Skip to main content

How to build a Credit Score for Fast Loans

At a time when education, healthcare and even daily household expenses are rising exponentially, your ability to borrow funds in times of need assumes greater importance. Imagine failing to procure enough funds for your child's education or having to let go of your dream house because your loan was rejected over a poor credit score. Banks and other financial institutions look at various parameters when they evaluate your loan application. There is a scrutiny of basic parameters such as age, income, job profile and place of residence, after which your credit score is checked. While you can't do much about your age, income or job profile, building a good credit score is in your hands. Here's how to do it:

Ensure a healthy credit mix of loans

Credit mix refers to the ratio of your secured and unsecured debt. Usually, lenders prefer those who have a higher share of secured loans such as home loans. Credit bureaus, too, score such borrowers favourably. If you have a high share of unsecured credit such as personal loans, loan against credit card and education loan, you are likely to be a "less preferred borrower" for a financial institution. If you have multiple home loans and are contemplating to pre-pay them, start with unsecured loans. An increased share of secured loans will increase your credit score.


Keep credit utilisation ratio within 30%-40%

This ratio refers to the proportion of the total credit card limit used by you. For example, if your credit limit is Rs3 lakh, of which you have used Rs30,000 this month, your credit utilization ratio for the month will be 10%. As financial institutions prefer to lend to those with credit utilisation ratio of up to 30-40%, credit bureaus reduce your credit score if you breach this level. If you are breach the limit frequently, request for an increase in the credit limit or apply for an additional credit card.


Don't apply for credit from multiple lenders at the same time

Whenever you apply for a loan or a credit card, the lender or card issuer will get your credit report from the bureau. Such lender-initiated requests are referred to as hard enquiries, for which the credit bureau reduces your score by a few points. Too many of these enquiries in a short period of time can be detrimental, as not only will your credit score fall, but you would also be conceived as a credit hungry applicant. Lenders treat such applicants as risky, thus avoiding lending. Chances of getting lower interest rates, too, will be miniscule.


Fetch your credit report at periodic intervals

The first step towards improving your credit is fetching the credit report and reviewing it closely. It tells you where you stand and if you need to take urgent steps to improve your score. It helps detect inaccuracies. I have been a victim of such inaccuracies. A few years ago, I was rejected a home loan by a leading public sector bank. On enquiring, I realized a namesake's credit defaults had been linked to my name because of which my credit score nosedived.

Remember, credit bureaus receive data from your existing lender and credit card issuer on your credit behaviour regularly. As bureaus use this data to calculate your credit score, any discrepancy in reporting by lenders or credit card issuer will impact your credit score. To detect such errors or frauds, check your credit report periodically and report the errors, if any, to the lender or card issuer.


Timely repayment of EMIs, credit card dues

Although bureaus don't disclose the method of calculating credit score, it is widely believed that how you repay the debt gets maximum weightage. Always ensure timely repayment of your equated monthly installments (EMIs) and credit card dues in full for a high credit score. Many people make the mistake of paying only the 'minimum amount due' on credit cards. This not only attracts heavy charges, but also lowers your credit score significantly.



SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Popular posts from this blog

Mutual Fund Exit Load Changes

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 Mutual Fund Exit Load Changes AMCs don't communicate about any change in exit load directly with investors, but do update on their website   The exit load applicable to your investments is the load which existed at the time when you invested in the particular fund. Any subsequent changes in the exit load will not be applicable to your investments.   However, Asset Management Companies ( AMCs ) periodically publish addendums in the newspapers, which state any change in exit loads of specific schemes managed by them. Such changes are also posted on their websites. However, a direct communication to an investor is not made, considering the costs involved in doing so. In their own interests, investors should not only track the performance of the funds they i...

Birla Sun Life Mutual Fund Launches Birla Sun Life NIFTY ETF

Birla Sun Life has launched a new fund namely, Birla Sun Life Nifty ETF, an open ended exchange traded fund. The new fund will be open for subscription from 4th July to 18th July 2011, at an offer price of Rs 10 per unit. The investment objective of the scheme is to generate returns that closely correspond to the total returns of securities as represented by S&P CNX Nifty, subject to tracking errors. No exit load will be charged under the scheme. The performance of the scheme will be benchmarked against S&P CNX Nifty and will be managed by Satyabrata Mohanty.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   1) DSP BlackRock Mutual Funds: http://prajnacapital.blogspot.com/2011/05/buying-dsp-blackrock-mutual-funds.html   2) Reliance Mutual Funds: http://prajnacapital.blogspot.com/2011/06/buying-reliance-mutual-funds-online.html   3) Birla Sunlife Mutual Funds: http://prajnacapital.blogspot.com/2011/...

Atal Pension Yojana contribution Tax Benefit for spouse

Contributions to Atal Pension Yojana (APY) are eligible for the same tax benefits as the NPS. This means that the contributions can be claimed under Section 80CCD (1B). The current limit for Section 80CCD (1B) is   Rs   50,000, over and above the   Rs   1.5 lakh limit under Section 80C. Section 80 CCD (1) is a different one, meant to cover employers' contribution towards NPS . You cannot get tax benefit by investing in the name of your spouse under Section 80 CCD . ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in India for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Religare Tax Plan 4. DSP BlackRock Tax Saver Fund 5. Franklin India TaxShield 6. ICICI Prudential Long Term Equity Fund 7. IDFC Tax Advantage (ELSS) Fund 8. Birla Sun Life Tax Relief 96 9. ...

Short-Term Investment Options in Mutual Funds

Mutual funds offer liquid funds and ultra short term funds in the debt category, which are suitable for short investment periods. Ultra short-term funds were earlier known as liquid plus funds. Liquid funds invest in money market instruments with a maturity of 91 days or less. However, there are no such restrictions for ultra short-term funds. Who should invest in these? These are open-ended schemes. Investors with a short investment horizon or with surplus cash and low risk appetite should look at these. These could include corporate as well as retail investors. Those interested in staying invested for less than 15 days can opt for liquid funds. Retail investors who want to remain invested for two-four months, can look at ultra short-term funds. The short duration for both liquid and ultra short-term funds shields them from any interest rate volatility.   What kind of returns do they offer? In terms of an investment period less than 15 days, these funds are comparable to a ba...

Mutual Fund Reivew: Birla Sun Life Asset Allocation Conservative

Birla Sun Life Asset Allocation Conservative has numbers on its side to prove its credibility… Don't be surprised to find this Fund of Funds ( FoF ) in our recommendations. It has earned its place. And despite the difference in the structure of the product, there is no arguing with the numbers.   Of the total 6 years of its existence, the fund has been among the top 10 funds in its category in four of them. Last year it put up an average show and the only year it underperformed its peers was in 2008.   One aspect to look at when investing in an FoF is the expense ratio. The expense ratio of an FoF is capped at a lower limit of 0.75 per cent (2.50% for an actively managed fund). However, the FoF not only has its own expense (though lower) but even the expense ratio of the fund it is investing into. Fortunately, the fund manager takes that into account. "Expense is one of the important criteria used for fund selection and is the main reason for our investment in BSL Ind...
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