Skip to main content

A Good Credit Score can make Access to Loans easier



Since the growth of the credit information industry, the only implemented generic scoring model that has been introduced and is being used extensively by lenders in India is the Cibil TransUnion Score.


Through advanced analytics, this score assigns a number from 300 to 900 to a borrower based on the credit history. The higher the numerical value of the score, the lower is the risk associated with the individual. Here is how you can manage your credit score for deriving maximum benefit for accessing credit and developing this vital reputational collateral.


Almost all the credit institutions in India use the Cibil TransUnion Score while deciding on the loan application of a consumer. It is, therefore, imperative for you to access your credit score before applying for a loan to get a precise understanding of your credit standing and the likelihood of the loan approval. This will enable you to see yourself as loan providers do and make prudent borrowing decisions. Therefore, as a first step to managing your credit score, it is imperative to know what your current Cibil TransUnion Score is.


You can know your score by accessing it from Cibil along with your Cibil CIR for . 450. The payment can be made by following an online payment procedure or through a demand draft. Along with the application form and online payment receipt or demand draft, you will have to submit documents as identity and address proof.


Once you have accessed your score it is important to review it and understand how your credit score has been derived.


Your Cibil TransUnion Score is calculated based on the information in the "accounts" and "enquiry" section of your Cibil CIR. A majority of the score is made up of the following factors:

CREDIT UTILISATION:

How much credit is the consumer using?

DEFAULTING:

How many accounts are past due date – how much and by how many days?

NUMBER OF ENQUIRIES:

Has the consumer applied for additional credit lines?

TRADE ATTRIBUTES:

How old are the consumer's lines of credit? What type of credit does he have? Does the consumer have a good mix or balance of credit or is it all credit cards?
Now that you know your score and the broad factors that determine the credit score, it is imperative to understand how to manage your credit score. Here are some ways to make sure that you are being financially disciplined and, thereby, maintaining a healthy credit score:

EMIS:

Pay your loan EMIs on time. If you have more than one loan running, it is prudent to track it well. Make regular and timely re-payments of your loan to maintain your credit level.

CREDIT CARD:

Never fail to pay the minimum payment on your credit card. Credit card is categorised as revolving credit and it helps in building a good credit score if payments are regular.

CREDIT EXPOSURE:

Do not apply for loans or credit cards if not required, as this would mean more credit exposure. This could affect your credit score. Instead of applying for another loan, try checking for a top-up loan option on your existing loan. This will make your debt burden easier to manage.

REPAYING DEBT:

Use some of your savings to repay some of your debt. Always plough back extra income to reduce your debts.

REVIEW:

Review your credit history and credit score frequently, throughout the year.
For maintaining a good history and subsequently a worthy credit score, you should ensure that you are always in control of your finances.


Remember, a good credit history results in speedier access to credit. It is beneficial to both the credit grantor as well as the borrower.


However, if your credit score is low, don't be disheartened. The credit system always gives chances to improve. You can start improving your credit score by simply paying off your debt and not opting for more until your score improves. Better late than never!

 

Popular posts from this blog

ICICI Prudential Dynamic Plan Invest Online

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   ICICI Prudential Dynamic Plan             Invest Online This fund does remarkably well during falling markets, but fails to show the same prowess during a rising market. The fund sticks to its mandate to adapt to the dynamic nature of the market by shuttling between debt and equity. It takes aggressive asset calls in equity when the market surges by investing in quality mid-cap stocks. At the same time, it adopts a defensive strategy by investing in debt and cash when markets get overvalued, making it a good long-term choice.     For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call     Leave a missed Call on 94 8300 8300   Leave your comment with mail ID and we will ...

What are the factors affect the changes in Interest Rate of Fixed Deposits?

  What are the factors affect the changes in rate of Fixed Deposits? Fixed Deposits are now considered to be a very old fashioned method of saving, but still attract many investors since they have guaranteed returns at the end of the tenure of the investment at a decent interest rate. There are various factors that affect the rates of interest for a Fixed Deposit. Policies of the Reserve Bank of India   - The several norms and restrictions posed by the Reserve Bank of India , in order to gain optimum control over credit and inflow and outflow of fund throughout the country. The repo rate changes, cash reserve ration tends to change and these changes affect the banking products like Fixed Deposits, loans etc. Recession   - When unemployment in a country crosses the benchmark set Recession hits, and slowly the country faces an economic slow movement, affecting the purchasing power of the people in the country, forcing the Reserve Bank of India to release more funds in the financial marke...

Understanding Your Cibil Credit Information Report

   WE ARE all familiar with the anxiety and uncertainty that we feel when applying for a loan. After all, it's the lender who decides whether we can own our dream home, our first car, or whether our children can pursue higher education. In a nutshell, a better life depends on the lender's decisions.    While other factors do play a part in the lender's decision, the Cibil Credit Information Report ( CIR ) plays a crucial role in a lender's decision to approve a loan application.    Previously, lenders would treat all loan seekers equally. Each applicant, if approved by the lender's internal credit policy, would be charged at the same interest rate for a particular loan size and purpose. The lenders would charge a higher interest rate to all the borrowers, in order to compensate for the possible default of a small portion of the loan disbursed. In other words, it's like a professor (the lender) punishing an entire class (borrowers) for the mischief played b...

Mutual Fund Review: ING Dividend Yield

  ING Dividend Yield's small assets enable the fund manager to churn in impressive returns… Strategy The aim of the fund is to invest in stocks which offer a high dividend yield. This fund deploys a value based strategy which aims to gain from investing in fundamentally strong and free cash flow generating businesses. The scheme focuses not only on growth but also on the cash generated by the business, which mostly leads to stable returns even in volatile markets. This fund has a low volatility because of its investment in high yielding stocks. The scheme tries to include stocks that yield dividend above the dividend yield of the Nifty and stocks with liquidity, which throws up a universe of 150 stocks.   Our View Launched in October 2005, this fund invests at least 65 per cent of its assets in high dividend yield stocks. The fund has consistently maintained a mix of stocks across varying market capitalisation, with a higher tilt to mid caps compared to small caps. Howev...

Capital Protection Oriented Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Capital Protection Oriented Funds   Erosion of capital is one of the key concerns for investors wanting to invest in equity mutual funds. To address this concern, asset management companies have launched Capital Protection Oriented Funds (CPOFs). What are CPOFs? CPOFs are generally three to five-year, closed-ended funds where 70-80% of the portfolio is invested in fixed income securities, which mature on or before the scheme's tenure. The investment in fixed income securities grows to 100% at the end of the tenure, providing the investor with capital protection. The remaining portion (20-30%) is used to take exposure to equity, which provides the upside. Exposure to equities is either by directly buying equity stocks (plain vanilla CPOFs) or by b...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now