Saturday, 19 August 2017

How Long Must I Have Credit Before I Get a Near-Perfect Credit Score?

Let’s assume you pay all your bills on time, you do not carry any debt on your shoulders and also have a great mix of accounts on your credit report you are proud about it. Yet every time you pull up the cibil report there is one factor which appears to be blocking you to reach the perfect score you always imagined. 
If you have just started out in the world of credit you won’t be having any idea on how to manage accounts, how to maintain a perfect cibil score. But if you are a seasoned person in the credit world you will need to be an ace in regards to credit management.  Many fail to achieve this as there are many credit related things which should be considered,
How to ensure gaining Maximum Points Available considering ‘How Long Have You Had Credit’?
What is your target?
As we know there are different credit bureaus in our country and all of them handle the credit ratings differently, but the basic factors to consider credit ratings is the same, i.e. credit history, mix of accounts, utilization of credit also credit inquires made from time to time. In India priority is only given to Cibil ratings by Indian banks. Consider your target on an early stage and plan it accordingly for example, a credit score of a three year old account will be entirely different than the person who has a credit account from twenty years. You can achieve what a twenty year old credit account has not in three years if you maintain the habit of paying bills on time.
Pay your bills on time
Many have perceptions on having to prepare for the perfect cibil score. What people don’t know is you can avail a loan with score of 750 or above. Yes you saw it right! It’s easy to maintain a score above 750 instead of running for a perfect score and achieve your financial goals.
To build an amazing credit report for a long run, just make your payments on time, keep your expenses low which can lead you to debts. Keep a mix of accounts like consumer loan, credit cards and keep sufficient balances on all. You can definitely track your progress by cibil score calculation from time to time.
Do not close your account and get it removed from your report
If you want to achieve that perfect score do not try to remove any existing account by closing the same. Keep all your accounts live and keep making small transactions through the same, many people think if they close the account the report related with the account vanishes, but that is not the case. The closed account gets reflected on your cibil report for a brief amount of time.   
Opening a new credit account will lower your average credit age
The idea here is to not going for multiple credit accounts when you do not need any. Cut off your luxury expenses and only but what you need. If you are getting another credit this will definitely et reflected in your cibil account and it will lower your credit age.
The Impact to Your Credit Scores
Once you keep a track on the credit scores and make payment from time to time it will lead you to a healthy financial we know these days as a part of verification there are companies which also pulls up your cibil scores just to analyze you on how responsible are y in terms of managing money. A healthy credit score will always get you of the edge in times of emergency situations by opting for any emergency loan.
It does not matter how long you need the credit before for making a perfect score, it’s about your integrity for paying the bills on time. If you pay the bills on time it will only help you to improve cibil score and lead to a secure future.

Thursday, 10 August 2017

How Can One Repair Their Credit Score?

If there is one thing you should know about credit scores, it’s that finding a personal loan, home loan, etc. can be really difficult unless yours is a good. Your credit score will play an important role at various points of your life. So, it’s really important that you monitor it well and take the necessary steps to improve it whenever necessary.
The following are some of the best ways to repair your credit score:
1. Removing Settled Accounts
You can’t expect to improve CIBIL score if the credit report mentions an instance of debt settlement.
Debt settlement is usually the last resort for a bank or NBFC that’s not able to receive the full loan amount from a borrower. So, when a person defaults on a loan, the bank gives them an option to pay only a small portion of the actual debt and be done with it. While exercising this option removes all the problems for the time being, it ruins the credit report. So, if you ever decide to take another loan in the future then the mention of debt settlement in your credit report can make it nearly impossible to succeed in your endeavour.
You must get your bank to remove the remark on debt settlement from the credit report if you want to improve CIBIL score. You can simply contact them and explain your situation. If you can convince them that you are ready to repay the pending balance they might agree to your request.
2. Becoming Careful with Payment Deadlines
One of the easiest ways to improve CIBIL score is to start paying credit card bills on time. The same goes for other kinds of debt payments, such as loans, mortgages, etc. There are two benefits of becoming punctual with payments:
·        You don’t have to pay fines or penalties for late payments.
·        Your credit report shows a consistent pattern which not only helps in increasing your CIBIL score but also makes you a good candidate for pre-approved loans.
3. Lowering Credit Utilization
Perhaps the reason why you are unhappy with your free CIBIL score is because you were using your credit cards too much, which led to high credit utilization. So, by limiting that you can repair the credit score easily.
The key to a balanced credit utilization is understanding how it works. Let’s say you have two credit cards with each having a credit limit of Rs. 1 lakh. If you are using one of these on a primary basis and spending on average Rs. 50,000 per month then the credit utilization on that card is 50%, which is quite high. On the other hand, if your credit utilization on the second card is about Rs. 10,000 then the credit utilization on that one is just 10%. In this situation, what you can do is use both cards for a maximum spending of Rs. 30,000 each. This way, the credit utilization is only 30% on each card, which is perfectly within limits and will help improve your CIBIL score.
4. Avoiding Minimum Payments
A large number of people end up with a poor CIBIL score because they are unaware about the bad effects of minimum credit card payments.
Banks want more and more people to apply for credit cards. To convince them they advertise the option of “minimum payments” which are basically partial payments that you can make and still continue enjoying the benefits of your credit cards.
While it’s true that you are not fined for not paying credit card bills in full if you are making minimum payments, the remaining balance is still collected as debt. This debt has to be paid off eventually and is actually bad for your credit score. So, if you want to repair credit score, you must start avoiding minimum payments.

Improving CIBIL score doesn’t have to be hard. If you are careful with your actions and check your free CIBIL score every once in a while then you can make remarkable progress in just a few months. However, if you have your reservations for the same, then you can also consult a professional.

Thursday, 3 August 2017

My home my way- Get your desired home renovation loan

Do you want to add a room to your house, or change the interiors to keep up with the latest trends and designs? Is there a structural repair in the house that requires immediate attention?  Renovating a house is a costly affair. Sometimes our plans for remodelling take a backseat because of lack of funds. But with home renovation loans all your dreams can turn into reality. There are many banks and NBFCs that offer you financial assistance and help you cover for these expenses. So you no longer need to constrain your plans because of budget issues.
Kind of loans you can avail for home renovation
Home loan top up- Some lenders offer renovation loans under the banner of home loans. If you have an existing home loan and you have been paying your EMIs regularly, then you can become eligible for a top up loan. Your payback period will be extended and you will have to pay a higher EMI on your home loan. It is a good option if you have availed a home loan at a lower interest rate.
Home renovation loan – These loans have become popular in recent times. To get an approval one must ensure that one has a healthy credit profile, good employment history and a stable monthly salary.
Personal loan- You can also avail an unsecured personal loan to cover for the renovation expenses. You can even use these funds to buy furniture and electronics for your house. This option usually turns out to be much cheaper than the EMI option with the retailers or purchase through credit cards. But these loans can be obtained only if you have a good CIBIL rating.
Preparing for a home renovation loan
Estimate the cost of renovation- To determine the amount of loan required, one needs an estimate of the total cost of renovation. You can get an estimate from multiple contractors to arrive at an average and then make an allowance of 15-20% of the amount to meet any unexpected costs that may arise in the future. Also take into consideration your capacity to pay the monthly EMIs. You may either reduce the loan amount to fit your budget or increase the tenure of the loan if you cannot afford the specific EMI.
Check your credit score- Your CIBIL rating plays a major role in determining whether you will be approved for a loan or not. So check your CIBIL score and report before applying for a loan. If you notice any discrepancy or fraudulent transactions then you need to take steps to get the errors corrected.
Benefits and features of home renovation loan
Easy application- The process of applying for a home renovation loan is quite straightforward provided you have all the documents, low debt-to income ratio and an excellent CIBIL score. The documents required for the loan generally include KYC documents, income proof, property documents, employment proof and details of the work that you need to carry out.
Loan amount- The loan amount for which you are eligible depends on several factors like age, educational qualification, income, savings, potential to meet the new obligation, assets and liabilities and credit history. If you wish to get approved for a higher amount you may consider getting a co-applicant.
Interest rate- Home renovation loan interest rates vary from bank to bank. It is not necessary that the bank with which you have a relationship will give you best deals on interest rates. In order to avail the best interest rates one needs to have an excellent credit score. A rating of 750 and above will give an assurance to the lenders that you are a responsible borrower who makes repayments diligently. Since the risk of lending money to you will be very less, lenders will be ready to offer you lower interest rate and better terms and conditions.
Loans for Bad credit
You know that a good CIBIL rating is necessary for getting a loan approval. But what if you have a bad credit history? Is there a way you can qualify? Surely there is. A co-signer with a good credit standing can help you get an approval. You can also use your home as collateral to provide assurance to the lender that his investment is safe. Home equity line of credit can make you eligible for a higher loan amount even if your CIBIL rating is not very impressive. You can also try approaching online lenders who provide loans for bad credit but charge a high interest rate.
So do not hesitate anymore to undertake that extensive d├ęcor and furniture re-design that you have always wished for. Increase the value of your home and satisfy all your passions, hopes and dreams with a home renovation loan.

Friday, 28 July 2017

Credit Repair Guidelines for Better Results

A good credit score is a gateway to your good financial future. However it is sad that many people do not pay attention to their credit scores until they need a loan. By paying attention to your credit rating from the beginning, you could stay credit ready always. Neither would your score tumble down ever nor would you require guidelines to repair the credit report.
Nevertheless let’s find out certain tips to improve credit score and get better results in a record time.
For robust credit health it is important that you understand the basics first. You need to know what builds your score and what hurts it. For, in the backdrop it is your financial moves that determine health of your credit report.
There are five factors that primarily determine your credit score.
1.       One of the most important factors that boost your credit score is certainly the repayment history. The regular repayment of EMIs and credit bills enhances your score by 35 percent. So by ensuring the timely repayments, you take a large step towards a good score.

2.       After repayments, the amount of credit being used affects your score. The percentage of loans raised against the sanctioned limit is called credit utilization ratio. If you use adequate credit utilization ratio, that is 30% or less of the permitted limit, you would boost your score by 30 %.

3.       Next is the age of your credit history helps your score by 15 %. That also means, if you maintain good credit history for years it would also be counted in your favor. However, a single skipped payment or late payment ruins this good history. So you need to ensure the good history every time.

4.       If you raise too many new loans or credit cards simultaneously it can hurt your score by 10 % and you are considered as a credit hungry prospect. This also increases chances for loan rejection. For example if you want to buy a home loan in the future, you should start planning for it many months before. Each loan or card application should be made keeping in view the future loan.

5.       If you use right credit mix of secured and unsecured loans you would help your score by 10%.
Paying attention to these factors your credit score would always stay hale and hearty.

Repairing credit score
Now, in order to improve bad score, pull out your free credit report from the CIBIL.

Study the report and find out if there is any misinformation or error on the report. As you find an error in the report, dispute the error with CIBIL. You can either dispute it online or send a snail mail for the same. Sometimes a simple error such as showing status of a closed account as open account can drastically hurt your report.

As the error is corrected your score would jump to a better place. Next you can ask the creditors to erase a disputed account altogether from your CIBIL report. You can make a settlement and change the status of bad debt.
As discussed above, percentage of credit limit being used affects the score badly. Sometimes the credit limit on the report is lower than the current, you need to get it corrected as soon possible.
If however your credit utilization is more you can consider applying for a couple of credit cards. With good history of repayments adding two cards would help you raise the limit and you could successfully maintain the credit health.
In case you have too many cards, you can choose to close certain high cost cards. Herein you should be careful enough to not close an old credit card with good history.
The purpose of all the financial moves should be to enhance the score. By raising the score, you would also raise your worth. It would not be easy to get loans for bad credit score with broken credit score. You can consider applying for a secured credit card or secured personal loan. With right mix of credit accounts, your creditability as a borrower would rise.

As you successfully repay the loans for next few months you would build a good history. It would enhance the score and would make you ready for bigger loans. Soon you may be ready for a home loan!

Wednesday, 19 July 2017

Home equity to consolidate debt - pros and cons

Has overspending got you into a lot of debt? Are your incomes flowing down on EMIs? Finding it hard to remember all the EMI dates? Many of us at some point of time get stuck in such situation, but what is the fix for this?  Try considering a home equity loan for paying of your debts. An equity loan can help you minimize your EMIs and help you save a lot of money.
What is home equity loan?
If you own a debt free house and you have built up a lot of debts on high interest rates, you can take a loan on your home as equity loan and consolidate all your debts at low or fixed interest rate. For example you have a personal loan of around five lakhs at 18% interest rate and a car loan of around 7 lakhs at 15% interest rate. You can opt for this loan for these amounts at around 9.5-10.5% interest rate with a high tenure and make life easy. There will only be one payment to make every month compared to multiple EMIs.
A lot of balance transfers, personal finance leads to such situation which affects your cibil score so it is advisable to go for this loan with less home loan interest rates available in the market.
We will sight some pros and cons if considering a home equity to consolidate debt;
Low, fixed interest rates
The interest rates in loans are less as compared to other loans and financial products like personal loans or credit cards. It is always a great option to opt for an equity and pay off all your existing debts as this gives you access to low interest rates. You can save a good amount of money by doing this.
Interest is tax-deductible
A home equity loan has no tax on interest and instead you get tax exemptions. If you are stuck with other loans you are bound to pay tax on the interest as well.
Flexible terms
You can opt for a flexible repayment term which can be good, as compared to other loans which you avail. Like for example if you avail credit card loans the maximum duration to pay it off would be 90 days, in terms of personal loans the maximum term is five years but when you go for this loan you can raise tenure  of the loan by ten to fifteen years. This gives you more time to pay your debts off.
Use the money to consolidate debt
Go for a home equity only for a consolidated debt. Do not try to use this privilege for luxury, if you use it for one of your wants but not the needs this will cost you a lot in near future when you are in an urgent need of money.
House as collateral
When considering an equity loan, understand that your house will be collateral as compared to the other loans which are available in the market like personal loans or credit card. If you fail to repay your EMIs on time you may lose your home as a result for the same. Many people make this mistake of taking this loan and lose their home when not paid the EMIs on time.

Risk of value drops

This is a bit complicated, as we all know home loans are processed on the market value of the home same goes for a home equity loan. If you avail a this loan for an X amount and due to market fluctuations the property rates go down, you will be paying more than what you have. For example if the value of your property is 50 lakhs and you have taken an equity of 45 lakhs and the market goes down resulting your property’s worth 40 lakhs then you will be paying high interest for a depreciating property.

Lose bankruptcy option

Compared to other loans like personal loans, credit cards which demand no collaterals, if you fail to honor the EMI amount you can file for bankruptcy. In cases of equity loans as your home will be collateral you lose the option for filing bankruptcy.

In conclusion, 

it will be suggested to lower your expenses and try saving money, which can help you in near future in case of emergencies. If you have crossed the line of debt and know there is no chance you can evade this, get a home equity loan only if you have run out of options because it may ease your situation temporarily but is a long commitment. 

Saturday, 15 July 2017

Influencing factors to your LAP tenure, Know them!

Are you planning to apply for a Loan against Property? Before you meet a bank or financial institute for the purpose, it is important to understand about the various factors pertaining to LAP. Like other loans, the funds are advanced keeping a property as mortgage and you are expected to repay via EMIs till the maturity of loan tenure. The rate of interest and duration of loan depend on your credit profile and certain other factors. The maximum permissible loan tenure can be up to 15 years for mortgage loans.

Let’s discuss here some of the elements that a lender considers for finalizing the tenure.
Loan amount
Lenders generally have a tendency to offer a longer tenure to add to the eligibility of the loan. Banks or NBFCs generally offers tenure of 5-15 years on LAP. The higher the loan amount, the higher would be the term of the loan. However you should extend the tenure according to your repayment capabilities. The longer would be the term of loan, the total cost of loan would rise too.
Your age plays a fundamental role in deciding the tenure. Say, if you are in your 30s; you can go for a higher tenure, however, if you are nearing your retirement, you are eligible for a short duration loan. Most of the lenders; banks or NBFCs are hesitant in approving a loan past retirement age.
Age of the property
The age of the property you intend to mortgage is one of the major factors for your application to be sanctioned. Even supposing your building is approved by the government, the age of the building would play a significant role in deciding the tenure of loan. The residual age of the property basically defines the permitted tenure. 
Say, the age of building you are planning to mortgage is 15 years, and the age cap is 30 years, in that case the highest permissible term for your LAP would be 15 years. While if your property is 20 years old the highest term for which you are approved would only be 10 years.
As a borrower it is essential to have a regular and a sustainable source of income. Your net income and costs (expenses) are the most important factors that leave an impact your loan tenure. There are a number of online EMI calculators available that help you assess your income and expenditure to give the best loan opportunity with the most favourable tenure.
Your EMI (Equated Monthly Instalment) plays an imperative responsibility in deciding the tenure of your LAP. If you are looking for a low EMI, it will result in a longer loan tenure while, if you are comfortable with a higher EMI, you may choose a shorter tenure.
Mortgage interest rates
It is recommended to cautiously analyze and try to reach at the most favourable balance in terms of loan tenure, EMI and rate of interest.
Cibil score
The lender considers your CIBIL score while assessing your credit worthiness and deciding on the permissible loan tenure. So it is important to improve CIBIL score when before planning LAP or any other long term loan.
Is your low credit score bothering you?
A good credit score is essential to get a LAP approval. If you have a bad score, one common worry that is running through your mind is probably how to improve your CIBIL score? Improving credit score for LAP is not something unworkable, but requires time. Don’t run after a company that advertises that they can fix your bad credit score and increase it by 100 to 150 points in just a few months. Beware! It might be a scam.
It takes some time for bad credit fix. Let’s discuss on how to make you eligible for LAP despite the low cibil score.
·         Pull your free CIBIL report and study it to know where you stand.
·         Watch the credit card balances
·         Avoid applying for new loans and credit cards
·         Reduce Loans
·         Avoid applying for new loans and credit cards
·         Seek professional help
·         Request goodwill adjustment on any negative items on your report

It is important to keep in mind that if you have a bad credit score that doesn’t mean you’re a defaulter. This could happen because you are an unorganised person. By simply following the above rules you can take a first smart step to improve your score and avail the desired loan.

Tuesday, 4 July 2017

Things one must consider before getting a personal loan

What is a personal loan? Unlike other loans like home loans or car loans there is some collateral like your home or a car this is one type of unsecured loan where no collateral is needed to avail. Personal loans comes handy when times of emergencies like medical expenses or education purposes, etc. you can access personal loan within a day or a few days depending on from which bank you are opting the loan from. The interest rates are quite high as compared to various loans available in the market and also the charges related to it, but are personal loans the right way to meet your urgent needs?
Here are some points to consider before going for a personal loan,
Consider family and friends
 In an urgent need of money do not opt for personal loan directly; try speaking to friends and relatives and try availing money from them. This will give you spare time to repay them without a deadline on your head and no interest. If for some reasons you are not able to pay the amount to the person you borrowed the money from, they will understand your current situation and spare you more time but banks won’t.  For banks monthly repayments are mandatory and if you don’t make your payments on time will lead to a personal loan bad cibil score.
Ask you bank if you have access to overdraft facilities
Overdraft is an option given by banks depending on your transactions and relations with the bank. If you are seeking a small amount try contacting your bank and if you are credit worthy they will provide you overdraft which can be repaid with a nominal interest rate.
Consider alternate cheaper loans
There are other loans as well which offer you cheaper interest rates and low processing fees. Loans like gold loans, used car loans which take the same amount of time to get processed; that is a day or two but has fewer hassles in terms of repayment. Like you can walk in with your gold in an HDFC bank and they will understand your needs consider your gold and give you on the spot loan.
Take what you need
Once considering family and friends and if there is no way of getting the money, try and understand the amount you need as a personal loan and not what your bank is offering considering your eligibility. If you need one lakh rupees try getting the same amount as loan but do not over borrow, as personal loan comes with high interest rate and less tenure for repayment.

Try negotiating for interest rates
There are different banks which offer personal loans, and in this competitive time there is different interest rate with different banks. When opting for loan try negotiating on the interest rate, either go for a flat rate of interest or reducing balance interest. This will help you save a good amount of money.
Understand the “all” in costs
After negotiating the interest terms try understanding the other costs as well like processing fees, foreclosure charges and late payment fees. Processing fees ranges from 1-2 % depending from which bank you are taking the loan from, it’s a flat rate which is deducted from the sanctioned amount. For some banks there are high foreclosure charges, if you are trying to close on the loan early some banks will charge you a lot. If you fail to pay your EMI on time it has bad consequences, there is late payment fees and then your cibil rating will also go for a toss. So, try comparing your options before you finalize on which bank you are opting the loan from.
Read loan agreement
Before you sign the agreement read the loan agreement carefully so that you don’t have any sudden surprises in future. Ask the bank relationship manager to send you a soft copy of the agreement so that you read it with ease before signing the agreement.
Check on you Cibil score
Before you apply for a personal loan check your cibil score. A low cibil score would either reject your application for loan or you may get the loan on higher interest rates. It’s always suggested to keep up with your monthly EMIs to avoid such situations.

Consider all options before taking a personal loan! it is only viable if you are in a desperate need of money, try not to take a loan for fancy things.

Friday, 30 June 2017

Which home loan is popular? Why?

Buying a house and making it their home is a dream of every individual, and home loans are the way to get to your dream home.
In India the demand for Home loans are rising on a daily basis due to many factors such as affordable homes in many township projects, Government subsidies for first home, tax benefits and also competitive interest rates by various banks and non-banking financial companies. Today customer is the king to afford and avail various benefits for buying his own home.
Every day ample number of people apply for home loans, some pass the door of dreams when their loan gets sanctioned, but many are pulled back because of low cibil score.
It is very important to check your cibil score before you undergo the process of availing any loan. Cibil score calculations can be done by various mediums and if your cibil scores are low than the eligibility score, then to avail a loan you will have to wait for some more time to get your dream home.
Buying a home takes years of planning, savings and patience. Imagine you thinking this is the right time to buy a home and you are being let down by your cibil score calculations.
There are different types of loans you can ail in this vertical,
1.       Loans for home purchase
2.       NRI home loans
3.       Loans for home construction
4.       Loans for land purchase
5.       Home Improvement Loans
6.       Home Expansion Loans
7.       A loan for home conversion
8.       Balance transfer loans
9.       Stamp Duty Loans
10.   Bridge Loans
Once you have an idea about your cibil score calculations and decided which type of loan you want to avail, the next step would be to choose from where you shall avail the loan. There are different banks like HDFC, AXIS Bank, ICICI and Non-banking financial services firms like Indiabulls. They all have different services and offers they provide in regards to home loans and products related to home loans.
One can easily get in touch with the bank directly or take assistance from the vendor you are purchasing the house from. It would be suggested to do a thorough research on the home loan market offerings which would suit your criteria’s to avail a loan.
There are some points which you can consider while availing a loan:
Healthy CIBIL score is the key
As we all know good cibil scores leads to fast processing, the lender can reject your application if your cibil scores are low. Make sure you make your payments on time so that they don’t reflect on your cibil ratings.
Poor credit scores will delay your home loan
As explained earlier low cibil scores will delay your chances to avail a loan and will postpone your dream to get a home. Traditional banks may reject your application but you can still try getting the loan processed by an NBFC like Indiabulls home loans at a bit higher interest rates.
Always choose lower interest rate
You have many banks and NBFCs which can offer loans and there are many websites as well which will provide you with all the information on home loans and various interest rates to offer, so choose your lender wisely as taking a home loan is a long term commitment.
Types of interest which suits you
As there are many types of loans, also there are types of interests i.e. fixed and floating. A fixed interest rate will be fixed throughout your loan tenure and floating will fluctuate according to financial market trends, many avail floating interest rates as it gives a flavor of uncertainty and you can benefit your pocket when the interest rates are low.
Foreclose your home loan if you can
It would be suggested to consult an expert to foreclose the loan, as tax benefits, appreciation on the property, etc. make sure you have done your due diligence before you take this step as sometimes this could lead into a minor loss.
Home Loan is a long-term commitment so don’t get trapped by various market offerings and choose an appropriate home loan product after due diligence.

So, A better home loan would depend on your credit score, better deal offered to you, interest rates and the final tenure. Always make sure that what you are going for is the prefect purchase for you!

Friday, 16 June 2017

Unexpected Things that May Cause a Hard Inquiry

Your credit score reflects your financial health. Maintaining a good score is indeed the first step to stay credit healthy forever. Apart from regular repayments and maintaining appropriate credit utilization ratio, certain factors such as the length and mix of credit accounts besides hard credit queries also impact the CIBIL score.
Hard credit query is basically a footprint being made by a bank to check your loan eligibility and credit worth. Frequent hard inquiries on the credit report reflect credit hungry behavior of the prospect and thus it hurts the score.
Why does bank make a query? The purpose of making a query is to make a note on your report about your financial activity. Not only does it record your financial moves but it also saves your from identity theft or other fraudulent financial moves. As long as you could recognize your credit activity you could be assured of complete security of your account.
Besides being vigilant about loan repayments and maintaining zero balance on your credit bills, it is thus also important to ensure that unnecessary queries are not made to the CIBIL.
Even if you are planning to avail a loan you should conduct CIBIL Score Check yourself by pulling out free CIBIL report save a hard credit check by the bank.

But sometimes even the smartest of people make silly mistakes and hurt their score. Despite being careful about each of their financial moves they unknowingly cause a hard inquiry. Let’s find out some unexpected things that may cause a hard inquiry on credit report and affect the score.
Paying your taxi’s fare with a debit card
This is one of the most unsolicited reasons for making a credit check on your CIBIL report. Most of the popular cab services allow you to pay with a credit card or a mobile wallet. However there are few who allow you to pay with a debit card even. Those invite debit card payments often have a clause that allows them to make a credit query on your report. Any such inquiry if undertaken would be hard one.
While applying for utility services such as mobile phone plan or cable connection
When you apply for services such as a cable TV connection or a new cellphone contract, it can initiate a credit check. The objective behind such credit checks is to evaluate the stakes. The query is meant to check your credit worth and ensure that you could repay the bills on time. The credit check thus is a hard query.
When you request for increase in a credit line
By requesting an increase in a credit line, you would successfully reduce the total limit being used and it will boost your low CIBIL score. But at the same time, the request to a bank to initiate the limit would cause a hard query on your account.
Here you should also know that all requests made for increasing credit limit are not hard ones. For example, when a credit card company offers a random increase in the limit it does so after making a credit check. But without your knowledge the check would be considered as a soft query.
When you apply for a new credit card via an employer
Many companies ask their employees to have a corporate credit card so that they could cover business-related expenses on the run. However employees fail to realize that it could initiate a credit query. The companies ask employees for a personal guarantee. The purpose behind is to ensure that the employees are worthy enough to pay the pending bills on time. This causes a hard inquiry on the report.
Credit check before a new job
There are some jobs that require a complete history check before accepting the candidature. These jobs also include a credit inquiry so as to establish your financial history. One example for the same could be a bank’s treasurer job.
Before finding a rented accommodation
Many landlords ask for credit check before offering their home to tenants. In order to know your credit score you should seek a free credit report from CIBIL. Every year CIBIL provides a free credit report.

All in all, before using many of the utility services a credit inquiry could be started. So you should be vigilant enough to ask the service provider to initiate a soft credit instead. A soft query is the one that doesn’t add a mark on your credit report and its presence doesn’t hamper your score.

Wednesday, 31 May 2017

Things To Know About Capital Gains When Selling Property

Reselling is one of the best ways to make a profit. Properties, gold, stocks, etc. are thus are excellent investment options. However, talking particularly about properties, when you sell one at a price higher than what you bought it at originally, you incur a gain, which is technical terms is called a "capital gain". Or, in other words- when you make a profit by selling off a property, it is called a "capital gain". Now, since this type of profit is non-recurring, unlike fixed deposit investments, mutual funds, etc. the taxation is calculated differently for it. There are certain things which you must be aware of if you are going to sell a property. But first things first:
What is a Capital gain?
Any profit that is gained through the selling of properties, bonds, shares, gold, etc. is called a capital gain. It can be of two types- short term and long term capital gain. The amount of time you have held an asset determines whether the gain is a short term one or a long term one.
Short Term Capital Gains
Generally, if you sell off your property within 3 years, then the profit gained is called Short Term Capital Gain(STCG). Here is the gain formula simplified for you:
Short term capital gain = Selling price of the property – (cost of purchase of property + cost of renovations made(if any) + any other expense incurred on the sale or transfer of the property)
Long term Capital Gains
if you sell off your property after owing it for more than 3 years, then the profit gained is called Long Term Capital Gain(LTCG). Here is the gain formula simplified for you:
Long term capital gain = Selling price of the property – (indexed cost of purchase of property + indexed cost of renovations made(if any) + any other expense incurred on the sale or transfer of the property)
Net profit= LTCG- Exemption (if availed) u/s 54 or 54EC or 54F
 What is Indexation?
As you must have noticed, when it comes to long term capital gains, indexation comes into action. The capital gain has to be calculated using indexed prices, rather than the base prices. But what is indexation anyway? Well, indexation is used to calculate the price of your property adjusted for inflation. To understand it better, consider an example. Say, about 10 years ago, you could have bought a cup of coffee for 5 Rs. However, today the price of the same cup of coffee has gone really high. This is due to inflation. With time, the purchasing power of your money reduces. So, when you are selling a property after several years, you have to calculate the price that you would have to pay for the same property today, and not the price you bought it at originally.  
Tax Exemptions on Capital Gains
The government of India provides a variety of tax exemptions that you can claim for the capital gains you make on the selling of your property. Here are some of them that you can consider:
·         As per Section 54 of Income Tax Act you can claim tax exclusion on profit earned if that total profit sum is used for buying another house. To avail this tax exclusion you must either purchase a new home in two years after selling the property, or build a new property within three years after selling.
·         If you are selling an agricultural land that doesn't come within the limits of a civic body then the profit made on it is not taxed
·         You can also avail tax exemption if you are going to invest the capital gain in a small scale or medium scale business. However, you must buy all the tools and machinery that you will need for manufacturing in six months after the sale of the property.
Before you sell any property it is important to learn how capital gains, and associated taxation work. Only then you can make maximum gain, and avail tax benefits. Taking the help of a professional also helps, especially when it comes to calculating accurate prices.

Read Articles on Home Loan

Thursday, 25 May 2017

Things You Should Know About Personal Loan Disbursal Process

Personal loans are extremely popular due to their multi purpose nature. For instance, you can get a personal loan for buying a house or a car, or even for paying your medical bills. The interest rates on personal loans may be somewhat high than other types of loans, but they can be really helpful when you need a large sum of money at once.
For those who have never taken personal loans or rather any kind of loans usually have several doubts regarding the same. If you are also one of these people, then the following points will help make things clear:
Actual Disbursed Amount
You will almost never get the full loan amount that you apply for in a personal loan. This is because the lender levies multiple kinds of charges and taxes such as processing fees, service tax, etc. before finally disbursing the money.
Mode of Payment
The standard mode of loan amount payment is either through a banker’s cheque or a demand draft. Your lender may send it (whichever it is) or you could also collect it from the bank branch.
Sometimes a lender may also send the money to your account directly through a wire transfer.
Add-on Offers
Lenders, when selling personal loans may also pitch add-on products such as accidental plans and try to rope you in by telling things such as you don’t have to pay anything upfront for the facility, etc. However, these add-ons can greatly increase your EMIs depending on their nature and variety. Thus, you must think twice before giving a nod. Usually, you don’t need such add-ons so it’s alright to say “no”.
Loan Costs
You would think that the principal amount and interest rate are all that you have to deal with when you get a personal loan. However, that’s not true. There are a few other major fees that you must know about:
Processing Fee:  Almost every bank charges a processing fee on a loan, which could be anywhere between 1% to 2% of the loan amount. Alternatively, some lenders charge a flat processing fee. At any rate, you would want to take that into account before signing the papers.
Prepayment Fee: Many people don’t know about the prepayment fee, mainly because it comes into the picture very late in the loan term. The prepayment fee is the fee for repaying a loan sooner than the actual term completion. So, say you sold a house and now have enough money to repay your loan in full, which is a good idea as you will save a lot of money on interest. However, you may have to pay a prepayment fee for this.
There are some banks though, that don’t charge a prepayment fee which is why it’s best to confirm it with yours.
Late Payments
Although late payments usually attract penalties, there is one more thing you should be worried about, which is CIBIL score calculation. Every single late loan payment damages CIBIL score, which is why you must make sure that you always pay on time. By missing EMI deadlines repeatedly, you can jeopardize your credit report itself and lead to a poor credit score calculation.
Fixed Interest and Floating Interest
The interest rate applied on a personal loan can be of two types- fixed and floating. In the case of the former, the interest rate remains the same until the completion of the loan term. However, in the case of the latter, the interest rate can vary throughout the loan term as it’s based on the market fluctuations. So, if you want to minimize financial risk then you can stick with a fixed interest rate, but if you feel the interest rates may drop in the near future then floating interest rate is better.

Personal loans, just like other kinds of loans must be obtained only after due consideration. It’s also important to get to know the basics so that you know how the calculations are done, and how your money will be spent. Failing to do the homework can easily lead to a financial crisis and will damage your credit score too.  

Thursday, 18 May 2017

Want to Join 800+ Club? These are the Secrets of People with High Credit Score

If you have been neglecting your CIBIL score all this time now, then you must take control immediately. While it’s not impossible to improve CIBIL score it comes at a huge cost, which is why it’s best to build an excellent score before it’s too late. With a high credit score, not only you will be able to enjoy attractive interest rates on loans and credit cards, you can also have the peace of mind that you can get financial support from your bank whenever you need.
The Credit Information Bureau of India Limited (CIBIL) provides credit scores ranging from 300 to 900. Generally, a CIBIL score higher than 650 is considered good. However, if you are a perfectionist and willing to go an extra mile, then you can surpass 800 and build a rather outstanding credit report.
The following are the top secrets of the people with near-perfect credit scores:
Most credit bureaus, including CIBIL, give big importance to the payment frequency of the credit users. In fact, many times it takes just one missed payment to cause a damage of as much as 50 to 100 points.
Credit savvy people understand how important it is to pay their bills and EMIs on time, which is why they go out of their way to ensure that the payments are made prior to the deadlines.
If your score is not increasing despite a lot of effort then try becoming punctual with your loan EMIs and credit card bills. Once you have started paying one bill after another on a timely basis you can easily observe an impetus to your CIBIL score.
Credit Mixing
Most people think that the key to building a high CIBIL score is never missing payments and using credit cards responsibly. However, there is a secret that only smart credit users are aware of, which is the importance of credit mixing.
If you want to give your credit score a big boost in the easiest way possible, then just diversify your credit portfolio. In other words- if your credit report is based on just one personal loan or a home loan then you can get a credit card or two.
If you are already using credit cards and have a personal loan under your name, then you can also take a mortgage if you need. The key is gaining experience with a variety of credits. That being said, you still need to repay your debt responsibly. Otherwise, there is no point in using multiple credit cards when you can’t keep up with the bills.
Credit Utilization Ratio
The credit utilization ratio may sound technical or complicated, but it’s rather simple to understand and not to mention- matters a lot for your CIBIL score.
Credit utilization ratio is the ratio of the combined credit limit on your credit cards and the actual utilization of that credit by you. So, if you have two credit cards with Rs. 50,000 credit limit on each (thus, total= 1lakh) and you are spending about Rs. 40,000 every month using them, then your credit utilization ratio would be 40%.
If you want to improve score fast and go beyond the 800 mark, then you must keep your credit utilization ratio small. It’s best if it’s kept below 30%.
Accounts Closing
When it comes to increasing credit scores you must be very careful when planning to close any credit card or bank accounts. This is because the length of credit history can make a big difference in the equation. If you have a really old credit card that you have been using responsibility, and paying its bills on time then closing that account can put a major dent in your credit score. Thus, if you really have to it’s better to close a rather recent account.

Aspiring to go past the 800-points mark is not a death-wish, but that doesn’t mean it’s easy as well. If you will remain patient and take all the right steps, then achieving a near-perfect score is very much possible.

Friday, 12 May 2017

Pros and cons of prepaying a home loan

The wish of buying a dream home becomes a reality when you get a home loan of your choice. Home loans are essential types of loan in which both banks and consumers are interested in. Being the long term loans, they stay in your CIR for longer period of time, significantly affecting your credit worthiness.
So, when you plan a home loan it is advisable to read the terms related to prepayment option along the interest rate and loan duration.
Whether you apply for HDFC home loan, SBI home loan or the one from PNB, all banks offer you prepayment option. Sometimes banks charge 2-3 % of fee for opting for prepayment in the middle of the loan tenure.
The prepayment of loan is a win-win situation for you as it would improve your credit score and you would get rid of a debt sooner. While for the bank, it would entail an added burden of finding out another client to lend the amount being credited to them before the anticipated time. They might even discourage you to opt for prepayment option and thus many lenders choose to levy a fee or penalty for the same.
So, let’s weigh down the pros and cons of prepayment of home loans so that you could now if you need to prepay your current home loan.
The Pros:
When you go for prepayment, you get rid of debt early. It improves your credit score and you regain the power of availing credit again. So you get more financial flexibility as you repay.
Next, prepayment of a home loan is basically an investment option. Let’s understand this with a simple example.
Mr Subodh Gupta has a home loan of Rs 12 lakhs at interest rate of 10 percent per annum for 10 years. Every month he pays 10,000 of EMI. After paying EMIs for first 12 months, he receives an annual bonus of Rs 1 lakh this Diwali. He has an option to either keep it in a bank account, invest somewhere or have a fixed deposit. Each of these option will fetch him between 6-8 % interest rate.
However if he decides to prepay, he is cutting the principal amount for larger interest and yield greater benefits. So he decides to pre-pay the loan. His remaining loan principle would be 10 Lakh and 10 % on lakh would be 1 Lakh of interest. Had he not opted for prepaying the dues, his pending interest would have been 10 % on 11 lakh which is 1 lakh and 10 thousand. So he has saved 10% (Rs 10,000) interest by repaying.
So, by prepaying the loan one can either choose to reduce the duration of the loan or reduce EMI. In the above example, by retaining the same EMI, Mr Subodh would reduce the loan duration for 1 year.
However if he has other expenses to fund, he should choose to reduce the EMI. This way loan would run for the same duration but additional saving per month on EMI can be used to fund the other short term expenses.
Thus by prepaying the loan you basically plan other credit lines and add to your financial sturdiness.
The Cons
With home loans you avail certain tax benefits under Section 24(b) and Section 80EE.By prepaying the loan, you may miss those benefits. You get tax deduction up to Rs 1.5 lakh per annum. So it is advisable to make partial prepayment and keep availing these benefits at the same time.
If you use all of your cash or savings by prepaying, you may end up sucking up funds for emergency. Thus, prepayment should be an option and not the necessity for you.
Being lesser expensive loans than other loans, you should prepay other expensive loans first.
Many banks levy penalty on prepaying so you should check out the impact of those charges on your loan before making the decision.
Things to keep in mind when you plan the prepayment:
Never prepay the entire loan amount. You only need to pay out till the time you save on interest amount on the loan.
As cutting on to the interest is your basic aim of prepayment you should plan the pay out in the early stage of the loan.
When you want to prepay, the bank would ask you submit certain documents such as ID, address, and income proof. So be prepared with all the required paper work.

Last but not the least, you should use a Home Loan Prepayment Calculator before making the decision.

Friday, 5 May 2017

Things You Must Know Before Starting EMI on a Credit Card

The main motive of every business is to maximize profits, which is done by maximizing the sales. However, consumers don’t always have the kind of money they need for big purchases such as motorbikes and home entertainment systems. To help these customers, and themselves in the process, the banks offer EMI schemes on their credit cards, often when they have tie-ups with certain companies.
An EMI purchase allows you to buy the product of your choice with your credit card, and you can pay the full price in small instalments over a certain period of time such as 6 months or 9 months etc. On the surface, this arrangement certainly seems convenient and affordable. However, is it actually true? Is there no catch at all?
Well, they say when something seems too good to be true, it is. In other words, yes, EMI purchases have certain extra costs that you must be wary of. Thus, if you are going to buy something with an EMI scheme, make sure you are aware of the following things:
First things first, let’s talk about the different types of costs that you have to bear in an EMI scheme. These are:
The Cost of Interest
Let’s say you want to buy an iPhone worth Rs. 80,000. Since you can’t afford to pay the full amount in one go, you decide to purchase though the EMI scheme. You contact the seller and they tell you that you can purchase the phone with a 6 month EMI plan after making a down payment of Rs. 8,000. You think you will be paying the EMIs at Rs. 12,000 each. However, in reality the actual EMI could easily be Rs. 12,500 or more. This is because in EMI scheme you have to pay interest apart from the base price. 
Extra Costs
Apart from the interest rate, many credit card companies also charge a processing fee when you make a purchase with an EMI scheme. It is usually a small percentage of the full transaction amount. However, when the cost of the product is high then even the processing fee can be huge. For instance, to buy home entertainment system of Rs. 1.5 lakhs you will have to pay Rs. 1500 as processing fee (assuming the rate is 1%).
 Pre-closure Fine
If you decide to pay the full remaining amount of a product under EMI scheme before the completion of the total number of EMIs then you may have to pay a fine called the pre-closure fine. Usually it ranges between 2% to 3% of the outstanding principal amount.
 If you want to make the most of EMI scheme offered by credit cards companies then pay heed to the following tips:
·        Shorter Tenure: Since most EMI purchases come with high interest rates, it is best to choose shorter tenures. This is because you will have to pay less interest this way.
·         Reading T & C: Make sure you go through the terms and conditions set by your credit card provider. It is possible that you may not need to pay pre-closure fine, which can be good for you if you decide to repay the EMIs before the actual due date.
·        Pick a Good Time: Credit card companies and sellers both often roll out interesting offers during festive seasons such as Diwali, Christmas, etc. They may offer zero interest EMI purchases, or purchases with processing fees, etc. Thus, it’s best to buy during such times.
When you buy using your credit cards, there is one more thing you should be really careful about, which is your CIBIL score. The way you handle your credit directly affects your CIBIL score. Thus, be sure to pay your EMIs on time and avoid defaulting at all costs.

Having a good CIBIL score is important if you want to get loans easily and at low interest rates in the future. A good CIBIL score also gives you a peace of mind. So, use your credit cards wisely, and make purchases only when truly necessary.