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Lana Linge has $42,000 in credit-card debt, but it's not the giant tab that has her most frustrated.The 29-year-old says she takes full responsibility for her debt. After getting her first credit card in her early 20s, Linge accumulated small amounts of debt but was always able to pay it off. That changed in 2020: Linge struggled with managing her spending on necessities and other items, like clothes, while in isolation, causing her bills to grow. Things got worse after she lost her job this past October, and she eventually depleted her savings to keep up with the payments on her card."I know for a lot of people, they're in debt because of these freak things that are outside of their control," Linge tells me. "The reason that I'm in debt primarily is from overspending, and I don't try and negate that in any way."Overwhelmed, Linge is going through the painful bankruptcy process to discharge the debt. Looking back, she regrets not paying more attention to the details of her card's interest rate. Wooed by the rewards and perks the companies were offering, Linge signed up for a card with an interest rate she says ballooned to over 20%. The growing interest payments meant that even as she worked to get her spending under control, the bills kept growing.Linge's experience may be on the extreme end of America's personal finance journeys, but she isn't alone in her interest-rate woes. Consumers are always looking for deals, and it's easy to be swayed by credit-card companies offering glitzy rewards and points. As Adam Rust, the director of financial services at the Consumer Federation of America, told me, issuers are "putting the sizzle before the steak." But many of these cards come with high rates and hidden fees, and by the time consumers realize just what they signed up for, credit-card companies have raked in the profits."Credit-card companies can get away with charging high rates of interest because consumers aren't necessarily paying attention and marketing doesn't focus on that," he said.The average credit-card interest rate is now just over 21%, up from about 15% a decade ago. More importantly, the gap between the interest rate that credit-card companies pay banks that oversee their business and the one they charge you is the widest it has been in nearly 30 years. Even with existing regulations and the recent interest-rate cuts from the Federal Reserve, credit-card companies have the power to exploit consumers, and people with growing debt piles have few avenues for relief. Additionally, as credit-card companies continue to charge high interest rates, more cardholders in debt become delinquent — and that could push the US economy closer to recession."What we're seeing from the data shows a rapidly deteriorating financial landscape for Americans," Bruce McClary, a senior vice president at the National Foundation for Credit Counseling, tells me, "with a lot of people teetering on the brink of severe financial crisis."<h2 id="ddbac9bc-8e83-4317-902e-7a4e1408e665">The squeeze is on</h2>Americans have a lot of debt piled up on their little pieces of plastic. The Federal Reserve Bank of New York said in August that Americans owed a record $1.14 trillion on their credit cards in the second quarter and that balances increased by $27 billion from the same period a year ago, a 5.8% jump. TransUnion says the average credit-card balance per debtor stands at $6,329, up by 4.8% from a year ago. Most worryingly, according to the New York Fed, the percentage of people who had fallen more than 90 days behind on their payments climbed to 6.4% by the end of 2023, up from 4% at the end of 2022. Austan Goolsbee, the president of the Federal Reserve Bank of Chicago, described those rising delinquencies as "uncomfortably high" and a "warning sign" for the economy.This may be worrying news for average households and the US economy, but it is wonderful news for the credit-card companies. Credit-card issuers make money in a few ways, but one of the most important is interest payments. When a customer doesn't pay off their full balance each month, they pay interest that the credit-card company collects, so increasing interest rates is an easy way to bring in more profit. To better understand the strength of the credit-card industry, look at the split between the federal funds rate — the interest rate at which banks make very short-term loans to each other, which is also used as the benchmark for almost every other type of loan — and the average credit-card interest rate. Data from the St. Louis Federal Reserve indicates the difference between the rates is at a nearly three-decade high, suggesting credit-card companies feel free to charge high interest rates regardless of what the Federal Reserve does with the federal funds rate."We should never lose sight of just how profitable credit cards are," Rust says. "You've got interest, you've got interchange, you've got late fees; credit-card companies are making so much money."The Consumer Financial Protection Bureau estimated in February that major credit-card companies earned about $25 billion in additional interest revenue in 2023 by raising their annual-percentage-rate margins, or the difference between the APR and the interest rate set by banks, known as the prime rate. It also found that major issuers raised the average margin by 4.3 percentage points over the past decade, to an all-time high. Using data on how Americans deploy their cards to paint a representative picture, the CFPB estimated that the margin increase cost the average consumer with a balance of $5,300 more than $250 in 2023. On top of that, the bureau's 2023 report to Congress on the credit-card market said companies charged consumers over $105 billion in interest in 2022, helping boost the profit margin for these companies to 5.9% from 4.5% in 2019.These staggering numbers are made possible by the tactics that credit-card companies use to lure in new customers. Antoinette Schoar, an economist at MIT who coauthored a paper examining credit-card companies' use of behavioral biases to acquire customers, says companies use data to determine a prospective customer's education and income levels and will tend to offer products with hidden fees and high rates to people with lower educational attainment and income. For example, a company might advertise a 0% APR, but the consumer might not realize that that rate can't last forever, leading them to take on balances higher than they can afford to pay off. She says that while the tactics companies use to appeal to certain consumers can lead to high balances and credit-card debt, the companies aren't the only ones to blame — government regulations to prevent this kind of misleading marketing by credit-card companies could force the companies to compete by offering customers a better deal."We need better regulation so that the card companies are competing on the right dimensions and not on increasing convolution or increasing confusion to their customers," Schoar says.<h2 id="a19bffcc-ffc0-46bd-9211-4a8e68d3409d">'The highest credit-card rates we've ever seen'</h2>Until 1978, most states had laws capping interest rates for credit cards and consumer products. But a Supreme Court decision that year allowed banks to charge whatever interest rate they wanted if they were headquartered in a state without a usury law. This inspired a race to the bottom, with states like South Dakota and Delaware doing away with their laws in order to attract more business from banks. The industry ended up with, as David Silberman, a senior fellow for the Center for Responsible Lending, put it, virtually "no legal constraints on the interest rate they charge." Lawmakers have tried to rein in the industry — for instance, the CARD Act, enacted in 2009, required card issuers to notify consumers of interest-rate increases at least 45 days in advance and put restrictions on things like late fees and withdrawal fees. The legislation, however, didn't cap interest rates or rate increases. Lowering the current high interest rates, and the profits that come with them, has become a priority across the aisle. GOP Sen. Josh Hawley introduced a bill in 2023 that would cap interest rates at 18% and impose penalties on companies that violate the cap. "Americans are being crushed under the weight of record credit card debt—and the biggest banks are just getting richer," Hawley said in a statement, adding that "capping the maximum credit card interest rate is fair, common-sense, and gives the working class a chance." Democratic Sen. Elizabeth Warren brought up the issue during a Senate hearing in May, saying credit-card companies had "grown their profits through interest and fees."The Federal Reserve cut its benchmark interest rate in September after holding it steady for over a year, but credit-card holders with high interest rates won't feel any relief off the bat. Michele Raneri, a vice president and head of US research and consulting at TransUnion, told me that's because consumers have to pay off their balances at the interest rate in place when they accumulated the debt, so the lower rate wouldn't apply."It'll take a while for the consumer to realize the benefit of it," Ranieri says.The high inflation of the past few years has also made it easier for consumers to fall into credit-card debt. Ted Rossman, a senior industry analyst at Bankrate, described the feedback loop of high prices and high interest rates as "a tough cycle to break." Credit-card companies know what they need to do to maximize profit: If they offer rewards and bonuses up front, they can snag new customers before they realize the high rates they're signing up for. Profits keep rolling in for issuers, while consumers fall further behind.<a target="_blank" rel="" href="https://www.businessinsider.com/author/ayelet-sheffey">Ayelet Sheffey</a> is a senior economic policy reporter on Business Insider's economy team.

Credit card companies are ripping you off like never before

Mumbai, Mar 30 () Credit information company Transunion Cibil on Monday assured borrowers that data reporting will be aligned to RBI's moratorium announcement and there will not be any dent to credit histories as a result of it.The move came after the RBI announcement of a 3-month moratorium for servicing all the term loans as a measure to contain the economic fallout due to the lockdown to contain coronavirus spread."We would work closely with our member banks and credit institutions to define the data reporting framework basis (after) the announcements made by the RBI Governor, so that during the moratorium period there is no adverse impact on the credit histories and CIBIL Score of borrowers," the company said in a statement.The RBI announcement came as a relief to the borrowers and affirmed commitment to provide a comprehensive picture of each person so they can be reliably and safely represented in the marketplace.The company, the biggest among three players in the CIC (credit information companies) market, said it is also working with members to ensure more frequent and near real-time data reporting during these unprecedented times."Reporting and monitoring daily nuances of consumer behaviour trends will yield deep insights for the industry to adjust policy and lending. This will ensure support to consumers and enable the lending bodies to transact with confidence," it said. AA BALBAL

Transunion Cibil says data reporting to be in line with moratorium guidelines

<ul><li>A report by <keyword id="4053635" type="ORGANIZATION" weightage="20" keywordseo="Transunion-Cibil">TransUnion CIBIL</keyword> found that out of 220 million people in India that are eligible for loans, only 72 million have active bank accounts. </li><li>This is a significant opportunity for banks to expand their retail lending.</li></ul>India has been lauded for its progress on <keyword id="107911" type="ORGANIZATION" weightage="20" keywordseo="Financial-inclusion">financial inclusion</keyword> in recent years. The <a href="https://globalfindex.worldbank.org/">World Bank</a> found that India’s flagship government schemes such as the Jan Dhan Yojana, under which nearly <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/deposits-in-jan-dhan-accounts-cross-rs-80000-crore/articleshow/63865987.cms">315 million</a> accounts have been opened, increased formal financial coverage from 53% of the population in 2014 to 80% in 2017. Even CRISIL, a homegrown analytics firm, said that India’s overall score on its <a href="https://www.livemint.com/Opinion/EYDsPA60qlvujdln9SJcdN/India-is-doing-well-on-financial-inclusion.html">district-wise financial inclusion index</a> has increased as a result of government efforts. However, the surge in account openings is not translating into <keyword id="6354680" type="UNKNOWN" weightage="20" keywordseo="credit">credit</keyword> penetration. A report by TransUnion CIBIL, a credit information agency, highlights that a lot more work needs to be done in expanding access to formal credit. The report found that out of 220 million people in India that are eligible for a loan -- based on the fact that they are between the age of 20 and 69 and earn at least ₹250,000 a year -- only 72 million, or 33%, had an active account at a bank or lending institution. A market opportunity Rather than bemoaning the lack of access to formal credit as a problem, however, TransUnion CIBIL says this represents a significant opportunity for banks to tap into. Following the massive pileup in non-performing loans, banks are becoming wary of lending to companies. They have relied on retail lending, that is loans given to individuals for housing, cars or investment purposes, to drive credit growth. Last month, Standard Chartered outlined plans to increase it share of retail loans in India <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/standard-chartered-to-grow-retail-lending/articleshow/63891090.cms">to 40%</a> from the current 29%. This untapped market is expected to sustain a rise in credit growth for the next five years. And the population of credit-worthy borrowers is only set to grow bigger as incomes rise and young Indians come of age, reaching 295 million in another five years. The expansion in access to credit can be facilitated through the uptake of online banking, which will require credit cards, and peer-to-peer lending through smartphones. What the government needs to do Account openings aren’t the sole determinant of financial inclusion. Financial literacy programmes are vital in enabling account holders to make proper use of their banking facilities and overcome their resistance to using phones for banking purposes. The government also needs to encourage the establishment of credit bureaus to underwrite individual loans - something that can be achieved by the continued linking of bank transaction information with Aadhar details. Additionally, it is precisely because of lack of access to formal credit that India’s household debt, as a proportion of GDP, is still very low compared to countries like China and the US. According to a <a href="http://www.imf.org/en/Publications/WP/Issues/2018/05/14/Global-Debt-Database-Methodology-and-Sources-45838">working paper by the IMF</a>, India’s household debt is a little less than 10% of the GDP compared to 150% in the US and 44% in China. As banks expand access to credit, the government will have to keep a watch on this statistic.

Just 33% of the Indians that are eligible for a loan have access to a bank account

The first month of 2016 is about to get over and its time to look back and analyse your financial behaviour. 
	 
	“Advent of 2016 signals new hopes and aspirations along with resolutions for fulfilling these aspirations. Here are 7 resolutions you must commit to if you want to enjoy credit happiness and <a href="http://www.businessinsider.in/Is-this-what-2016-holds-for-startups-in-India/articleshow/50549936.cms">easy access to finance</a> in the New Year by maintaining a healthy credit report and high credit score,” says Harshala Chandorkar, COO, <keyword id="6380215" type="ORGANIZATION" weightage="20" keywordseo="CIBIL">CIBIL</keyword>. 
	 
	Timely payment of loans 
	 
	Ensure that you are paying of your EMIs and credit card bills on time. Always have enough balance in the bank in order to make timely disbursements. 
	 
	“In case you are making payments through cheque each month ensure that the check is deposited in advance before the due date of the EMI payment. Similarly also make sure that you pay credit card bills on time each month. Try to make the credit card bill payments in full each month to avoid accumulation of debt and interest charges,” says Chandorkar. 
	 
	If making full payments isn’t possible, it is suggested that one should at least make part payments in order to avoid default tag. “Missing any EMI or credit card bill payment will impact your credit report and lower your credit score,” she notes. 
	 
	Restrict credit card limits: 
	 “While increased spending on your credit cards may not necessarily negatively affect your <keyword id="728709" type="ORGANIZATION" weightage="20" keywordseo="CIBIL-TransUnion-Score">CIBIL TransUnion Score</keyword>, an increase in the current balance on the card over time is an indication of an increased repayment burden and may negatively impact your score. It’s always prudent to not use too much credit,” says Chandorkar. 
	 
	Limit credit exposure 
	 
	“The total size of your debt reflects on your <a href="http://www.businessinsider.in/Wanteasy-access-to-credit-for-your-startup-Here-are-a-few-tips-/articleshow/50743156.cms">credit</a> report and has an impact on your CIBIL TransUnion Score. Having many loans or credit cards increases the total amount of debt you owe and increases your credit exposure. High credit exposure may impact your CIBIL TransUnion Score. If you have many loans running ensure that you close some of them so that your total credit exposure is reduced, before you apply for new loans,” she adds. 
	 
	Monitor your co-signed, joint accounts 
	 
	It is important to regularly monitor all your loan accounts which include co-signed, joint and the ones for which you have signed up as a guarantor. It is also important to understand that by pledging as a guarantor on the loan, you are also legally responsible towards the timely repayment of the loan. In case of defaults and delinquencies by the principal borrower, the CIBIL TransUnion Score of the guarantor will also get negatively impacted. Hence, it’s imperative that the guarantor on the loan should ensure that the borrower pays the EMIs regularly on the due date, month on month. 
	 
	Know your CIBIL TransUnion Score 
	 It is important to keep a tab on your <keyword id="88181" type="UNKNOWN" weightage="20" keywordseo="credit-history">credit history</keyword> regularly in order to track your financial standing and be “loan ready” always. Remember responsible credit behavior is the cornerstone of financial independence. In order to enjoy financial freedom and access to credit you must ensure responsible credit behavior and due diligence.

4 credit management resolutions that you must make in this new year!

Getting a loan is a task. And nothing could be worse if the loan is rejected because of a poor credit score. BI India talks to Harshala Chandorkar, senior vice president of Consumer Services &amp; Communication at <keyword id="6380215" type="ORGANIZATION" weightage="20" keywordseo="CIBIL">CIBIL</keyword> and lists down common mistakes that can hamper your financial future seriously. 
	 “This 3 digit number, is your <keyword id="728709" type="ORGANIZATION" weightage="20" keywordseo="CIBIL-TransUnion-Score">CIBIL TransUnion Score</keyword> which ranges from 300 to 900. This score is calculated based on your credit history as reflected in your CIBIL Report. Today an individual’s CIBIL TransUnion Score is one of the important factors that banks and credit institutions review before granting a loan or a <keyword id="6368202" type="ORGANIZATION" weightage="20" keywordseo="Credit-card">credit card</keyword>. An individual's CIBIL TransUnion Score provides a Credit Institution with an indication on the likelihood of the individual paying his loan or credit card dues on time. Higher the score more favorably the loan application will be viewed by a Credit Institution. Most banks and credit institutions today lend to individuals who have a credit score of 750 and above,” said Chandorkar. 
	 
	Missing out on paying <keyword id="6388045" type="COMPANY" weightage="20" keywordseo="emis">EMIs</keyword> on loans 
	 
	Have you missed out on paying your monthly EMIs on any of your loan. This is quite a common trend often observed amongst young consumers, who often take loans and delay the EMI payment. 
	 
	“Default on the monthly payment will occur if sufficient fund is unavailable in your linked account. Defaulting on loan EMIs is detrimental to your CIBIL TransUnion Score. So ensure you pay your loan EMIs month on month and have adequate funds in your bank account for the loan EMI debit,” said Chandorkar. 
	 
	Defaulting credit card bills 
	 
	“Delay or default on credit card bill payment: Forgetting to pay your credit card bill on the due date or not paying your credit card bill at all can hamper your credit score drastically. Ensure you set up payment alerts on your credit card bill and make the payments before or by the due date,” she explained. 
	 
	Settlement on a loan or credit card 
	You may think it is a wise idea to settle your outstanding credit card bill or loan but believe it or not, it is often considered to be bad credit behavior by the banks. 
	“If the customer has partly paid the dues and settled a loan or a credit card then the status will reflect as "Settled" in the credit report. It is important to understand that though there will be no impact of the “settlement” flag on the customers CIBIL TransUnion Score, his credit history will show a “Settled” status in his CIBIL Report and there will be Days-Past-Due reflecting on the report since the payment on the loan has not been timely. Each bank has its own policy of viewing at a “Settled” status and will decide on the consumers future loan applications accordingly. Therefore it’s best to not ever get into a loan settlement,” pointed out Chandorkar. 
	 
	Exceeding or reaching the limit of your credit card 
	 
	“Spending more than the assigned limit on your credit card or spending close to the limit on the credit card may affect your credit score to some extent. Therefore ensure that you spend well within the limit on your credit card,” she noted.

Straigten up! You have a bad credit behavior if you are doing any
of these!

We have always stressed on how a good credit history is important for accessing <a href="http://www.businessinsider.in/4Tips-to-manage-your-financial-goals/articleshow/47468847.cms">financial</a> help. But if you still feel that applying for a loan is an easy job and you have all the documents in place, hold that thought for a moment. BI India now list down 5 reasons why you should access your <keyword id="2405124" type="UNKNOWN" weightage="20" keywordseo="Cibil-Report">CIBIL report</keyword> and <keyword id="728709" type="ORGANIZATION" weightage="20" keywordseo="CIBIL-TransUnion-Score">CIBIL TransUnion Score</keyword> before you apply for a loan. 
	 “Your <keyword id="6380215" type="ORGANIZATION" weightage="20" keywordseo="CIBIL">CIBIL</keyword> Report and <a href="http://www.businessinsider.in/Confused-about-your-credit-score-Know-how-your-CIBIL-TransUnionScore-is-calculated/articleshow/47785300.cms">CIBIL Transunion</a> Score provides a testimony of your financial discipline to banks and financial institutions for approval of your loan or credit card application. A healthy CIBIL Report and a high CIBIL TransUnion Score indicates that you are managing your loans and credit relationships well and are financially savvy,” says <keyword id="1801472" type="PERSON" weightage="20" keywordseo="Harshala-Chandorkar">Harshala Chandorkar</keyword>, senior vice president – Consumers Services and Communications at CIBIL. 
	 
	You are always ‘loan ready’ 
	 
	“Along with your income to debt ratio, your credit history as reflected in your <a href="http://www.businessinsider.in/Straigten-up-You-have-a-bad-credit-behavior-if-you-are-doing-anyof-these/articleshow/47617149.cms">CIBIL Report</a> is a vital parameter for the approval of your <a href="http://www.businessinsider.in/Dont-be-a-guarantor-unless-you-knowthese/articleshow/48097607.cms">loan </a>application. It is important to do your homework and assess your credit eligibility before applying for a loan. Along with calculating your income to debt ratio you should also be aware of your credit history and credit score. Therefore before applying for a loan or credit card you must access your CIBIL Report and CIBIL TransUnion Score and understand its components so that you do not face any unpleasant surprises in the form of loan rejection because of low CIBIL TransUnion Score,” says Chandorkar. 
	 
	Manage your accounts 
	 
	A CIBIL report helps you keep a tab on your loan and credit card accounts. “It is a useful tool to monitor performance on all your loans - be it loans that you have availed, guaranteed or co-applied. It also provides you a snapshot of your credit cards- the ones you own and the ones you may have provided to your spouse or children as add on credit card, she adds. 
	 
	Ensure correct information 
	 
	Accessing your CIBIL report on time will allow you verify if your credit history is accurate or if there is any discrepancies in you report. “If you find any discrepancies in the information on your report you can always get it corrected by approaching CIBIL through its online dispute resolution forum. CIBIL can also help you resolve any discrepancies or disputes on your credit report through the online dispute resolution process on our website,” notes Chandorkar. 
	 
	Credit Health Check Up 
	 
	“Just like your regular health check you must also run a financial health check up to be in control of your financial stability. Reviewing your CIBIL Report will provide you insights into your financial health with reference to your credit exposure- how much debt do you hold?, how have you being repaying your loan <a href="http://www.businessinsider.in/Knowhow-a-good-credit-score-can-help-you-avail-instant-finance-at-electronic-stores/articleshow/47277522.cms">EMIs</a> and credit card bills?, how many times have you applied for a loan or credit card? Do you have detrimental flags like “Settled”, “Written-Off” or “Suit Filed” against any of your loan accounts or credit cards?. This credit health checkup will help you take corrective and preventive measures in time for maintaining financial hygiene and a healthy credit report,” she suggests. 
	 
	Better negotiations 
	 
	Accessing your CIBIL report helps you in negotiating the terms and conditions with your lender. According to Chandorkar, banks and lenders now increasingly rely on CIBIL Report and CIBIL TransUnion Score to decide if the loan should be approved. “The consumer can use this powerful reputational collateral to his or her advantage. Accessing you CIBIL Report before applying for the loan may give you better negotiating power with the lending institution for availing the loan at better terms and conditions, if you have a high credit score and a healthy CIBIL Report,” she states.

Here's what accessing your CIBIL report can do for you!

Loans are an indispensable part of our lives. As we climb up the ladder, we realize that we are involuntarily tied-up with our banks in form of loans and EMIs. Be it our dream house or the latest car, loans seems to be the easiest way of funding our aspirations. However, it comes as a rude shock if our loan application is rejected by our bank that we have been so loyal to. But ever realized why does this happen? 
	 “Many people simply apply for loan without giving a second thought to how the lender might actually perceive their loan application. The <keyword id="2405124" type="UNKNOWN" weightage="20" keywordseo="Cibil-Report">CIBIL Report</keyword> has been widely used by loan providers to evaluate loan applications for over a decade now. However, only recently have people begun to realize, how crucial it is to be aware of and maintain their credit history,” says Harshala Chandorkar, senior vice president of consumer services and communication, CIBIL. 
	 
	She further adds that an applicant, before applying for a loan, must evaluate his capacity to repay the loan. “How many other loan payments do you have, and what impact do these payments have on your monthly income? Is your income sufficient to cover your contractual obligations, as well as those other day-to-day expenses?” notes Chandorkar. 
	 
	Chandorkar also advises that along with one’s own affordability, an applicant must also look at different banks for a better understanding of the different terms and conditions of the loans. “Check for the terms they are being offered and what suits you the best. While the interest rate is important, it may not vary too much between the banks but the customer service, Internet banking facilities and more may vary extensively. These are the things you have to live with for rest of the tenure of your loan. 
	 
	Similarly, an applicant before applying for a loan should also have a clear understanding of the interest rate being offered on the loan. “For instance what is the base rate and what is the mark up on same to arrive at the lending rate. Have a clear understanding on the interest rate calculation. It will affect your EMIs directly. Also, understand the loan tenure. We tend to go for the longest tenure as the EMIs look more affordable. While this is true, it also means that you end up paying more interest,” she says. 
	 It is important to remember that a bank always looks for both CIBIL report as well as <keyword id="728709" type="ORGANIZATION" weightage="20" keywordseo="CIBIL-TransUnion-Score">CIBIL TransUnion Score</keyword> before clearing a loan application. Harshala Chandorkar tells us some common mistakes that you must avoid lest it hampers your credit score: 
	 
	Late payments or <keyword id="6642053" type="UNKNOWN" weightage="20" keywordseo="Defaults">defaults</keyword> in the recent past 
	 
	The individual’s payment history has a significant impact on the CIBIL Transunion Score. Hence, if the individual has missed payments on any of his or her existing loans, over the last couple of years, the score is likely to be negatively affected because it indicates that the individual is having trouble servicing his or her existing obligations. 
	 
	High utilization of credit limits 
	 
	While the balances on the individual’s loans will only reduce over time as payments are made, he or she must be diligent about making timely payments on credit cards. While increased spending on the individual’s credit cards may not necessarily negatively affect his or her Score, an increase in the current balance on the card over time is an indication of an increased repayment burden and may negatively impact the Score. 
	 
	Higher percentage of credit cards or personal loans 
	 
	While a higher concentration of home loans or auto loans (commonly known as Secured Loans) are likely to be more favorable for the CIBIL Transunion Score, a large number of unsecured loans can do the reverse. Although unsecured loans offer easy access to finance, it's also by far the most expensive forms of credit. More the number of unsecured loans with high utilization, larger are the payments resulting from its high rate of interest. 
	 
	Being credit hungry 
	 
	If the individual has made many applications for loans, or have recently been sanctioned new credit facilities, a Credit Institution is likely to view the individual’s application with caution. This "Credit Hungry" behaviour indicates that debt burden is likely to, or has increased and the individual is less capable of honoring any additional debt, which is likely to negatively impact his CIBIL TransUnion Score.

Common Mistakes That Can Mess Up With Our CIBIL
Report

There is much more to your <keyword id="2405124" type="UNKNOWN" weightage="20" keywordseo="Cibil-Report">CIBIL report</keyword> apart from the score that it reflects. We might focus only on the <a href="http://www.businessinsider.in/searchresult.cms?query=cibil+score">CIBIL score</a> and know about its importance but a <a href="http://www.businessinsider.in/searchresult.cms?query=cibil+report">CIBIL report</a> has much more information. 
 
Here are some simple tips that can help you to get a better understanding of CIBIL report. 
 
CIBIL TransUnion Score: 
 
This is the first section of the report. An individual’s score ranges from 300-900 and lenders use this score to decide whether to offer a <a href="http://www.businessinsider.in/searchresult.cms?query=loans">loan</a> to the concerned person on not. Obviously, higher the score, higher are the chances of lenders accepting your application. This section also indicates the percentage of applicants that are sanctioned loans (in the last one year) based on the particular band that they fall under. 
 
Sometimes the score may not be between 300 and 900; do you what it can mean? 
 
NA or NH means that either you have no <keyword id="88181" type="UNKNOWN" weightage="20" keywordseo="credit-history">credit history</keyword> or are new to credit system. It also implies that you haven’t had any credit activity in the last few years or you have no credit exposure. This is not a bad indication. 
 
TIP: The information in this section indicates not only your <keyword id="2054234" type="UNKNOWN" weightage="20" keywordseo="CIBIL-Score">CIBIL score</keyword> but also the likelihood of your application being accepted. 
 
Personal / Contact/ Employment Information: 
 
This information is given under three separate heads. This is fairly simple; the personal information section contains information as provide by the lenders to CIBIL. Here the name, date of birth, PAN number, passport details, voter ID and driver license details are mentioned. Letter “e” mentioned against any detail indicates that the information has been provided by the lender. 
 
Contact information lists up to four addresses (permanent/temporary/office), email ID and phone numbers of the person as provided by the lenders. Employment information section has details about your employment and income at the time of applying for credit. So in case of two different loans this can be different. 
 
TIP: In this section, there is not much to understand except to make sure that the information mentioned is accurate. 
 
Account Information: 
 
This is by far the most important part of your Credit report. This contains information about all the open loans and credit cards that you have. Details about the lender, type of credit (home loan, auto loan, credit card etc), date when the account was opened, date of last payment, whether the account is held by an individual or jointly, amount of loan, amount of overdue (if any), total outstanding and a monthly payment record for last 36 months. A red band against the information indicates that the particular information is disputed. After a letter is received from the lender (clarifying about the situation), the information may or may not be removed depending on what the lender has to say. 
 
TIP: This section gives a brief summary of your open debt; go through it carefully to find out about any lapses that may have occurred on your or the lender’s part. Try and resolve the dispute ASAP. This section is useful for you also to get an accurate picture of your debt situation. 
 
Enquiries Information: 
 
Enquiry made by any financial institution into your credit score is listed under this head. Details such as name of financial institution, date, loan size and type of loan are mentioned here. This also impacts your final CIBIL Score. 
 
TIP: Only hard enquiries (those made by financial institutions) are mentioned here; enquiries made by the individual for his own score (soft enquiry) are not mentioned here. 
 
Meanwhile, below are few terms that can help you in understanding your credit report better. 
 
DPD: Days Past Due is an indicator of by how many days the payment is late in that month. More Than Standard (STD) or zero “000” is viewed negatively. 
 
CN: This is the Control Number mentioned at the top of the report and is useful if one wants to raise a dispute. 
 
Settlement Amount: If a loan or a credit card payment is disputed, the borrower and the lender may agree at an amount that will be paid by the borrower; the rest is written off by the lender. 
 
Written off Amount: When a loan amount is written off that means the lender has no hopes of recovering this amount from the borrower. Principal or total (principal plus interest) may be written off by the lender. 
 
(About the author: Rajiv Raj is the Director and Co-Founder of <a href="http://www.creditvidya.com/">www.creditvidya.com</a>.) 
 
(Image: Thinkstock)

Here’s how you can read your CIBIL report like a pro

<ul class="summary-list"><li>More US drivers agree to being monitored in exchange for lower insurance premiums.</li><li>Telematics is well on its way to becoming a norm in US auto insurance, with adoption growing in 2021.</li></ul>The news: Stung by higher auto insurance premiums, US drivers are increasingly shopping for usage-based coverage and consenting to having their driving monitored, <a href="https://discover.jdpa.com/hubfs/Files/Industry%20Campaigns/Insurance/2021INSQ4QuarterlyShoppingLISTReport_vJan11.pdf?__hstc=247542680.1e4f8e06583e45555e7470b8d5d693fa.1639510219972.1639754610871.1642073023058.4&amp;__hssc=247542680.2.1642073023058&amp;__hsfp=2234910243" target="_blank" rel="noopener">per</a> the J.D. Power Quarterly Loyalty Indicators and Shopping Trends Report for Q4 2021 on US auto insurance.Key findings:<ul><li>More US consumers are switching insurers because their premiums increased despite driving less.</li><li>They want to lower their rates through personalized auto risk programs.</li><li>In 2021, higher-risk consumers were more likely to actively shop around for auto insurance than their lower-risk counterparts—that wasn't the case during 2020.</li></ul>What's the context? Traditional, time-based insurance contracts often price quotes based on non-driving factors like your credit score and where you live.Lockdown measures during the pandemic led consumers to drive less, laying bare the inflexibility of <a href="https://content-na1.emarketer.com/uk-car-insurance-customers-are-paying-more-for-driving-less-highlighting-usage-based-insurtechs-potential-to-displace-traditional-insurers-2020-8" target="_blank" rel="noopener">traditional</a> coverage that doesn't typically adapt its premiums to changing habits.This pushed more policyholders to demand behavior-based pricing. It can offer lower premiums by analyzing auto usage and behavioral data to personalize mileage-based policies.The data comes from mileage reporting and telematic driver scoring from real-time tracking through mobile apps, diagnostic port plug-in devices, Bluetooth beacons, or built-in options like OnStar.Large US insurers like <a href="https://www.allstate.com/drive-wise/drivewise-app.aspx" target="_blank" rel="noopener">Allstate</a> use telematics data to introduce mechanisms for structured behavioral change—such as earning cash back on each trip—to reward and promote less risky behavior.Behind the numbers:<ul><li>Telematics adoption grew in 2021: 49% of consumers opted into a telematics program when it was offered, according to a survey from TransUnion, which partnered with J.D. Power on the report.</li><li><a href="https://content-na1.emarketer.com/more-than-two-thirds-of-insurance-customers-would-share-personal-data-exchange-lower-prices-and-while-iot-devices-help-insurers-unlock-" target="_blank" rel="noopener">Sixty-nine percent</a> of insurance customers in select global markets are now willing to share driving data with insurers if it means lower prices, compared with 50% in 2019.</li><li>We <a href="https://forecasts-na1.emarketer.com/5fac6af8b68aed01a4c7e08b/5fac6ae163ad660f1caa8c3d" target="_blank" rel="noopener">forecast</a> that 52.5 million US drivers will buy UBI coverage by 2023, up from 37 million this year.</li></ul>What this means: J.D. Power found that both price-conscious and quality-conscious customers are aware of and switching to personalized value programs. Telematics is well on its way to becoming a <a href="https://www.dig-in.com/opinion/insurance-telematics-past-present-and-future" target="_blank" rel="noopener">norm</a> in US auto insurance.That will likely increase the competitive pressure on midsize insurers—which have engaged with telematics at roughly one-third the rate of their larger counterparts, per Digital Insurance.Insurers may see premium revenues decrease due to policyholders' telematics and IoT usage. Those whose tech stacks are still works in progress may have a harder time compensating with the value-added telematics features that McKinsey <a href="https://www.mckinsey.com/industries/financial-services/our-insights/digital-ecosystems-for-insurers-opportunities-through-the-internet-of-things" target="_blank" rel="noopener">recommends</a> exploring, such as anti-fraud initiatives, assistance and service add-ons, and selling data to third parties.Want to read more stories like this one? Here's how you can gain access:<ol><li>Join other Insider Intelligence clients who receive Fintech forecasts, briefings, charts, and research reports to their inboxes each day. <a href="https://www.insiderintelligence.com/become-a-client/?IR=T&amp;itm_source=businessinsider&amp;itm_medium=content_marketing&amp;itm_campaign=briefing_post&amp;itm_content=bottom_bullets&amp;itm_term=enterprise_text_link-more-us-drivers-agree-to-being-monitored-in-for-lower-premiums">&gt;&gt; Become a Client</a></li><li>Explore related topics more in depth. <a href="https://store.businessinsider.com/collections/financial-services?IR=T&amp;itm_source=businessinsider&amp;itm_medium=content_marketing&amp;itm_campaign=briefing_post&amp;itm_content=bottom_bullets&amp;itm_term=store_text_link-more-us-drivers-agree-to-being-monitored-in-for-lower-premiums">&gt;&gt; Browse Our Coverage</a></li></ol>Current subscribers can access the entire Insider Intelligence content archive<a href="https://subscriptions.emarketer.com/"> here</a>.

Higher premiums send more US drivers out shopping for usage-based coverage

Krishna Kumar, a marketing executive based in Mumbai, had a harrowing time dealing with a local internet provider in 2008. He took a connection with 20 GB free usage for Rs. 650 a month. Even in the months he was out of town for work, he was charged extra. Kumar had indefinite fights with the company officials and refused pointblank to pay. Eventually he migrated to another city. A few years later, he was sent a legal notice by the company regarding the dues, summoning him to Mumbai court. These kinds of disputes over <keyword id="518657" type="UNKNOWN" weightage="20" keywordseo="utility-bills">utility bills</keyword> are not unheard of. But here is a bomb-shell. Credit bureaus are planning to add utility bills to credit score determinants. This is sure to evoke mixed reactions from people. While some are sure to welcome this move, others are apprehensive about prospective false disputes. Timely settlements of your utility bills like water bill, electricity bills etc. can soon become a deciding factor for approving your <keyword id="6360217" type="PERSON" weightage="20" keywordseo="Loan">loan</keyword> application because credit bureaus are planning to include this in individual credit sheets. Paying monthly utility bills for electricity, water, mobile phone, land phone and gas consumption not to mention apartment maintenance charges can be seen as a cumbersome task to many of us as it not only takes lot of time but also bites a huge chunk out of our income. Soon people will be forced to pay their utility bills on time for fear of getting poor credit scores and consequentially facing loan rejections. Many countries like the US and Canada already follow this system. Factors that determine your <keyword id="2054234" type="UNKNOWN" weightage="20" keywordseo="CIBIL-Score">CIBIL Score</keyword>: <ul><li>Timely repayment of loan EMI, credit card dues and any other big purchase EMI. </li> <li>Closing payments/loans well ahead. </li> <li>Having a healthy mix of credit (secured, unsecured and credit card loans). </li> <li>Keeping a healthy debt-to-income ratio (below 40 percent). </li></ul> When and how delayed utility bill payment will begin to hurt: TransUnion CIBIL, India’s leading credit bureau is seriously considering including utility bill payments along with loan and EMI repayments as a factor to calculate CIBIL Scores. If this is put into practice, all those who are flippant about paying the bills by due-date will be forced to rethink their priorities as it can bring down the score significantly. Banks are already meticulous when it comes to giving personal loans and they will have more reasons to reject your loan applications if you give them the chance. Many lenders also ask for the latest utility bill copy as residential proof as this is impossible to duplicate or manipulate. How to Change Bad Financial Habits Related To Utility Bill Payments: <ul><li>Set a Finance Alarm (Reminders) on your phone for various utility bills at least a week ahead. </li><li>Form a buddy/family system. Entrust a member to remember/pay. </li><li>Opt for ECS facility or authorize auto-debit for your monthly bills within 2-3 days of your salary date. This way, you can plan your monthly budget more easily. </li></ul> (The article has been authored by Aditya Kumar, Founder &amp; CEO, Qbera.com)

Here’s how utility bills play an important role while applying for a loan

(Eds: Correcting headline) Mumbai, Jun 29 () Nearly a fifth of the 45 lakh small businesses identified by the government to benefit from a credit guarantee scheme have low credit rankings, and banks should prioritise the remaining 80 per cent while extending loans under the Rs 3 lakh crore package, a study by Transunion Cibil said on Monday. The Guaranteed Emergency Credit Line (GECL) facility is applicable to all MSME (micro, small and medium enterprises) borrowers with industry-wide aggregate credit exposure of up to Rs 25 crore and industry-wide delinquency less than or equal to 60 days as of February 29, 2020. The government is targeting to ensure that the MSME sector gets fresh credit of over Rs 3 lakh crore by October 2020 through the scheme as against the Rs 2.8 lakh crore achieved in 2019-20. The Rs 3 lakh crore package is a significant part of the Rs 20 lakh crore COVID-19 stimulus announced by the government. As per the government, there are 45 lakh MSMEs in the country who have been identified as eligible for the scheme. The largest difficulty seems to be in the category classified as "medium", with 38 per cent of the companies marked out as "sub-prime" borrowers, while the lowest risk seems to be with the "micro" segment which has only 18 per cent of the borrowers in the same segment, it said. Eligible MSMEs can borrow up to 20 per cent of their aggregate credit exposure. The loans have four-year tenor with the first 12 months of principal covered under moratorium to further assist MSMEs benefitting from the scheme, a statement from Transunion Cibil said. The credit information company relied on its MSME ranking solution and went into results of it as of February 29 to identify the companies which should be prioritised by banks. While the banks will not lose money if any of the low ranked companies defaults, the risks from a credit management perspective are high, it said. The analysis revealed that 81 per cent belong to what is considered the structurally strong section of CIBIL Rank - CMR-6 or less, it said, adding that the ranking is an algorithm-based solution which predicts the probability of an MSME becoming a non-performing asset (NPA) in the next 12 months. "The ECLGS package is well structured scheme which not only provides the much needed access to funds for deserving MSMEs but also ensures long term stability of the portfolio quality of lending institutions," company's managing director and chief executive Rajesh Kumar said. He, however, seemed to be warning against complacency. "In the rapidly changing market conditions, the dynamics of MSME businesses are evolving every day and therefore it's important to not only rely on original structural strength of MSME but to also regularly monitor borrower's behaviour," he said. The company said finding and funding the good MSMEs is critical to the recovery of the Indian economy. AA ANU RAM

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