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Deal4loans NEWSLETTER
for May 2008 |
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| Guru Gyan |
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| "If you are already using a credit line, make sure you pay the dues on time and if you happen to be a first-time borrower, never over-leverage yourself." |
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| Loans by choice not by chance!! |
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Amitoj Sethi
(Loan Guru) |
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How Important is your Credit score? |
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In modern world of banking, to help banking and financial institutions to better evaluate the credit worthiness of a customer, Credit Information Bureau (India) Limited and Transunion Score launched the credit score solution. The CIBIL – Credit Information Bureau India Limited is accumulating all your card payments records and your defaults and maintaining records of all major banks.
How CIBIL works?
CIBIL evaluates the credit history of every customer on the basis of CREDIT SCORE. A credit score takes a snapshot of a consumer's credit report and through advanced analytics turns the information into three-digit number representing the amount of risk a consumer brings to a particular transaction. A credit score is a number between 300 and 900 that sums up a customer's credit record. This means that every time you pay late on your loan EMIs or your cheque bounces on loans, all this is getting recorded and deducting your scores. Any of the payments you don't make on Credit cards is making sure that you don't get a loan or Credit Card in future!
Your Credit Score reflects your credit History
When you approach a credit grantor for credit, your application will be evaluated on the basis of your past payment history, existing credit lines and other factors such as income and security. In this case, a good Credit Information Report (CIR) is one of the best indicators of the level of risk you present to the credit grantor. A CIR that reflects a good past payment history may lead to credit being granted on better terms. On the other hand, a CIR, which indicates that a borrower has been delinquent on several occasions, could lead to denial of or extremely expensive credit.
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Advantages of good Credit score?
• You will be required to furnish fewer credit documents
• Turnaround time for your proposal will be faster
• You would also get a lower rate of interest
How Can I improve my Credit score?
• Immediately establish a budget in order to control your cash outflows.
• Ensure that your income level permits an additional monthly outflow if you plan to take a loan.
• Investigate your options in order to reduce your interest and other credit related costs, e.g.,
refinance an outstanding loan at fixed interest rates if there is a significant drop in interest rates
or you discover a significantly cheaper option, etc.
• Use some of your savings to repay some of your debt.
• Understand why you have a bad credit score and work on fixing those specific problems
• Always pay on time.
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