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ÇREDIT SCORE .pdf



Original filename: ÇREDIT SCORE.pdf
Author: Vaijayanti Ajinkya

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A Perfect Credit Score

A good credit score has become so necessary nowadays, every lending institution asks for it
before giving a loan. So it becomes immensely important for a borrower to maintain a
decent score. Also, it aggregates the borrowers with low interest loans. A good credit score
ranges between 750-900.

There are some guidelines that a borrower should follow in order to maintain a pleasant
credit score-

-

Always maintain a proof for all your records. This would give the credit bureau a basis
to evaluate your score. And in cases of a faulty score, this proof can be shown to
elevate the credit score.

-

It is a strict no to be late in your future payments. The best practice here would be to
have an automatic payment system installed.

-

If you have a bad credit score, it is highly recommended to improve it. The score
would get improved gradually. But just to make the lenders think that you are
creditworthy, it is advisable to get a credit card.

-

It is a good practice to have a mix of 4 types of credit account types, namely secured
loans, unsecured loans, credit cards and retail cards.

-

Always limit your credit card expenses. It is preferred that you only use your credit
cards under 25% of its usage to keep the ratio in balance.

-

Closing your old accounts which reflects late loan payments would not increase your
credit score.

Resolution of Cibil Disputes

Cibil score is one of the most important decision criteria used by banks for
sanctioning a credit to a borrower. It is a 3 digit score that varies between 300 and
900. It is one of the most trusted credit scores that is used by all of the banks and
NBFCs around the country.
It is very important to regularly check your credit score from time to time.
Sometimes, you might find an information on your report that is wrong or not right
according to you. In this case, you need to approach cibil for raising a dispute with
them providing all details. If your dispute is found to be genuine then it would be
reflected in your updated score.

Is getting higher credit limit good or not?

A higher limit on credit cards is a desirable thing for all credit card holders. A higher
limit on credit card would give additional spending power to an individual.
A higher credit limit would always have a great impact due to increase availability of
o rely on your relatives and friends to fulfil your financial
needs. But, it has been seen that a higher credit limit results in over spending by a
credit card holder and it would result in higher interest charges.

CREDIT SCORE SUGGESTIONS TO FRESHERS

A person should be cautious of their scores before beginning his/her career. It widens a lot of
financial options throughout his life. The lenders will easily be convinced to offer you loans
with the best interest rates. A good credit score ranges between 750 to 900. And for a
newbie, who has no credit history, the credit score is usually -1.

A newcomer generally has an education loan to be paid. So the rational approach would be

red.

It is always a clever strategy to first tag along a family member with good credit score to
become your co-signer. The banks would be convinced to offer loan when they see a
creditworthy person together.

Also a good practice is to get a credit card. Secured cards and student cards can easily be
availed by the fresher.

LOAN OPTIONS FOR BAD CIBIL SCORE

If you are a person with a low cibil score then it must get you really difficult to get loan. Low
score counts for less than 650. And usually the banks deny providing unsecured loans to
borrowers having a cibil score less than 750. So the borrower cannot access funds. But there
are a few options which the borrower can use to avail loans. Few of the options are-

-

Private money lenders- This accounts as an option for low cibil borrowers. But they
mostly deal in secured loans, i.e. collateral/asset transferred in their name. And when
they do give unsecured loan, they charge exorbitant interest rates starting from 3%
monthly or 36% per annum.

-

Peer to peer lending- They have other credit valuation systems rather than just the
cibil scores. They perform a full credit valuation and then come to a decision. And
also these platforms offer both, secured and as well as unsecured loans.

Loankuber

r to peer lending and offer loans at affordable interest rates.

MANAGE YOUR CREDIT UTILIZATION RATE

Credit cards have become necessities nowdays, everyone seems to have at least one
credit card for himself. Spending from credit card is quite easy and that can lead to
impact on our credit scores due to this unplanned spending.
Credit utilization stands for ratio of total amount outstanding to credit limit
provided in the credit card. Ideally, credit utilization rate should not exceed more
than 30% at any given point of time. Moreover, credit constitutes a major chunk of
your cibil report. You should never take impact of high credit utilization on your cibil
score lightly and should be proactive in mitigating this risk.

TIPS TO MANAGE CREDIT UTILISATION RATE TO IMPROVE THE CIBIL SCORE

Credit utilization rate is the percentage of the borrower s credit that they have exhausted.
They are being calculated by adding the credit used by the borrower and then dividing them
up by the total credit line among all the cards that they possess. In simple words, it basically
tells how much the borrower has used the credit. The lower the credit utilization ratio, the
better he is in the eyes of the lenders.

An article on credit utilization rate on http://www.loankuber.com/ gives a clear insight that
s profile, the lenders take into account both the per card rate
and the aggregated cards rate. This article also focused upon the relationship between
credit cards and cibil score, and how they are linked to each other. It is always recommended
to use the limit upto 30% so that your scores are high.
Also when the credit card ratio increases, it becomes very difficult to correct it. Though it can
be done by raising the credit card limit.

And the most important fact that the credit card holders should keep in mind is that the
banks could lower down the credit card limit. So it really important to be aware all the time.


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