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But soon he realized it was all in vain. He wanted to invest in
a second home on the outskirts of New Delhi at an exotic location.
He wanted to spend his weekends there. So he applied for a home
loan. "I was shocked to know that credit score was around 600 and
the bank rejected my loan," said Rangan. Today he is working
towards improving his score.
Improving a credit score is no big deal for someone with a sense
of financial discipline. But it could be a humungous task for
someone who doesn't have any kind of norm or procedure to invest
and spend the money they earn.
But with Indian economy moving towards risk-based lending, it is
imperative for every individual to fall in line when it comes to
financial discipline, else they will end up losing a lot.
It is important to note that the financial discipline is not
impossible to achieve. Here are a few steps:
Check you CIBIL credit report: This is
the first and most important step in bringing in a discipline to
your financial life. Logon towww.cibil.com fill an online
application form. Make a payment of Rs 470 using net banking or
credit card. Go through the authentication process, if it is
successful the credit score will be emailed to you in a couple of
days. After you get your credit score please check if your name,
age, date of birth, PAN numbers are accurate. If not, report this
to CIBIL immediately. Then check for the accounts held and loans
being services under your name. If there are any discrepancies,
report to CIBIL immediately, as it could bring down your credit
Manage your credit cards well: Some
people like to flaunt their credit cards. If their wallet has some
10 divisions, they would like to fill it with 10 different cards.
This is a definite no for a lender. "It simply shows that a person
is credit hungry, this is not something we would like to see on a
person's credit history," said a credit card department official of
Axis bank. So if you have more than two credit card accounts close
Make payments on time: Having too many
credit cards becomes a problem when it comes to payment. You may
not remember last date for all the credit cards. Any delay in
payments would attract surcharge, late payment fees, interest
charges and proportionate service taxes. So you might actually end
up paying a lot more than usual. And banks won't let you go without
getting their money. Make sure you pay not just your credit card
dues on time but also your telephone, utility and insurance
premiums on time. "Missed payments negatively impact credit
history which most lenders look into it to determine the risk on a
prospective borrower, though the recency of this occurrence is also
considered. As an example, a default which occurred a decade ago
will not have the same impact as a default which occurred a year
ago," said a senior official with one of the bureaus.
Pay your dues in full: Every bill will
show you minimum amount due. Don't get excited that the amount is
much lesser than what you actually owe the bank. Always pay your
entire amount, because the remaining amount will show as overdue in
your CIBIL score, which could hurt your score dearly. Also the
banks will charge interest on the entire amount even if you pay
minimum amount due.
Close unused accounts:If you have ten different
bank accounts close the ones you don't use. You can do well with
2-3 accounts. Dormant accounts can attract fraudsters to misuse
your accounts. Same is the case with loan accounts. After you have
cleared all your dues please sure that you follow up with the loan
officer and get your loan closure letter.
Do not use your entire credit:If your credit
card has 1 lakh limit, it does not mean that you have to use the
entire 1 lakh every month. Just because you are eligible for a loan
of Rs 50 lakh, it does not mean you have to borrow the entire 50
lakh. Give a lot of room for credit. Lenders like to issue loans to
individuals who are not credit hungry. It could work in your favour
as your interest may go down.
So wake up to reality. Go get your credit score and work towards
achieving that dream home or car. Live a financially healthy
We, at CreditVidya, believe in empowering you. Because we believe that knowledge is not only power but also gives you a sense of belonging. We believe in supporting the consumers by not being their crutch but as catalysts and enablers.
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