If your credit history is not where you want it to be, you’re not alone. Improving your credit scores takes time, but the sooner you address the issues that might be dragging them down, the faster your credit scores will go up. You can increase your scores by taking several steps, like establishing a track record of paying EMI’s and card dues on time, paying down debt and checking your CRIF credit report regularly.
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.
If you have never ever availed any loans or possessed any credit cards in India, you will not have your records with any of the credit information companies – therefore no credit history. As such, when you will try to check your credit score from any of the four credit bureaus, you will get a score of -1 or no score (also called No Hit or NH cases).
Is -1 or NH bad? If one doesn’t have any credit history, a bank or a NBFC lacks information from one credible source so it becomes difficult for them to take a decision on your loan application. The lender, in absence of a credit score, will use alternative mechanisms to assess your application and therefore may take longer to decide or may even reject an application. Having a -1 or NH score isn’t bad by itself, it is a genuine condition for a youngster who is starting with the first job or a housewife who is looking to be a co-applicant for a housing loan with her husband.
For a person with no credit history in India, what’s the best way to get started?
If you would like to build your own credit history and get yourself a credit score, you will have to begin by taking a loan or a credit card and use it effectively over some time. Here are a few simple ways by which you can build a credit history:
1. Apply for a Credit Card with your Existing Bank: You can apply for a credit card with the bank with which you have an existing relationship like your salary account. As the banks are generally inclined to offer additional facilities to its existing customers, the absence of a credit history may not bother much to them. Go for the most basic credit card on offer to begin with. However, you may get a lower credit limit in such cases, but nevertheless, your credit card is there and so is your credit history. Further, once you have a credit card, make sure to pay off the credit card dues well in time as regular repayments will translate into a better score for you. Do not spend too much, limit your utilization to 30–40% of the card limit.
2. Apply for a Secured Credit Card: if the first option doesn’t work out for you, you can deposit a small amount say 30K into a Bank FD, and apply for a “secured” credit card against the deposit. The bank will assign you a credit limit of up to 80% of the deposit amount. This is generally a good starting point for even self-employed and professionals.
3. Apply for a Small Ticket White Goods Loan: You may also purchase your next smartphone, TV or laptop on EMI by applying for a small consumer durable loan/ EMI loan. The financiers are available on most large format electronics retail stores as well as on the online e-commerce websites. Consumer Durable Financiers are more comfortable approving loans for customers with no credit history, and the approvals are also almost instant. The good news is that these loans are usually zero cost EMI loans.
4. Apply for a Secured Personal Loan: Most of the banks can offer you a personal loan against the security of your existing term deposits (loan against deposits). Since the term deposit is generally enough to cover the personal loan amount along with interest for a reasonable period, banks may not check your credit report and sanction you a personal loan. Usually, such personal loans may be lighter on your pockets too, as such loans typically carry an interest rate of your FD rate plus 1-2% and FD rates are presented in the range of 6-8%. So, the effective interest rate can be 7-10%.
As they say, ‘Rome was not built in a day, neither will your credit history be.’ It may take six months or even a year depending on how well and often you use and handle credit. However, ensure regular repayments of your loans and credit cards, so that you have a good credit score, reflecting good credit habits. Further, once you have a credit history and a credit score, make sure that you manage your loans and credit cards smartly.
Uh oh…remember when a 650 credit score was deemed sufficient to secure the best rates and terms on credit cards, auto loans, home loans, and so on?Well, not anymore! You can also the join the club of high credit score by simply following the practices listed on our infographic and climb all the way to become an achiever.
An error on your credit report could lead to lower credit scores and impact your chances to open a new credit account or get a loan. Errors can occur surprisingly easily on your credit history. It may be that your handwriting was hard to read on a loan application, that a lender mixed up account information, or that you were a victim of identity theft. With so many ways an error can occur, it is indispensable to check your free credit score for accuracy periodically ― not just when you need a loan.
However, due to a lack of understanding of credit, it can be difficult to determine what factors may affect your credit score and the steps you need to undertake to dispute your credit report. This is also one of the reasons to educate yourself with the concepts of credit score and credit history. Once you’re familiar with your score, if you do find an error in your credit report there is thankfully a way to dispute the inaccuracy.
The fastest way to start a credit report ‘dispute’ and check your status is by applying online. Disputes are 100% free and require no fee. However, credit reporting agencies are used to receiving many disputes on a daily basis, mostly from people who are just trying to get something legit removed from their reports. Hence, you must be sure about your point and support your dispute with documents.
Following these steps, you may be able to win your credit dispute and get your credit history back on the right track:
Step 1: Download your credit report
First off, you need to download the detailed credit information report from any of the credit bureaus in India such as CRIF High Mark. You are entitled to download one free credit report each year.
Step 2: Inform the credit bureau
Once you are sure about the discrepancy in your report, you have to make it known to the 4 credit bureaus on their respective websites and postal addresses. This information has to be shared in the form of online appeal and in writing via a letter. The letter should clearly contain each item in your report that you dispute. You need to state the facts and explain why you dispute the information and wants it removed or rectified. The letter should be supported with copies of documents verifying your dispute. Always ‘request read receipt’ for your letters.
Step 3: Contact the Lenders
To ensure the errors are resolved at the source, it may also be a good idea to contact the lenders who supplied the incorrect information to the bureaus. Lenders, also known as furnishers, are the companies that provide the information to the credit bureaus. They include banks and credit card issuers. You can go to the furnisher and ask them to correct the mistake in case it is apparent that the mistake is rectifiable at their end. But if the error is an identity-related mistake made by a credit bureau, it may not necessary to contact your lenders, you can to the bureau directly.
Step 4: Count 30 days
The credit information companies are required to investigate your claim of dispute which generally lasts at least 30 days. During this time, the item on your credit report which is under dispute will be temporarily removed from your credit report. After they have finished their investigation, the bureau is also required to provide you with a free copy of your credit report if it has now changed. While the process can be time-consuming, it is important to continue to dispute incorrect information on your report that negatively impacts your credit score. You can also ask the credit bureau to include information summarizing the dispute on your credit report so future lenders can see your claims and assess them for themselves.
Step 5: Check your credit report:
Updates to your affected credit reports may take some time to appear. It is dependent on the specific credit bureau’s update cycle and when the lender sends the new information to the credit bureau. If the update doesn’t appear on your credit reports within several months, contact the credit bureaus and the lender to verify it’s reporting your account information to the bureaus.
Credit bureaus aggregate the credit information provided by various banks and financial institutions on a monthly basis and records them in an individual’s credit report. This report has a complete history of your loan and credit card repayments, account usage and outstanding balances. It serves as a basis for the calculation of the credit score. Since banks use credit score and credit report to assess the intent and capacity of a loan applicant, it is necessary for every individual to ensure that the information in the credit report is up to date and accurate.
It is likely that the data reflecting on your credit report is not accurate or not up to date. The bank may have missed sharing all updates on your loan account with the credit bureau. Even if the bank has reported data properly, the credit information company may have missed updating or is yet to update it in your credit report. Such errors or misses on your credit reports can lower your credit score, which could hurt your ability to get new lines of credit or even make the terms of credit more expensive for you. Ultimately, these errors could be costing you money and may force you to postpone your aspirations.
You can begin reviewing your credit report by getting a copy of it yourself from the website of any of the four credit bureaus in India. Checking your own credit report or credit score doesn’t impact your score, so check it without any worry. Further good news is that you can request a free copy of your credit report once in a calendar year from any of these four RBI approved credit bureaus. And if you find errors, you can dispute the errors at no cost to you. Read more about How and When to Dispute Your Credit Information Report here https://blog.crifhighmark.com/how-when-to-dispute-your-credit-information-report/
Once you get your credit reports, review them carefully. You can use the list below to check for common errors and make sure your credit reports are accurate and up to date.
Are Closed Accounts Still Open?
A closed account means you have positively paid back all the loan or credit card dues, and the account is not going to see any future activity. While an open account is an indication that you still have some amount to be paid back or you have the credit line still available to you for use. Having old lines, those which should have been closed otherwise, on your credit report showing as open will show higher number of lines and higher credit amount available to you. This can impact your credit score and therefore your eligibility for a loan. So, if the closed accounts are being shown as open, it is time you report this error with documentary proof so that you can get it rectified at the earliest.
Are All Accounts up to Date?
Do check the last reported date on all your accounts. If the account is marked closed, the last reported date will be same or closer to date of closure. If the account is marked open, the last reported date should be within last 30-60 days. If any of the records are not updated, contact the credit bureau as well as the bank concerned. An out of date record will not present correct picture to another bank and may also impact your credit score.
Is There an Account That Does Not Belong to You?
If you notice any credit account under your name that you are unaware of, report immediately and get it removed from your credit report. This could be because of wrong reporting by the bank or an error at the credit bureau. Take it up with the credit bureau, and it will help you get it resolved.
Is There a Record of an Account Being Shown as Delinquent?
Delinquent accounts are those accounts which are way past their dates of payment. Typically, delinquency is reported as number of days past due date (DPD) which are shown for last 36 months for every credit line. For credit card accounts, delinquency is reported when the minimum amount due is not paid. Lenders might give you a leeway of a few days before reporting the delinquency. More than 3 months of missing repayments will automatically declare your account as NPA (non-performing asset or non-performing loan). Such accounts can bring a major drop in your credit score and distrust in the eyes of all the lenders. If any account is showing overdue or delinquent (if more than 30 days), review them more carefully. If you have already made the repayment, you must inform the bank to report it to all credit bureaus as well.
Is the Same Debt Being Recorded More Than Once?
Did you know that 30% of your credit score is made of the debts you have taken? The number of debts you have taken matters a lot when it comes to your credit score. More debts in your name will result in difficulty in getting further credit. If your loan account or credit card has been reported twice then you will have fewer opportunities to avail credit. It is also likely that while 2 credit lines are shown, only one is being reflected with good credit history and another one as delinquent. Make sure to check your credit report every time you take a loan from the bank so that there are no such errors on your report.
Is it About Incorrect Credit Limits?
To maintain your credit score, the credit utilization ratio should be a point of significance to you. When it goes high it shows an individual’s higher dependence on credit. Makes sure the credit limit on your credit card is accurate and not lower than the actual limit. Report to Credit Bureaus like CRIF to rectify in case if it is reported wrongly.
Incorrect Balances in your Loan Accounts?
If a higher outstanding balance than actual is shown, you may lose out an opportunity to avail credit since the bank may assume you to have higher credit available with you than actual. Make sure correct loan account balances are reported in your credit report.
Are there any Identity Errors on your report?
Identity errors may lead to many more errors on your credit report and credit score. These occur because of wrong information reported by the bank, the mismatch between PAN and your name or due to identity theft.
• Wrong Information: When there is a mix-up in two customers at the bank end or at the credit bureau end, loan and credit card information pertaining to some other person may have been reported against your name. The mix up could be due to same phone numbers, or mix-up in PAN or similar names/addresses etc.
• Mismatch: This could be particularly possible if you have undergone a name change in your PAN account or use different forms of a name like only with initials for certain accounts and expanded forms in other accounts.
• Identity Fraud: Fraud on your report is the most serious concern. Fraud means that someone is using your personal information to open accounts in your name. If you suspect identity fraud on your report, you will need to alert the bank concerned and the credit information company. Once it is established as a fraud, it should also be reported to the local police.
Achieving a good credit score is an iceberg. There is what people see on the surface: lower interest rates, faster loan approvals, enhanced credit limit. Then there is what people don’t see hiding below the surface: consistency in payments, maintaining a low credit utilization ratio, limiting loan applications, tracking credit report regularly. The key to the ‘Credit Score Illusion’ is creating balance in your financial life. Take a look at our image and note down the things that resonate with you!
Three digits that have the power to shape your world: your credit score. The higher the score the better are your chances of dreams becoming true. Not only you will have easy access to loans but will also be offered lower interest rate, which means taking the loan will cost you less overall and you could save a substantial amount over the course of a lifetime.
And when something impacts your life that much, don’t you think you should be familiar with it? The sad story is that tens of millions of Indians are taking a blind approach to their money. Everyone wants their finances to be in good shape, but only a few tend to work towards maintaining a good credit history.
Here we list down 5 important and basic questions about credit score to get you started:
1. What is on a credit report?
The short answer to that question is: A lot! A typical credit report will include personal identifying information: a list of credit accounts (including credit limit), type of account (credit card, home loan, auto loan, etc.), and your payment history on those accounts. Each of the four major credit reporting bureaus compiles data from sources such as banks, NBFCs etc that extend you credit. Based on all this data, companies may calculate a credit score to reflect your creditworthiness. Since each of the credit reporting bureaus provides a score, you may have at least four scores. Bits and pieces of your credit history may vary slightly among the four companies because not all businesses supply information to all three agencies. However, the broad picture of your credit history should be relatively consistent.
2. What Types of Information Can Impact Your Credit Scores?
The two most crucial factors that affect your credit score is your repayment of the loan and how timely you pay your EMIs and card dues. If you are a month late in paying your dues, then your credit score might drop by 80 points. Next up is, credit inquiries. They can affect your credit score in a major way. There are two types of credit inquiries, soft and hard. Soft Inquiries are harmless to your credit score but the hard inquiries that are often done by lenders before lending money to you can bring a change in your credit score even if you do not get the loan in the end.
Opening new credit accounts can or taking new loans also affect but it can be fixed with regular and timely repayments. Lenders evaluate the credibility of the borrower at their own discretion. They may use whichever scores they’d like and measure those scores on a scale that is unique to them. It’s also possible that they may not even consider credit scores at all but just the contents of the credit report.
3. Your Score Is Less Than 700. Now What?
Check your credit score yearly, at least to avoid surprises! With CRIF you are entitled to one free credit report every year. And no, your credit won’t take a blow if you do this – it’s considered a “soft” inquiry. If your credit score is lower than 700 then you should dig deep in your credit report and find out the reasons for bad credit score. Look at your credit card balances and credit utilization ratio. The closer you are to hitting your maximum limit, the more it may lower your score, so pay down those balances if you can. Check out for errors/information listed in the credit report not undertaken by you, in that case, you should immediately report to the credit bureau or the banks to update your information.
Abruptly closing your credit cards with a long credit history can affect your credit score in a negative way. How long you’ve been borrowing affects your score. The longer the better.
4. How long does a bad credit rating last?
Debts have a finite duration, and so does negative information that appears on your credit report. All negative information on the credit information after 7 years often start to value less for the credit score. Make sure all your payments and your credit activities are timely and regular to show stability in your credit behaviour and eventually pushing your credit score towards the good side.
5. Who Can See Your Credit Report?
Your credit report information is not available to the public and can be accessed only you’re your permission. When you apply for a loan and credit card then your permission is required as the lenders and banks need to investigate the information to determine your creditworthiness and your potential and ability to pay back the borrowed amount.
Now that we have explained the basics of Credit Score, wait no longer, follow these steps and start building a good credit history now!
Business credit scores are crucial to a business’s health and success. A higher credit score means you can easily avail loans. A low credit score could prevent you from availing any loan at all. The good news is that if you find yourself with a less-than-stellar business credit report, you don’t have to worry: there are many ways through which you can quickly improve your business credit score. Some ways are more obvious than others, and that’s why we’ve created this quick snapshot to help you improve your business credit score.
If you are planning immigration to the US, credit score is probably one of the last things you would worry about. However, in the US, many of the essential expenses such as renting an apartment, buying a car, signing up for a cellphone plan or applying for a credit card, requires you to have a personal credit score.
Worrying whether it’s possible or not? The great news is that it is possible to establish credit in the U.S. It may take work but with right credit decisions, you can definitely sail your boat. This guide can help you get started with the steps you need take to build your credit in the United States:
Apply for a secured credit card: The international banks are not likely to provide you any credit card directly, considering they cannot have a credit check on you without a credit history. The only option you have is to apply for a secured credit card (one that is backed up by funds) with a credit union or a local financial institute. If you manage to get yourself a credit card like a Macy’s or an American Express card, it can be used to purchase at the Macy’s retail stores or online, wherever the cards are accepted. Once in possession, try to make minor bills such as $30 to $50 with the card and repay back the full amount immediately. In this way, you will start creating a good credit history.
Subscribe for auto payments: Subscribing yourself for auto deductions ensures that your bill payments are done in a timely manner. The credit information companies in the US consider mobile and utility bill payments while building your credit report.
Use your spouse’s good history: If your spouse happens to be a US citizen with a good credit history, rejoice, for they have won half the game for you. You can apply for a joint account with them or become an authorized user on your spouse’s credit card. You can then buy a car or rent a house together!
Talk to the lender in person: It is always better to talk to the lender in person as then you can better explain your situation. This also helps establish your legitimacy with the lender and they can better analyze you.
Report your rents: Make sure you are paying your house rents electronically as you can now report the rent to the credit bureau. This is one good way to build your history.
Leverage your home bank relations: If you were a credit card owner with an international bank in India, you might be able to call the bank and get them to issue you a U.S. credit card based on your past relationship.
Do not share your SSN: The social security number in the US is like the Aadhar number in India. It is a unique number assigned to each individual and is connected with all your dealings. Your Social security number is required while buying something. Let’s say you share the number with someone who requires a telephone connection on that number. In the case that they were to default on paying their bills on time, it would reflect badly on your credit report and will hamper your credit score.
If you follow the above pointers, you will be smartly prepared for your stay in the US. But wait, there’s more! Always keep an eye on all accounts so you can identify and resolve problems quickly. Check your credit score regularly to track your progress. Pull your credit report at least once a year from any of the approved credit bureaus. It’s free and seeing what is being reported about you is illuminating. All the best!