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..
Good credit is the lifeline of your business. Sure, it’s a must for obtaining funding for launching or expanding your business. But that’s only the beginning. Here are just a few of the many benefits of good business credit score.
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!
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!
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.
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.
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.
The festival of lights is almost here and preparations are on in full swing. It’s that time of the year when you are allowed, or in fact supported, by your loved ones, to spoil yourself with all good things from clothes, to jewelry, to sweets…just about everything. So while you are basking in the festive mood, we don’t want to dampen your spirit. But being the righteous financial advisers that we are, we would like to, well, advice you! Diwali is celebrated to commemorate the victory of Lord Rama over his Arch-nemesis, Ravana. Likewise, we humans, with our limited competencies, should strive to overcome our financial evils. So here’s a list of simple things that would not just help you have a sparkling Diwali, but will also earn you a bomb of a credit score (or at least save you from ruining an existing one).
1. Give your card a break: Even as Diwali approaches, a number of special offers and schemes start flashing the market. These fancy advertisements combined with the festive fervor, beguile people into spending frantically. At such times, it requires a lot of effort to keep your credit card swipes under control and not give in to consumerism. As a rule, shop what you need rather than what is on offer, and remember to restrict your spending to at the most 50% of your credit card limit.
2. Plan your shopping in advance: Don’t wait to buy new clothes till the Diwali Diya is in your face. Begin shopping much in advance. This way, you get a lot of time in your hands to surf your options. Also, during festivals, the flight tickets touch the sky and you end up spending thrice the amount unless you are heedful enough to book your holidays months in advance. Planning saves you from spending all money at once and spread your spends across a few months. Buy big ticket items such as TV, Fridge, Laptop etc on EMIs instead on credit cards to give you some breather.
3. Stop forgetting due dates: It’s easy to forget the due dates when you have so many other distractions during Diwali. Have a calendar handy and also keep your partner or close ones informed about the same. In this way, you will be reminded of your dues and would be automatically prompted to spend mindfully. If you forget your dues frequently, it will show up in your Credit Score.
4. Protect your family’s future: Just like you would want to protect your kids from the fire crackers, you need to protect your family from the financial demons too. It is important to plan in advance so that you secure their future even when you are not around. The idea is to have a right mix of investments such as in FDs, PPF, PF, Mutual funds, SIPs, Equity or a real estate. Consult the right advisers to obtain a personalized plan for you.
All the above pointers will ensure your family has a great Diwali while you have a crackling credit score! So here’s wishing you a very happy Diwali from CRIF India. Have a sparkling one!
Festive seasons in India come along with a lot of offers and deal on cars, adding more festivity to the season. Be it Diwali or Durga Puja, there will be discounts and offers galore on varied products and it is in your best interest to avail them before it’s gone.
The car is one of the most thoughtful purchases that one has to do. It not only is confusing amidst an enormous number of options but is also a little nerve wrecking when a loan has to be taken for the same. If you are planning to buy a car that you have wished for then we have a list of things that should be on your checklist before you hop on to a decision or before you apply for a car loan, making things uncomplicated.
Did you decide what car you would go for? The first thing is to plan what car you really want to buy and is also a practical option for you and your family. It is wise to decide a car that fits the needs and does not compromise with your dreams too. As a novice driver, you must not invest in a high-end car or for that matter a new one. Choose the car that matches the purpose.These are few parameters that will definitely help you decide the right car model that will suit your needs:
Have you checked your credit score?
Credit score and history should first be in place before you start planning to apply for your car loan. The foremost step is to visit an RBI-approved credit bureau website like CRIF and check your credit-worthiness. A higher score means a better chance of loan approval and lower will be the interest rates. One will have a greater probability of approval of the loan if he/she has a score above 700.
Have you made a checklist of the documents?
The lenders often check your credibility and a list of documents before granting the loan. The list includes proof of identity, (such as PAN, Driving License Number, Aadhaar etc) your income proof (salary slips for last 3 months, Form 16 for last 2-3 years etc), credit and bank history (bank statements for past 6 months), proof of residence (electricity bill, driving license).
How much down payment can you afford? Now a day’s car dealers tie up with various banks and lenders, bringing in the possibility of 100% finance. Though it may sound very enticing once you start evaluating the options you will know that more the loan, higher the EMI. Make sure you have most of the amount ready as the down payment which eventually helps in the lower loan amount, thus a lower EMI.
What is the tenure of the loan? The repayment through EMI depends on the tenure of the loan. It is feasible to take a longer tenure loan (say for 5 years or more) if your income is on the lower side as it reduces the portion of the EMI as the loan amount is spread over a longer time and a shorter one (3-5 years) if you can afford it.
What are the loan rates? Car loan interest rates start at 8.7% per annum, depending on your car model, repayment capacity, employer, etc. At first check with your bank if they have any offers or any deal that gives lower interest rates. Secondly, visit all the online lending marketplaces and compare carefully all the deals to get the best one. Make sure a detailed inquiry is done by you before you finalise on a deal.
What kind of credit behaviour do you have? Do not make multiple inquiries in the same bank as it indicates that you have credit hungry behavior which eventually does affect your credibility and credit score. When you ask for a loan from a bank and get rejected for the same then you should not go back to the same lender again without fixing the glitches in your application profile.
Have you read the fine print? Lenders charge this fee to cover the cost incurred while evaluating your loan application. This is usually a non-refundable fee. In festive seasons and other offers, many lenders waive off their processing fees to attract business. Ensure that such lenders are not charging a higher interest rate or other charges to offset their loss from the reduction of processing fee.
Finally, did you take the test drive? When you choose to buy a new car or an old one never skip the luxury of getting a free test drive. It will help you take a decision which is often one of the biggest dreams that one fulfills with their hard earned money.
Your dream car is an emotional & financial investment and you would not want to take a hasty decision about it. Hoping that buying your new ride is easy now with all the information assimilated in this article. Out of all the steps, make sure to first check your credit score with CRIF before you apply for your car loan.
We know how important a credit score is in our everyday lives especially in our ability to take loans. Did you know it is equally important to check your credit score at regular intervals? There are a number of reasons to do so – some of them are to keep a track on your credit standing and take necessary steps to improve or maintain the credit reports and credit score. While we all know that checking your credit score is important, one thing that bothers a lot of consumers is if checking their own credit report will hurt their credit scores. We are breaking down the entire process to give you a crystal-clear view.
What does ‘credit report check’ or credit score check mean?
A credit report check, also known as an inquiry for credit score is either done by you or by the potential lenders of loan or credit cards such as banks, NBFCs and other financial institutions. A bank checks your credit score usually when you apply for a loan or a credit card to know the creditworthiness of the applicant. Further, a bank can also check your credit history and credit score while you are a loan or card customer of the bank to monitor its portfolio of customers.
Credit Report Check shows or not Hard Inquiry Vs Soft Inquiry
A credit report check or a credit inquiry can be classified into a hard inquiry or soft inquiry. Hard inquiries occur when you apply or request for a new credit card or a new loan or a line of credit like increasing the credit limit on a card. Such inquiries leave a footprint on your credit history and show up on your credit reports. Too many hard inquiries over a short duration have a negative impact on your credit score, especially if the credit keeps getting denied.
Hence, it is advisable to limit your applications for credit card or loan. 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. Want to know about the ways that can positively impact your Credit Score? Read our blog, “4 ways to Build a Great Credit Score.”
On the other hand, soft inquiries occur when an individual checks his own credit report and credit score. These are the type of inquiries that do not show on the reports, no matter how many times you check your credit report. Even if these appear on your credit report, these will never affect your credit score despite you checking five times in a single day.
When you are pre-approved for a special credit card offer or personal loan, it is very likely that the Bank would have carried out a soft inquiry on its existing customer base, such as you. Banks periodically review its existing pool of customers for assessing risk of its loan portfolios and finding out good customers whom to make pre-approved loan offers. Since these are soft inquiries, you do not need to worry on any negative effect of these checks on your credit score.
If you want to still keep a record of the inquiries just to stay more informed about them, CRIF can help you with the annual credit report with details of hard inquiries in your credit report.
Keep a check, always.
Consider your credit scores as a pie that represents your financial being. Your pie is divided into slices, each of which constitutes of different factors. One large slice is your timely payments, another is your length of credit history and yet another is total credit used. And then there is a tiny slice which represents your hard inquiries. It is essential to control your hunger and not to bite this slice. This diet won’t help you to lose weight but can definitely help you gain some points on credit score. It is essential to keep your credit on a check as it gives you an accurate position of your credit standing.
To ease out the hassle of keeping a check on your credit score, you can contact CRIF. It is an RBI-approved credit information bureau that gives trusted and accurate results of the credit score.
