Does Student Loan go on one’s Credit Score?

Student loans are installment loans which means that you pay a certain amount over a fixed period of time. It affects your credit history like an installment loan; pay your loan EMIs consistently and your credit score keeps building, miss a payment and end up with a low score. However, student loans come with the liberty of a few extra months to complete the payment before you are reported late.

So, when you make timely payments, your lender sends the details to bureaus which establish your track record. You can take a look at these details on your CRIF Personal Credit Report once a year for free! Keep in mind that the student loan affects the credit score of the one who takes it up. If your parents take up the loan, their credit score will get affected every time the loan EMI is paid in time and every time it is not. A good score, however, will always be a plus point.

Related Reads: Educating Myself for My Education Loan

What happens if you pay late?
Sometimes you may get delayed on the loan EMI payments due to a financial crunch or it could’ve simply skipped your mind. These are the usual slippages which the banks also take into consideration. But your score won’t get affected till your bank reports your late payment to the bureaus.

Some student loans extend a levy of 90 days while some report it within 30 days of missing a payment. Once this is reported, the entry remains on your credit report for 7 years. Despite not affecting your credit score right away, you missing a payment can be slightly expensive as banks start charging late fee as soon as you miss a payment.

Cannot pay the student loan? What do you do now?
It often happens that money falls short due to sudden expenses and in such cases, there are a few ways to reduce your monthly loan EMI amount or pause it till you sort things out. You can either sign-up for an income driven repayment plan which would basically set monthly payments of 10% to 20% of your monthly income. It can also be changed annually.

Another way to go about this issue is to apply for a modified payment plan which offers you flexible repayment options or you can decide to defer your loan which would pause your monthly payments. If you change your loan repayments in time then your credit score won’t get hurt. Just ensure that you pay the agreed-upon loan EMI each month.

How will refinancing affect my credit score?
Interest rates and repayment policies undergo changes whenever needed, in such a scenario, you can choose to refinance your loan. This means that you pick up another loan with policies and terms suitable to your needs with which you clear off the previous loan and move on to repay the new loan EMIs.

Every loan-related inquiry made on your credit score is a hard inquiry. This means that every time a bank runs this enquiry on your report, you lose a few points on your credit score. To avoid this, you can make sure that you apply for all the loans you are considering within a period of 14 to 45 days. All these will count as a single inquiry having only a single impact on your credit score.

Planning to pick up a student loan is a big step in anyone’s life, be it a parent or the students themselves. Ensure that you have emergency funds in place to repay it and have the right knowledge to take action.

Benefits of a Good Credit Score – An Infographic

Your credit score isn’t just a number on paper. It’s a door to opportunity, from jobs to credit cards to loans. And, the higher your score, the wider that door opens. Your credit score calculation is based on several factors in your credit report: length of credit history, amounts owed, new credit, credit mix, and payment history. Banks use versions of these scores to make lending decisions. That means that the advantages of good credit factor in to almost every aspect of your life, whether you’re hoping to purchase your first car or get approved for a loan to start your small business. Here’s how a high credit score positively impacts your life:

4 Reasons to Check Your Business Credit Score

Your business has a certain value. A certain reputation it holds in the eyes of the market. You have built it all from the ground up and now you seek the best of opportunities for it to grow and scale. That means your business should be successful in attracting the right kind of people to it, and getting the right treatment from them.

Any opportunity for your business that may come today or in the future will definitely have some financial aspect attached to it. Maybe you’re going to get a new round of funding, or a new insurance policy for your employees, or even a line of credit for a new product. All these opportunities demand a strong commitment from your end.  Your business needs to prove its worthiness of a new deal, its capability of growing and most importantly, its ability to pay the bills on time.  This assurance makes the investor, or the interested party, feel secure and motivated to offer an opportunity for your business. This is where your business credit score comes in.

Business Credit Score to establish your organization’s reputation

Just like your individual credit score, business credit score determines your organization’s creditworthiness by evaluating various aspects of the business’s financial structure. The information on your business credit report is used in the Credit Scoring Model. The score is then used by people when they’re considering your credit applications or loan applications, to predict how likely you are to pay them back in a timely fashion. A higher score means your business has a history of paying bills and returning loans on time. 

Knowing your business credit score is quite easy. The score needs to be updated and accurate. The problem arises when business owners are not updated on their current credit scores. Business owners could be accidentally deprived of good business opportunities due to their or someone else’s misunderstandings of the credit score.  For example, let’s you’re applying for a business loan. You need to know your exact credit score for business loan, so that you can get the most favourable loan terms as possible. This is why knowing your business credit score is of paramount importance.

Here are 4 crucial reasons for knowing your business credit score:

  • Discrepancies: Credit reports from various credit bureaus may not reflect the actual financial and risk status of your company. It is very important to keep a close credit check and analyse the credit reports to get rid of any errors or a mismatch, so that the final score comes out to be accurate.
  • Credit scores change quickly: Every business lender or investor submits a chunk of information as soon as they are done conducting business with you. This information contains their evaluations of your business risk and repayment ability. This influences your existing credit score [score at the time initiating a deal] as the information will provide newer insights into your business’s financial health. So, it is very important to stay updated on your credit score.
  • Avoiding fraud: Business credit manipulation and identity fraud is a common issue that has plagued all kinds of business verticals. This can severely tarnish your market reputation and become a major problem for all your future deals. Staying updated on your score keeps you alert against any suspicious activity.
  • Monitor the red flags: Red flags are the bad blots on your credit reports.  Every time something negative is reported against your company, something like bad consumer feedback, bounced cheque or missed repayments, a red flag is added in your credit report. Monitoring these red flags can help you implement stricter measures in your accounting/billing structure and avoid any fiascos in the future.

CRIF High Mark is a leading credit bureau in India that offers all kinds of services for business analytics, scoring, credit reporting and decision solutions.  To check your business credit score or to learn more about CRIF, you can visit the website- www.crifhighmark.com

5 Goals to Help Your Finances in 2020

Every 1st of January, when the clock strikes 12 at midnight, what is the first thing you think about? Most would say wishing everyone a happy new year. Of course! But what’s the second or third thought? Planning how you want to lead the new year and set goals. While some might be fairly ambitious, some can be realistic too!

Everyone has to take stock of their actions, decisions and plans made in the previous year to understand what worked and what needs to be changed. These could range right from personal goals like planning an international trip to professional goals such as receiving a promotion by year-end. But the plan that all these goals derive is how strong a financial plan you built in the last year.

Related Read: How I Raised My Credit Score by 250 Points

Financial plans are dynamic and they need to adapt to the new situations and requirements that you shall lay. Here are a few goals you can place across 2020 which is not only a new year but also a new decade!

Goal #1: Catch up with your credit history

Your credit history will tell you how high above or deep into the water you are. It enlists all your financial transactions and also exhibits the factors that raised or reduced your credit score in the last year. In addition to that, check your personal details and KYC information in case there has been a change in the previous year. Wrong information can also hamper your credit score and we don’t want that to be the case!

Goal #2: Take stock of last year’s credit lines, transactions etc.

While you are looking at your credit report, evaluate the lines of credit you picked up and how you did in repaying them. The mix of credit lines you pick is an important factor accounting for your credit score. So make sure you branch out with the kind of loans you pick to ensure that you have used the right type of loans when needed. If there were any defaults or late payments, they would’ve affected your credit score. So, make a promise to stay at the top of your repayment game in 2020.

Goal #3: Pay all your bills on time and lay a plan to reduce your credit debt

If you have faulty credit card due clearances or late loan EMI payments, list the reasons behind them both, real and hypothetical. Evaluate how you should avoid the real reasons from recurring and be prepared to deal with the hypothetical ones in advance. Every faulty payment reflects on your credit report for 7 years, so make sure you don’t get late in paying your credit card dues and loan EMIs this year.

Also, start planning on how to reduce the number of credit lines you pick in a year. The last thing you want is to display a credit hungry behaviour! So, make a list and take stock of those credit lines which you could’ve avoided. Try to abide by this in 2020!

Goal #4: Apply for credit only when absolutely needed & stick to a monthly spending limit

You may have received a credit card with handsome credit limits but that doesn’t mean that you can use all of it, especially when you cannot afford to repay the entire due on time. Keep a few points in mind when you get a new credit card! Plan your savings and put a cap on your monthly expenses. This will help you plan ahead and save up for any emergency expenses. Avoid picking up credit to repay another line of credit, pick it up only when absolutely necessary.

Goal #5: Save up on emergency funds

Emergency funds are underrated. It may seem like an extra amount getting blocked from your monthly income amidst all the dues and EMIs, but having an emergency fund is very important for everyone. Right from health needs to emergency travels, you should be prepared for everything in advance. So, invest in an emergency fund and build it judiciously.

These 5 goals will help you ace your finances in 2020, so make sure you keep a stellar credit history and take measures to maintain it every year.

Want to lay down such goals? Begin by checking your CRIF Credit Score now.

Does a Failed Credit Card Payment Pull Down Your Credit Score?

Rohan is browsing through his mail. He sees the monthly credit card bill sitting in his inbox, oh-so-proudly. It was his birthday month and his bank gave him a new credit card with a generous limit. And this leads to the crux of the matter: he crossed the planned budget! Now, he is contemplating if he should pay a partial amount this month and the rest next month or leave all of it for the end of the month, when he receives his salary.

He thought to himself, “What if I miss just one odd credit card payment? I am sure the bank will not mind!” Haven’t you too had this thought at some point in time? The honest answer is, they won’t mind you missing a payment… but they’ll add an interest to it. “But what about my credit score?” Rohan thought. As far as that is concerned, yes it will be affected.

Sometimes, missing a credit card payment might not be intentional; it could be because of a billing mistake or because of a financial crisis. But a lender does not look at it in favour of your credit history. It only shows that you, at some point in time, have faulted on clearing your credit card dues. A missed payment doesn’t only affect if it is your credit card, it can also affect your score on add-ons cards, where you take accountability of someone else’s expenses too.

Related Reads: 5 Things You Should Do When You Get A New Credit Card

How does a single missed payment affect your credit score?

When you miss paying your credit card dues on time, the interest added on it is compounded daily. So you can end up paying an interest of 3-4% per month depending on your credit card limit. The same applies to your outstanding amount when you pay the minimum amount. In short, if you do not clear your monthly credit card dues on time, you will see your amount blow up significantly and can increase your repayment period as well!

In such cases, lenders see you as an unfit borrower- someone who is more likely to default on timely payments.

Need a simple solution? Financial discipline!

Your score is calculated taking into account the last 24 months of your credit history. So that is how long it will take for you to mend your credit score for good if you end up missing on your timelines. Even so, these transactions will be visible on your credit history for 36 months.

In order to mend or rebuild your credit score, you will have to hold your end of financial well-being with absolute dedication. Ensure that you do not let a single instant arise that can have an impact on your credit score.

Ways to rebuild your score

To get back on track and raise your credit score, you have to be vigilant about the following things:

  • Make it a point to repay your debts and dues fully in time. A part payment indicates that you have difficulties in repaying but no problem in borrowing. So, do not let your outstanding debt snowball.
  • Consider taking a personal loan to repay your outstanding credit card dues. This way you will get rid of a compounding interest and end up clearing just one part of debt, your personal loan.
  • Avoid making any transactions on your credit card till your dues are cleared. This will appear to be difficult but it is for your financial well-being.
  • Keep a close check on your CRIF Personal Credit Report to follow-up on the developments and take stock of your next steps.

Having the freedom to spend more than your current affordability is very tempting till it becomes a huge snowball of debt. Avoid reaching that point with your credit cards and ensure that you pay your credit card dues on time. Missing even a single payment can affect your credit history badly.

Take stock of your financial history by pulling your CRIF Personal Credit Report and start making wise choices right now!

Should I Opt for Festive Season Loans?

Isn’t festive season the best time to cash on impulse? Consumers are already spending heavily either shopping, taking a holiday or planning a lifestyle upgrade. That’s why discounted loan advertisements become pretty hard to avoid! Before you opt for the festive schemes, offers and loan discounts, just keep your credit score and this quick read to in mind!

What’s in it for me?
Festive loans give you special waivers in the processing fees or lower interest rates for the loan tenure. Banks tie-up with several merchant segments like travel, lifestyle, automobile, real-estate, etc. to get you quick disbursement on loans for travel & holiday packages, home appliances, fashion, electronics, and accessories! Banks are thrilled to offer personal loans or credit cards within a day since they are unsecured, i.e. do not require collateral, which makes them easy to offer!

How does it work?
Loans are for a genuine requirement and a liability that needs to be paid back. The festive offers do make a lucrative bet, but make sure you read the underlying terms and conditions before riding on the debt wagon.

Related Read: What is a no-cost EMI and does it work in your benefit?

Need to Know!
Recently, RBI has clarified that the term “Zero interest” or “No-cost EMI” does not exist as banks or lenders only earn from the interest rates. So, they either charge you a lump sum when you are availing the loan, or give you a higher monthly EMI, perhaps charge you a higher processing fee. You will find kiosks outside banks offering ‘quick loans’, requesting you to fill up the application forms.

When you apply for a loan, the lender has the authority to pull out your credit report to check your loan eligibility. This is called a ‘hard inquiry’ and can knock off a few points of your score. If you do have to borrow this festival, make sure you don’t apply for several festive loans at once, anticipating which one will go through!

Good to Know!
Millennials today survive on debt, quite literally! Either with an ongoing car loan or a home loan, or at least a credit card. Paying in EMI’s instead of a chunk out of your corpus seems easier to sustain your lifestyle needs, but it’s important to know that you only own things when you pay them off completely. In the festive mood, loan discounts may seem like a savior in need, especially with living costs going through the roof. Ensure you do thorough research on the lender options and the type of loans you can apply for before you make a hurried application.

What should I do?
It is not uncommon to make big purchases during the festive season but it is essential that you know how much you need.

Analyze
Analyze your personal financial goals and the benefits it actually gives you instead of making low prices the sole reason to apply for it. Do you really need a car upgrade? Is a foreign journey on your to-do list? Have you been waiting to buy a home? Having a credit mix of loans, credit cards and other credit lines can boost your credit score and thus your creditworthiness but only if you make timely repayments on them. Hence, planning your finances for the credit repayment tenure is the first step towards managing debt well.

Prepare
Take a quick informative tour online and prepare the documents you require for the loan application like income statements, tax receipts, and identity proofs. Check how much income you are left with after you pay your credit card dues, household expenses and taxes to estimate loan EMIs beforehand, making it easier to pay off without hurting your monthly budget!

Check
Once you are ready with your research on lenders and loan types, give your credit score a quick check to confirm loan eligibility that’ll help you avail it effortlessly. A credit score is an important tool that lets lenders study your credit history through an automated report that determines your creditworthiness. If you are worried about a low score, here are ways to repair it before you apply.

You can check your free credit report with CRIF and prepare to make the festive season memorable by fulfilling your wishes!

How Different Types of Credit Can Boost Your Credit Score?

A credit score is calculated taking several factors into consideration; a statistical account of your creditworthiness & credit history. Borrowers are required to have a credit score of 700 or above to have the freedom to avail loans & apply for credit cards to meet their financial requirements.

Credit mix is basically the types of accounts that build your financial history and as a result, your credit score. Credit types that can be part of a credit mix include credit cards, mortgages, loans of any kind (student, personal, car or home). It constitutes 10% of the credit history as it indicates the different kinds of credit an individual can handle & repay back.

There are a total of 5 factors that affect your credit score:

1. Payment history: 35%
2. Amount of debt owed: 30%
3. Age of the credit history: 15%
4. New lines of credit: 10%
5. Credit mix: 10%

Related Read: Let’s answer 5 frequently asked questions about a credit score!

Different types of Credit you can have:

Credit is available for borrowers in 3 main categories:

– Revolving credit: These are credit lines with a monthly credit limit. It gets renewed as soon as you clear the previous dues. A borrower is allowed to utilize as much of the credit limit as per requirement in one go or in multiple transactions. It includes credit cards & home equity lines of credit, not very common in India.

– Installment credit: These lines of credit have a set installment to be paid across a predetermined time period. The loan payments are listed in an amortization schedule. As the borrower goes on to pay the installments one-by-one, it keeps reducing from the amortization schedule in the loan agreement. This line of credit includes student loans, home loans, auto loans, mortgages, etc.

– Open credit
: A credit line that is preferred by a few. Open credit lets the borrower use a fixed amount which should be paid back in full every month it is used. This type of credit is usually associated with charge cards, and not credit cards.

If it is good, should you overdo it?

Diversity is encouraged in the world of credit for the borrower’s benefit, but it is not a hard & fast rule. You can have even one line of credit & ensure that you make timely payments to clear it. The fact that it constitutes only one out of 5 parts of your credit report can help you remain at ease but it will help you only as long as you are able to repay it on time.

Having a mix of credit basically clarifies a borrower’s image in front of the lender. It demonstrates the ability of the borrower to pay back different kinds of credit lines, indicating that you are responsible. The potential lenders will view in a brighter light & see you as less of a risk.

How can you apply this to your credit score?

Building a good credit score doesn’t limit to only picking up different lines of credit, but it also includes your timely repayments & other historical data. A major part of it is the credit utilization ratio!

Since revolving credit is one line that most borrowers deal with on a day-to-day basis, it is vital to keep an eye on your credit cards & home equity lines of credit. Another reason to pay close attention to it is that it determines your credit utilization, which constitutes 30% of your credit score.

Repay your credit card dues each month & ensure that you keep a low balance on it to keep your credit utilization low, as a result of which your credit score will strengthen. Credit card limits keep increasing gradually and often land borrowers in debt. So make sure you don’t fall in that trap & maintain good credit utilization.

Take a look at which credit lines you’ve used & what can be added to your report by grabbing your CRIF’s Personal Credit Score here.

Will Settling a Debt Affect My Credit Score?

When we take up a loan, our first intent is to pay it back and clear it fully, but it also happens that some of us may not be able to repay the loan EMIs on time. In such a scenario, it becomes very difficult to decide what one must do. There is, however, one way that can get you out of the debt, which is by settling it with your lender. If you & your creditor reach an agreement, then you can settle the debt for a lower lump sum payment. So, you basically put an end to the debt by negotiating on the total loan amount. Hypothetically, say you have a loan of Rs 10 lakh and you are unable to pay the loan EMIs, then you & your creditor can enter an agreement to settle the debt for a one-time payment of Rs. 2 lakh.

Related Reads: 5 Practical Steps to Get You Out of Debt

Better than “Unpaid” but worse than “Paid as Agreed”

Your credit report maintains records of your loan EMI status & history of credit card dues. It lists whether you have paid your monthly dues & loan EMIs on time, before or after the due date. So, when you are done settling your debt with a lump sum payment, your creditor updates the status of the loan as “Settled” or “Paid Settled” on your credit history. It is definitely better than an “Unpaid” status update on your credit report, but it is not as good as a “Paid in Full” status, which would’ve been updated had you paid the full amount. Any status other than the latter can hurt your credit score.

In addition to settling your debt, there are other factors that can have an impact on your credit score. But, the degree of the impact of each factor on your credit score varies & cannot be identified accurately. Debt settlement can, nevertheless, have a noticeable impact on your credit score! When you opt for debt settlement, the account is not removed from your report immediately. If you made late payments while you were paying the loan EMIs, then this account will reflect on your report as a factor for 7 years, starting from the first date of late payment.

Lay the bricks of rebuilding your credit score after debt settlement

The credit score is a dynamic number that keeps changing depending on your financial activities & any score above 700 is considered to be a good score. If you are in a situation of not having paid your loan amount on time & this has affected your credit score, then you must start taking measures to rebuild it:

1. Ensure timely payments of all your dues hereon. In fact, make use of the auto-debit feature on your net banking platforms, so that money is automatically debited from your account as soon as you receive your monthly income. Your payment history is the most important component on your credit report.

2. Monitor & control credit utilization no matter how high is your credit card limit. Make it a point to set a limit of utilizing only 30% to 40% of your credit limit to keep your expenses under control. You can even set daily & monthly spending limits on your credit card. So, you can use this feature as well to make sure you don’t overspend & land in another situation of excessive debt.

3. Keep an eye on your credit score to see its progress. Tap the entries of all your transactions & evaluate your risk factors. Your report consists of the risk factors you are exposed to along with your score & this tells you what you must start improving first to ensure a healthy credit score.

Begin rebuilding your credit score by getting your free credit report from CRIF!

What Is The Difference Between Accessing Credit Score From a Bank and Online Websites?

Your credit score is a reflection of your credit habits as it provides the details on your outstanding loans and credit cards along with the outstanding and overdue amounts. Your credit score can be accessed through any of the following modes:

1. By Self – You can check your credit score through the websites of any of the 4 credit information companies operating in India. CRIF Highmark is the youngest of the lot and you can access your credit report by visiting the link – http://cir.crifhighmark.com. You can check your credit score through CRIF HighMark for free once every year.

2. By a Bank/ Lending Institution – Banks generally have an access to the credit information database being maintained by Credit Information Companies. So, when you apply for a loan or a credit with a bank or a lending institution, it will typically access your credit report to know your credit behavior and the health of your outstanding loans and credit cards.

3. By Loan Marketplaces – Loan marketplaces like BankBazaar, PaisaBazaar, IndiaLends etc. generally offer consumers a facility to compare and apply for loans or credit cards from different banks through a single application. In this process, these platforms may also access your credit score to check your eligibility for loans/ credit cards. They may also offer you to check your credit score free from the credit information companies they would have partnered with. Since the facility is offered free, many visitors may be tempted to use such services. However, it must be noted that such marketplaces may retain your data that you provided directly on their website as well as what is sourced from credit information companies with your due consent. All such data can be directed to remarket more products to you in future, and also to build internal analytics. As such, you must also carefully read the terms and conditions that you consent on such lending marketplaces to know how and what will they use your data for.

With regards to the safety of your data, it is worth noting that your data is generally transmitted through secure servers in an encrypted form when your credit score is checked across the portals. As such, the information kept in credit databases with credit information companies or in transit while being checked by banks/ lending marketplaces is safe and secure.

However, you must also be aware that there is always a difference between checking your score by self or through banks. Whenever your credit score is checked for a prospective loan/ credit card application, it is also recorded as a credit inquiry in your credit report. A higher number of credit inquiries reflects you as a credit-hungry individual to the bank and also has an adverse impact on your credit score. Instead, you may check your credit score directly through credit information companies and avoid any adverse impact on your credit score. Check your credit score with CRIF HighMark for free once in a year by clicking here.

Debit Card vs Credit Card: What Affects Your Credit Score?

Are you confused between a debit and a credit card? Although they look identical, their uses and features like reward points, EMI option and impact on credit score are distinctly different. Read on to know more about these differences.

Debit Card:

A debit card is directly linked to your savings account and can be used to make purchases. As long as there are funds in your bank account, you can use the card. The different types of debit cards are:
● Standard Debit Card: The money is directly withdrawn from your bank account.
● Prepaid Debit Card: It can be used to make purchases up to the amount pre-loaded on the card. It allows you to withdraw money without access to a bank account.
● Electronic Benefits Transfer (EBT): This card is issued by federal & state agencies to allow specific users to use some benefits to make purchases. Common benefits provided are food stamps and cash benefits.

Credit Card:

Credit cards are issued by financial institutions, typically a bank. The credit card holder is assigned a pre-determined credit limit to use money as a short-term loan by the credit card issuing company. When you apply for a credit card, you agree to pay the money back on a certain date according to the institution’s terms. There are four major types of credit cards:
● Standard Card: This a simple type of credit card offered by the bank.
● Secured Credit Card: It requires an initial security deposit to be placed on the card. The deposit you pay here is equal to the transaction limit of the card.
● Reward Card: It offers travel points, cash back, and other benefits.
● Charge Card: This card doesn’t have a preset spending limit, but the complete balance amount must be paid at the end of each month.

Major Differences Between Credit & Debit Cards:

The only similarities between credit and debit cards are they are almost identical in appearance. Both have 16-digit card numbers, an expiration date, and CVV codes. But, the objective and usage of both cards are different. Let’s look at the differences between them.
1) Impact on Credit Score: A credit card affects your credit score in 3 ways
Builds your credit history
Displays your repayment intent
Shows your credit behaviour

Building a credit history is a hidden benefit of using a credit card. Credit history is an important factor in your credit report and score. The simple logic is if you don’t have a history, how can you have a score? There are simply no parameters to judge you. Debit cards, since they rely on the amount actually in your account, do not count towards credit. So, using a credit card is a good way to build your credit history provided it is managed well. A well-managed credit card has a good payment history. This means that you don’t default on any of the monthly payments.

And, last but not least is your credit behaviour. Do you constantly maximise your credit limit? Is your credit utilisation ratio very high? This ratio is the percentage of actual credit usage out of your total limit. E.g, if your limit is Rs.1 lakh and you regularly use Rs. 80 k, your credit utilisation ratio is 80%. This shows a “credit hungry behaviour”, also viewed negatively.Such factors lower your credit score, create a negative impression in the eyes of lenders, and subsequently, such consumers will struggle to get a loan approval.

Related read— How To Find Your CRIF Credit Score – An Infographic

2) EMI Option: In debit cards, there is no concept of EMI because the entire amount is directly debited from your savings account. However, a few e-commerce sites and some banks are offering a debit EMI option, wherein you need to maintain a fixed/recurring deposit to avail this facility. When you purchase, your money is first debited from your bank account and subsequently reversed in two working days. This means you need to maintain the necessary balance at the time of the initial purchase. The debit card EMI starts after 30 days from the date of reversal.

Credit cards give you the facility to convert your purchases into EMI. But, you have to pay interest every month on the outstanding amount until your EMI is fully paid. You might also have to pay service tax and other additional charges. You may have an idea of using multiple credit cards to fund different purchases and increasing your total credit limit. But, before you hit apply, wait! Multiple credit cards, with high utilisation, will negatively affect your credit score. When you apply for a loan, banks check your credit history of each credit card you use.

3) Protection on Purchase: Both debit and credit cards have a PIN; hence, they are secured. A majority of credit cards have a liability protection feature, which makes them safe & secure from any unrecognized transactions or frauds. In addition, many banks provide a charge back feature, wherein an unauthorised transaction on a credit card is paid back to the cardholder. These features are not offered on debit cards. If you want such security, you can apply for the Card Protection Plan (CPP) and secure your debit card from any fraud or misuse. Unlike debit cards, credit cards offer‬ cashback and rewards such as ‭‬fuel points, air miles,‭ and ‬free gifts‭.‭

Conclusion: Credit cards can come with huge financial benefits if used wisely. They build your credit score and ease loan approval to fulfil your financial goals. But, before you swipe your next credit card, check your CRIF credit score here and monitor it regularly.