or Easy Monthly Installment actually feels like it was invented keeping the Indian customers in mind. With festivals dotting the Indian calendar all around the year, and a prosperous population a.k.a. ‘Market’ to consume anything and everything the world has to offer, it just makes sense to make buying easier for buyers. This is especially true when you know they will be buying more this way. However, as a customer, you should always be cautious and clever when practicing this seemingly powerful facility to buy things beyond your capacity. Credit cards and EMIs while feasible could prove to be a big headache if dealt with clumsily. Here are a few tips you should remember whenever you plan to buy online, especially electronics on EMI:

Tip 1: Choose The Right EMI Option
When you are looking to buy a phone online on EMI with your Credit card, you have to be mindful of certain payments. While there is a good 12% to 18% interest rate on the EMI, some brands and banks even offer a 0% interest rate. Banks try to mitigate their losses by performing credit risk assessment before allocating you a loan. Most banks such as HDFC, SBI, ICICI etc. offer you with EMIs ranging from a period of 3 to 36 months.

Take the example of an iPhone X which is available at a discounted price of Rs. 79,999/- on Flipkart and which can be purchased using the EMI facility. Here, ICICI bank is offering multiple standard plans from 3 EMIs at 13% PA i.e. 27,247 p.m. to 36 EMIs at 14% PA i.e. 2,735 p.m. Also, you need to do the down payment along with a one-time processing fee (generally 0.5 to 1% of the total amount) and then pay the remaining amount in installments. Which means for an EMI of 3 Months, you will be paying a total of Rs. 81,741 i.e. Rs. 1,742/- extra while for an EMI of 36 months, you’ll end up paying Rs. 98,460/-, which is a whopping Rs. 18,461/- extra. This is an amount in which you can easily buy another decent smartphone.

If you are genuinely looking to buy something without the hassle of interest filled payments , then the best option is to look out for a‘0% interest EMI’ or ‘No cost EMI’. There are only a few banks which provide you with this option compared to the standard EMIs. Hence, you need to ensure your bank provides you with this facility so that you can avail its benefits. There is a certain one-time charge that they accrue though. But it is still a feasible option than standard EMI.

Let not the lure of paying less amount each month fool you into paying much more than the actual price. It is advisable to choose a moderate tenure of EMI where you can pay the monthly dues without much sweat while keeping the interest rates under control.

Tip 2: Buy Only The Essentials
Most e-commerce websites entice you with the option to buy expensive products online using Easy EMI options. The algorithm of the online websites is such that you will be searching for a TV, and a suggestion for a home theater will be displayed on the page end. You would be looking for a mobile phone, and a suggestion for covers and screen guard will pop up. All these fascinating offers are only good to bewitch you and make you spend more than you had initially planned. Whenever spending, you need to analyze and decide whether the amount you are willing to pay is congruent with your current financial situation and needs. Always remember that whether it be a TV or a fridge or a phone, it is just a product and not an asset. Hence, the value will only keep depreciating over its limited lifetime.

Tip 3: Pay Your Dues On Time
An EMI paid from a credit card is deducted wholly at one go. That means If you want to buy a TV worth 50,000, your credit limit should be at least 50,000 or more to deem you eligible. When you purchase anything on EMI, the whole amount is deducted from your credit amount and you are required to repay this amount in EMIs to your credit provider. Pay your dues on time and avoid defaulting. In this way, your credit score will also be maintained.

Hence, if you are planning to buy a TV, fridge or mobile phone this Christmas, always go for an EMI option which does not stretch your finances beyond limits. Keep your heads on your shoulders and do not get carried away in the festive fervor. We at CRIF hope you enjoy Christmas and keep your spirits & credit score high!

Went Overboard On Your Finances This Festive Season? 3 Ways to Come Out Of It

Diwali, Christmas and then New Year brought along with it a lot of celebration, jollification and merry making. The long holiday week saw a surge of people flooding the roads and skies, cross travelling between cities and countries. Gauging the streets filled with frantic shoppers, shopping it seems, has reached an all-time high. People are desperately trying to keep up with the lofty lifestyle of this generation. With all the glitter around you, you are compelled to believe that If you are not spending, you are not doing it right. Certainly then, all this subsistence comes with a price tag. Considering you too went a bit overboard on your spending this festive season, here are some tips to get you back from your financial guilt-trip.

1. Get rid of your credit card, well just temporarily
Do this right now. Hide your credit card and forget about its whereabouts for a month! Seriously, that’s the only immediate way to escape further debt. While we know this is not practically doable, but having a credit card handy post is like lingering around the forbidden fruit, one bite, and get ready to be kicked out of the garden. Resist the temptation if you don’t want to bleed your credit score further. You can use a debit card instead to avoid the risk of debt. Better still, is to use a digital wallet or withdraw the old fashioned cash from the ATM and spend the same. In this way, you have a limited resource to spend from which keeps you aware each time the amount is deducted. The point is to pause your credit card usage for a while until things settle down!

2. Instead of buying new stuff, sell or exchange old one
Instead of indulging in buying something new, learn the art of selling, recycling and reusing. There are quite a few unused things in every house which can be either reprocessed or sold off. With various online portals at your disposal, selling has become as easy as buying. Those items which lay unused occupying your space could be sold off for a goodly return and for good. If you are not among the ones to engage in the hassle of selling, then you may look out for exchange offers. There are offers on electronics and clothes where you can exchange old ones in return of a new one minus the value of the old.

3. Prioritize on clearing your debt
Stress on clearing your debt first. Maintain due diligence wherever possible. Even the seemingly trivial expenses such as having outside food and drinks, turning off your AC/lights, cutting down your car drives, avoiding using debit/credit card in place of cash, avoiding unnecessary purchase of things could collectively have a significant effect on your savings. In this way, you will be able to repay the monthly EMIs on time and pay at least the minimum due credit card amount. You will also learn some discipline and could even inculcate this as a habit thus helping you in the long run to improve your credit report.

Now that the festive season is over and the damage has been done, it is time for you to scrutinize your financial health. In India, you are entitled for free credit score from any of the four bureaus authorized by RBI. Credit scores can vary across the bureaus and an overall score of 700 and above is considered healthy for all.

Seth Godin, an American author says, “People do not buy goods & services. They buy relations, stories, and magic.” This quote indicates that our buying decisions are not completely based on rationality but are driven by some emotional impetus such as Love, Pride, Ego etc. We don’t just want to buy a utility, we want to buy a memory. Hence, while buying, we tend to prefer something expensive over useful in order to maintain our status.

The company you have while shopping also matters a lot as they influence your buying decisions more than you think. You only realize what you have purchased once you are in the ecosystem of your own house. Spare yourself this emotional atyachaar by keeping your head on your shoulders while shopping. If you comply with the above laws, you will soon find yourself out of this financial mess!

Learn To Be A Smart Borrower This Festive Season

This New Year, learn to be a smart borrower in the Super-hero way!

The susceptibility to become a spendthrift becomes more during the Christmas and New Year season. As the festivities are about to start, we are sure to buy gifts for loved ones, appliances for home and jewelry in abundance because of the irresistible offers that dominate the market. At this time of the season there are loans that people avail to buy expensive things. Often they throw caution to the wind to take advantage of a festive deal.

But does waiting for the festive offers to kick in so that you can save money make you smart? Are you really saving money? Is it a smart decision to splurge during the festive season? Let us break down the steps you should keep in your mind in the Superhero way while you decide your expenses this festive season.

With great festivals comes big expenditures!
It is essential to plan your shopping spree beforehand. As Batman said “with great power comes great responsibilities” so in a country where every festival is celebrated magnanimously it may get difficult to curb your expenditure. Don’t let the festive mood get the better of your financial judgment. It’s important to differentiate between what you need and what you want to avoid (impulsive shopping!).

Make a list of the things you are planning to buy based on affordability and try to stick to it. You should do a meticulous comparison of the available products and look for the best deals before you zero in on an item. Rein in your horses and take objective decisions.

This is my gift, my curse. Who am I? I’m Credit Score.
As Spider-Man accepted his powers as a gift, you should enhance your credit score and use it as gift too. Maintaining credit score is important and it is not unknown to anybody who handles finances on their own. If your credit score is 700 or above, then you are eligible to get a loan to fulfill your wishes. In case it is lower than 700 then you should mend it before it becomes a curse.

Your overall financial health is reflected in credit score and to make it better one must do payments and repayments on time, do a yearly check on the score and use credit in a wiser way. If you are looking for ways to ensure you keep your credit score, well above average, then don’t forget to read our blog,“7 Surefire Ways to Improve Your Credit Score”

Life doesn’t give us money, loans give us.
Getting a loan is easier now-a-days if you meet the eligibility and parameters like good credit score and report. Consumer durable loans are an amount of money lent to an individual for personal, family, or household purposes. Consumer loans are monitored by government regulatory agencies for their compliance with consumer protection regulations such as the Truth in Lending Act.

It is important to know whether you can pay of the loan that you take for buying or the amount that you are paying back does not have a vast difference with the principal amount of the loan. The super hero Flash says “Life doesn’t give us purpose. We give life purpose.” just the way loans work for consumers. Remember to take up a loan that has a considerably lower tenure but higher EMI, this eventually saves you money and gives better interest rates.

In a world of ordinary mortals, Discounts are a wonder woman.
As wonder woman says, “In a world of ordinary mortals, you are a wonder woman”, here the regular prices are ordinary mortals and the heavy discounts and offers are the wonder women while you buy your dreams. The festive season brings in best of offers and discounts, slashing out the price as low as possible. It is your duty to do your research thoroughly before you cash in on any offer.

As Superman say “I hear everything. You wrote that the world doesn’t need a savior, but every day I hear people crying for one”, CRIF is the super hero that helps you measure your credit score in the most accurate way so that you are financially aware and plan your expenses in such a way that you save more and spend less.

Why Do Banks Love To See The 750+ Mark On Your Credit Report?

When you apply for a loan of any kind, irrespective of your background or your ability to pay a lump-sum in your down payment, one important tool that helps the bank trust your ability and your intent to repay is a good credit score. Since the time credit bureaus have come into the picture, a credit report has become a financial bible for the banks.

A credit score is an aggregation of all your loans and credit cards. It reflects your creditworthiness and credit health. A score between 750 and 900 is the equivalent of an A/A+ on your school report card. It implies you’ve been very responsible with your credit, paying your EMIs and dues on time and in full each month. Even if you had a low score at one point, you’ve worked hard over time to reclaim a top spot on the credit score charts. In short, you’re very mindful and responsible when it comes to credit.

Your score also reveals that you’re a relatively safe bet when it comes to borrowing money from a lender or availing credit card facilities. According to credit bureaus, the lowest interest rates tend to go to borrowers with credit scores in the 750-900 range, which means your high score will also help you save money down the road. Besides these advantages, a 750 above score is also loved by banks. Below are the some of the reasons:

1. Judging your reliability becomes easier: The credit bureaus like CRIF are RBI regulated and for scoring an individual they employ sophisticated statistical analysis of your repayment performance on loans and credit cards listed in the credit report. A credit score takes into account many parameters, and helps bank predict future riskiness of a customer. The credit score thus becomes one of the major criteria for the bank.

2. Saves the bank a lot of time: The credit score is a sum of your loan repayment behavior so the bank saves a lot of time in analyzing how your credit behavior is or your ability to repay. The loan sanctioning process is simplified and is a lot faster. As a customer, you get your loan decisions fairly quickly.

3. Accuracy is on point: Initially, the traditional ways were adopted to verify an individual’s credibility which differed as the process depended on varied sources thus making the results volatile in nature. Since the time credit bureaus like CRIF have come into the financial world, the decisions have become more objective, data driven and also standardized. Therefore, the accuracy of the decisions have improved and also more dependable.

A good credit score is the magic wand that does the trick on banks when you apply for your loan to fulfil the most awaited dreams. The banks come across thousands of application for loans and the credit score helps them accept or reject applications in a more organized way and also quite quickly. A bad credit score can make you a risky bet while a strong credit score is encouraging to banks, ensuring you get the best deals out there, which saves you time, money and worry.

How Do Credit Bureaus Get My Information?

For this week, we get into the nitty gritties of understanding how a Credit Bureau works and why you should be trusting only RBI approved bureaus that play a crucial part in generating your credit score.

Credit Bureaus or Credit Information Companies (CICs) are RBI regulated institutions that help determine your creditworthiness. To be precise, Credit Bureaus are institutions that collect information about your loans and credit cards, and create credit reports that help in generating your credit score. To help put your mind at ease, let’s simplify the entire process of how credit bureaus work to make your credit report.

Credit Bureaus, what do they do?
Credit Bureaus are known as Credit Information Companies (CICs) in India. CICs are licensed by the central bank (RBI) since they are a fundamental part of the financial ecosystem. In India, there are four credit information companies – one such is CRIF High Mark. The role of a Credit Bureau is to gather loan account information from various creditors and provide it back in the form of credit report to similar creditors. The vision behind creating such centralized bureaus was to improve the functionality and stability of the Indian financial system by containing non-performing assets (NPAs) and improving credit grantors’ portfolio quality.

The credit bureau collect repayment information of all loans and credit cards of an individual or a business on a periodic basis from all type of lending institutions across India, so as to create an accurate representation of one’s credit history. The data CICs gather is merged across all loans that an individual or business across multiple lenders under one credit report and a credit score is then generated that reflects the data in that credit report. The more negative information you have on your report- like missed payments, debts, etc.- the lower will be your score. This score is then used for various purposes like granting a loan or credit card or make more loan offers.

Creditors, who are they?
Creditors are none other than all lending institutions in India such as Public Sector Banks (SBI, PNB etc), Private Banks (ICICI Bank, HDFC Bank etc), Foreign Banks (Citibank, HSBC etc), Co-operative Banks (Saraswat Bank, TJSB etc), Regional Banks, NBFCs (Bajaj Finance, Tata Capital, CapitalFirst etc), Housing Finance Companies (DHFL, HDFC Ltd) and MFIs (Satin, Arohan etc). RBI mandates all such lending institutions to share data of all the existing loans and credit cards of individuals and businesses with each credit bureau at least once every month. This data also includes personal information about the borrower, details of loan availed (type of loan, sanctioned amount, when was it taken, etc.) and the current position of the loan like its outstanding amount, overdue amount, when was the last payment done and many more details. The data is shared in a standardized format overseen by the RBI.

Credit Reports, what’s in it?
A credit report is an aggregation of all your credit history. It includes information about your credit accounts such as the type of account, the date it was opened, your credit limit or loan amount, your account balance, and payment history as well as any collections that are in your name. Your entire credit history is a record of your borrowing and repayment activity on credit and loan accounts.

Credit Reports, what role does it play?
Credit report determines your credibility or creditworthiness, which means whether to give you loan or not- for mortgage or automobile or education or for just about anything; interest rates to be levied or credit limit to be allowed on a credit card sanctioned to you; and in cases, employers too can check as part of your application process for a job. In some countries, landlords check whether to rent out their property to you or not. So, theoretically speaking, credit report does affect your life in many ways and more importantly your decisions or desires in life to scale up and grow.

A Credit Bureau is thus a central information platform necessary to create a credit report that may reflect directly on your credit management. So, whether you are financially savvy or not, whether you are looking for loans or not, try keeping your score higher by maintaining good habits regarding your finances and keep checking your credit score at least twice a year from RBI approved credit bureaus, such as CRIF.