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.

Checking My Credit Report Affects My Credit Score? Or Not?

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.

4 Ways Credit Score Can Impact Your Financial Life

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

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

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

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

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

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

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

 

Banking Ombudsman

Did you ever fight with your elder brother during your childhood? Whom did you go for the resolution? Your mother, right. However, we are sure that many times, you would have reached out to your father against the resolution made by your mother. Our families implicitly carry their own mechanisms to address and resolve complaints or grievances.

Given the number and the variety of interactions we engage with banks today, some of us are likely to have complaints or grievances against the services offered by the banks. Though such hierarchy for resolving complaints and disputes comes naturally into our homes, Reserve Bank of India (RBI) has defined such hierarchy for redressal of customers grievances through Banking Ombudsman Scheme, 2006.

According to the said scheme, any person who has a pending complaint against his bank in terms of deficiency of services or in respect of loans taken or not following fair practices etc may file a complaint online with the Banking Ombudsman appointed by RBI to get the issue resolved. RBI has appointed about 20 senior officials as Banking Ombudsman, one in-charge for a one or more states, for assisting you with your complaints.

The guidelines require the complainant to first exhaust the grievance redressal avenues within the bank such as writing to bank’s customer service desk or to the bank’s nodal officer and then only approach the Banking Ombudsman. The complainant may approach Banking Ombudsman in case he has not received any reply within a period of one month of the complaint or the complainant is not satisfied with the reply given by the bank.

While the Banking Ombudsman Scheme 2006 covered almost all types of banks operating in India, the RBI recently announced an Ombudsman setup for NBFCs for helping consumers with complaints against any service deficiencies of large NBFCs.

How about complaints on your credit report?
You may notice an error in your credit report which may be affecting your credit score as well, and thus your ability to take a loan for your needs. Since CRIF deals with a large amount of data emanating from many banks and other financial institutions and further, in respect of many borrowers, an inadvertent mistake in your credit report cannot be ruled out completely. Read more to understand how credit bureaus work.

Whenever you face such a situation, you may write to us highlighting the discrepancy along with the unique Report ID on the right top corner of your CRIF Credit Report. If you wish to enclose supporting documents, you can write to crifcare@crifhighmark.com. Our customer team ensures that your concerns are heard promptly. Technical issues, if any, are addressed at the earliest and a revised credit report is thereafter issued at no extra cost to you.

In case the issue is with the data provided by the bank to CRIF, we forward the issue to the concerned bank requesting a correction. At the same time, CRIF also requests you to directly take it up with the concerned bank to help expedite the correction. CRIF continues to follow-up with the concerned bank to support you with this correction. As soon as CRIF receives a confirmation for correction, we update our records and share a revised CRIF Credit Report with you.

Even though CRIF strives to offer best standards of customer service, in case you are not satisfied with the response from our customer service desk, you can escalate the matter to CRIF Nodal officer by writing to nodalofficer@crifhighmark.com.

If you do not hear from CRIF or the bank within a reasonable time of 30 working days, you can also approach the Banking Ombudsman for the said discrepancy.

Always at your service! Read FAQs on Banking Ombudsman

What benefits from Banks can I expect if I have a good score?

Rakesh has been making routine visits to his bank for getting his home loan sanctioned. As this was his first loan, he had been curious about the concept of credit score. Counting upon his neighbor, Aditya for all his financial queries, he had even discussed the things banks notice in the credit score with him a couple of days back. You can check the conversation here. So, while they were watching the FIFA World Cup match live on TV, the discussion during the halftime again turned towards the credit score.

“Aditya, do you remember we talked about credit score last week. I checked with my bank manager and came to know that my credit score is 759. Is this something good or bad?” Rakesh checked with Aditya.

“That’s indeed a great score. Any score above 700 is generally seen as a good score.” Aditya said. However, Rakesh was not much satisfied with this plain answer. It seemed like Rakesh had something more to ask.

Noticing this, Aditya continued, “A good credit score is an indicator of creditworthiness, i.e. the person has established positive habits with their finances. One tends to get plenty of benefits with a good credit score.”

Benefits of a Good Credit Score:

1. Better chance for credit card and loan approval – Your credit score is your first impression of you as a borrower in the eyes of the bank. As such, having a good credit score improves your chances for faster and earlier approvals for credit cards and loans etc.

2. Low-interest rates on loans – Several banks have started linking the interest rates applicable to the borrower with credit score. As such, the interest rate you may be charged on your loan can get affected by your credit score. Some time back, Bank of Baroda had become one of the first banks to offer better interest rates on home loans for customers with a credit score above a specified number. Many more banks have already followed the suit and several others are now joining the race. Recently, IDBI Bank has also offered some discount on the applicable interest rates for customers with good credit score. It, therefore, becomes imperative for you to maintain a good credit score.

3. More negotiating power – Your better credit score helps your bank to perceive you as a less-risky borrower. As such, you can ask for concessions on processing fees, higher loan to value ratio (amount of loan against the value of the security) etc. and given your good credit score, such requests can be definitely expected to be considered favorably by the bank as well. Any saving is a good saving, nevertheless.

4. Get approved for higher limits – With a good credit score, you get reflected as a healthy borrower with lower credit risk for the bank. As such, you may also be approved for higher limits against your credit card/ loan etc. However, do make sure that you genuinely need such higher limits before choosing to avail them. After all, the money you are going to use is just a loan and you need to repay it one fine day.

5. Bragging rights – This is more linked to your psychological need. A good score highlights you as a responsible borrower who makes his payments against the debts on time. As such, you can rightfully brag about it within your friends network.

“Keeping all other things aside, let me focus on the last point mentioned by you.” Rakesh quipped.

“Definitely. I have always believed about appreciating good things in life, be it your credit score or a cup of tea. Masala tea or ginger tea?” Aditya was all into smiles as he offered Rakesh a cup of tea.

What do banks see when they look at your credit report?

Rakesh had applied for a housing loan with a leading housing finance company. However, when he read in the newspapers that XYZ Bank is offering relatively lower interest rate, it definitely appealed to him to approach XYZ Bank. Considering the high loan amount, even a 0.50% benefit in interest rate does make a huge difference in the overall outflow from one’s pocket. While the bank was doing its due diligence before sanctioning him the loan, Rakesh’s credit report was also fetched by the bank. Curious about what all would show up in the Credit Report, he visited Aditya, his neighbor and also a Chartered Accountant to look for answers.

“There’s more to a credit report than just how much of money you owe to banks. The credit report details out all of your credit information as has been gathered by the Credit Information Bureau (such as CRIF) from the banks, NBFCs and other types of lenders. Bankers keenly review various details in your credit report before approving the loan.” Aditya said and continued further.

Details Fetched by Bankers from the Credit Report:

1. Credit Score Credit score is the first impression the banker can have of you as a borrower while going through your credit report. Reflecting your repayment tendencies, it indeed impacts your access to the credit. For an individual with a regular credit history, the credit score ranges from 300 to 900. For a bank, higher the credit score, lesser is the probability of customer defaulting on the loan. It, therefore, becomes imperative for you to have a better credit score i.e. above 700.

2. How much you owe and to whom – Your credit report includes information about each of your existing credit accounts, including credit cards, home loans, car loans, personal loans etc. This helps them since the existing liabilities on you and also the type of loans taken by you. Every loan will tend to reduce the repayment capacity of the borrower for a new loan. Bank will be able to understand your monthly outflows (sum of EMI amount and card payments) towards your loans.

3. Repayment habits – This is the primary parameter which impacts your credit score as well. Your credit report tells the potential lenders about your repayment tendencies. It shows up how much amounts are overdue presently, how much amounts had been overdue in the past and in case any one-time-settlement has been resorted to by the borrower in respect of the loans.

4. Are you a Loan Hungry Individual? – In case you applied for loans with many banks in a short period or applied for many loans or cards every couple of months, you’ll seem less appealing to potential lenders. A banker may conclude that you have a high dependency upon debts and therefore you may be desperate for loans.

5. Personal Details – Your credit report will also contain information of your addresses for your existing loans and credit cards. As such, the banker can have a fair idea about the stability of your residence i.e. how long you have been staying at your current place of residence etc.

“So in a nutshell, a credit report is the mirror of my credit profile and repayment habits. A bank is giving my incentive on interest rate if I have a good credit score the since they see me as the less risky customer.” Rakesh tried summarizing his lesson.

“Spot on!” Aditya beamed hearing his disciple’s summarization. “You are the solution of all my financial worries. No wonder, I totally rely upon you.” Rakesh quipped.

Why banks use credit info when I have my savings account with them?

Twenty20 has always been pitched as the cricket format with the most crossover appeal. The success of this year’s IPL is living proof. Rakesh was indeed surprised on the performances by IPL Teams.

Yes, indeed. Anyways, even when our work makes us so busy in our own lives, these matches have just been giving us a chance to meet.

Oh, certainly. Anyways, you remember, I had applied for a housing loan. Even while the bank finally sanctioned my loan, it took them a century to process for it. They were saying that my credit history was now much old for them to process the loan faster. I don’t know why banks emphasize so much on historical data?” Rakesh was back on his learning curve.

Banks resort to credit reports for checking the past repayment history of the borrower. Credit reports show the information about existing loans and also the status of the outstanding amounts and in case any of such amounts are under default. This helps the banks to estimate the risk of default for the borrowers.” As always, Aditya was there for Rakesh’s questions.

Well, I can understand such an analysis for someone who is not an existing customer of the bank. I fail to understand why banks need to use credit information separately when I already have my savings account with them.” Rakesh shared a genuine concern.

That is indeed a valid point. However, even while you may hold a Savings Account with a handsome amount lying in it, your financial management and repaying habits are not clearly reflected through the pattern of transactions in the Savings Account. Banks need to factor in that how much of the regular monthly income is already committed for monthly EMIs, which they can estimate only once they have your complete credit data. Besides, in case you are utilizing the credit limits to the extent possible and paying only the minimum amounts due, that indicates your high reliance on the debt.All this information can only be fetched through credit reports and summarily reflected in the credit score. That is why banks give so much importance to the credit report data.” Aditya also made a good point in a bid to clear the confusion of Rakesh.

Credit reports certainly show off some valuable data for the banks. One should always be careful in dealing with the debts owed.” Rakesh was slowly getting a good hold over the subject.

Just remember not to default on your EMIs and utilize debts only for productive uses. Improving your credit score and credit report is not that difficult.” Aditya closed the conversation on a crisp note.

Rakesh and Aditya were both smiling.

How to Check your CRIF Credit Score?

Last time Rajesh and Aditya met, they had a good session discussing the basics of the credit score. They were again together to enjoy the one-day IPL Match between CSK and KXIP. CSK won this match comfortably by 5 wickets but Rajesh seemed much happier. Digging a little, Aditya came to know that ABC bank had finally sanctioned Rajesh the housing loan after his credit score was traced from another credit bureau.

I owe you a party, my friend. It’s all thanks to the basics you made me aware of the credit scores. I went to the bank next day and possibly due to my discussions about the credit score, the banker searched more into my credit history. I was pleasantly surprised when he said that while he could not fetch my credit history from one of the credit bureaus, he could find my credit history and credit score in CRIF High Mark database. With a score of 755, it was easy thereafter.” Rajesh said all this in one go. He was not able to hide his excitement.

Aditya was happy to hear about Rajesh’s housing loan sanction.

“Oh great, a good score indeed. CRIF score is calculated by CRIF High Mark, India’s leading credit bureau, which has the largest credit bureau database of individuals and supports millions of lending decisions every month.”

But there must be a way to check this score by myself too. I must keep a regular track of my credit score now.” As always, Rajesh was excited about the new thing he was made aware of.

Aditya was happy to guide him again. It seemed like he had been waiting for this question since long.

Here are the steps to get your free CRIF Credit score:

  1. Open CRIF portal, http://cir.crifhighmark.com.
  2. Click on “Get Your Score Now” button.
  3. A pop up will open asking your email address for communication purposes. Enter your email address here to proceed.
  4. The next window will ask you about few details which will help CRIF High Mark identify you amongst the complete database. The details as may be asked are name, date of birth, mobile number, address and PAN or Aadhaar number.
  5. Once you review and submit the information, you will be asked one security credit question, which will be based upon the records so traced basis the information furnished above.
  6. If you are able to answer the security credit question correctly, your CRIF credit report is available to you for download.

You should also be happy to note that everyone is entitled to a free credit report and score from CRIF High Mark once every year. So, get your credit report without paying any charges.

Oh, that is good. I will definitely download my CRIF High Mark credit report once I get back home.” Rajesh was happy to again learn something new.

It’s time to enjoy the tea now. The rainy weather is calling pakodas to my kitchen now. I will not let you go before we enjoy that.

But yes, how could bank not find my credit report with one credit bureau while getting the same from another credit bureau.” Rajesh was in no mood to let Aditya go.

We always have a good time when we meet over the weekends. So, let’s keep this question for then.

Rajesh and Aditya were smiling now.