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We have always talked about importance of having a good <a href="http://www.businessinsider.in/searchresult.cms?query=cibil+score">CIBIL score</a> and also how it can impact you. But how many of you know that a good <keyword id="2054234" type="UNKNOWN" weightage="20" keywordseo="CIBIL-Score">CIBIL score</keyword> means it should be 750 and above. 
 
Your CIBIL score is a measure of your <a href="http://www.businessinsider.in/searchresult.cms?query=credit+score">credit worthiness</a>. In other words, banks look at your CIBIL score to find out how you have handled your finances and whether you have behaved responsibly with the credit you have already availed of in the past. 
 
And if you are confused as to what makes your CIBIL score and impacts it, here are five things: 
 
Making timely payments 
One hack that can pump your CIBIL score is, make all your payments on time. This is applicable to all the credit you already have. This includes credit card outstandings and EMIs on loans. Also make sure you make other payments like insurance premiums on time. Although it does not fall under the credit bracket but even a single late payment on a home <a href="http://www.businessinsider.in/searchresult.cms?query=loans">loan</a> or an unpaid outstanding on your credit card will bring your CIBIL score tumbling down and be a blemish on your CIBIL report. 
 
Total credit availed 
Credit is something that is easily available today. You may have two or three credit cards that you are using simultaneously, along with a home or a vehicle loan. While you are particular about repaying EMIs, you think its okay to pile on the debt on your credit card, because you are far from your credit limit. If you are under any such impression, stop right there! The amount you owe to your lenders makes a large impact on your credit score. The closer you are to your credit limit, the worse its gets! Ideally you should not be using more than 30% of your total credit limit at any given time. 
 
For how long you have had credit ‘<keyword id="88181" type="UNKNOWN" weightage="20" keywordseo="credit-history">Credit history</keyword>’, as it is called in financial parlance, has a huge impact on your CIBIL score. If you have availed credit for a long time and have serviced it well, it certainly fetches you brownie points to increase your CIBIL score. A good credit history gives a prospective lender the confidence to lend to you. 
 
Too much credit in a short period of time 
If you apply for too many credit cards or loans in less time-frame, it sets the alarm bells ringing for any bank. As for your CIBIL score, it inches lower each time you apply for a new loan. Everytime you apply for a new credit card or loan, there is a ‘tough enquiry’ made on your CIBIL score and CIBIL report, bringing down the score a few notches lower each time. 
 
Good and bad debt 
Believe it or not, the kind of debt you avail, impacts your CIBIL score. While home, vehicle and student loans fall under the category of good <a href="http://www.businessinsider.in/searchresult.cms?query=debt">debt</a> because they are ‘secured’ in nature, ‘unsecured’ loans such as too many credit cards or personal loans spell trouble and bring your CIBIL score down. 
 
And you don’t have to worry about trivial issues that do not impact your CIBIL score. So, here are four things that really do not matter when it comes to CIBIL score. 
 
Age 
Your CIBIL report does carry your date of birth, but it does not play any role in the computation of your score. 
 
Address 
Once again, your address is recorded, merely as a part of your personal information, but does not have any impact on your CIBIL score. 
 
Your bank account and investments It is a good practice to keep your finances in order, but your <keyword id="25450" type="UNKNOWN" weightage="20" keywordseo="savings">savings</keyword> and investments do not feature as a part of your CIBIL score. A credit score, as the name explains, merely has to do with credit. 
 
The <keyword id="37018" type="UNKNOWN" weightage="20" keywordseo="interest-rate">interest rate</keyword> on loans 
It’s great if you have managed to get a loan at a lower rate, but even if you have availed of a loan at a higher rate of interest, you have nothing to worry, as long as you are servicing it on time. The rate of interest does not have any impact on your CIBIL score. 
 
(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 are 5 things that determine your CIBIL score

You have been told time and again that your <keyword id="2054234" type="UNKNOWN" weightage="20" keywordseo="CIBIL-Score">CIBIL score</keyword> should be above 750, if you want to access timely credit. But is all this hype about keeping CIBIL score high creating pressure on you, so much so that you are living in fear due to your CIBIL score? If yes, this is just what you need to read today. 
 You often hear that your loan application may get rejected if you fall short on your CIBIL score. As a result, you are so scared, that despite knowing that you must request for your CIBIL score at least once a year, you keep postponing it. You postpone it because you are scared to find out what you may see and what impact it may have on your plans to avail of <keyword id="6354730" type="UNKNOWN" weightage="20" keywordseo="Home-loan">home loan</keyword> or any other credit. 
 
If you are nodding in agreement, here are few things to do to dispel your fears about your CIBIL score. 
 
Catch the bull by its horns 
 
Yes, you heard that right! You need to face your fears, by pulling out your CIBIL report. It is a fairly easy process and you will receive your report right away on your email after you have gone through the steps as mentioned on the CIBIL website and paid the fee required to access your report. Once that is done, you need to take a close look at your CIBIL score. Needless to say, if it is close to 900 mark you have little to worry about. If it is below the satisfactory level of 750, do not panic! You need to keep your head above your shoulders and find out exactly what has been pulling down your CIBIL score. 
 
Chalk out a plan 
 
If your CIBIL score is low because you have not made regular repayments on your credit card or some other loan, fix that immediately. Examine your finances and see where you can cut corners. If possible, try and liquidate some assets to repay your credit card debt first. Credit card debt is the most expensive form of debt that you are servicing and the rate of interest you are paying on it can be as high as 38-40%. Once you have repaid this debt, ensure that you do not repeat the mistake. 
 
Raise a dispute, if necessary 
 
If your CIBIL score is low even after you have maintained an impeccable repayment track record, check if there is something amiss in your CIBIL report. For instance, you may have closed a loan account from your end successfully, but the bank in question has not forwarded the relevant details to CIBIL. As a result, your CIBIL score is taking a beating for no fault of yours. In such cases, raise a dispute with CIBIL right away. CIBIL has an efficient grievance redressal mechanism that will resolve your issue after it has verified the relevant details with the lender in question. Once your dispute has been resolved, your score will be restored to normal within a short while. 
 
Relax! It’s just a number 
 
At the end of the day, your CIBIL score is a yardstick of your financial health. Of course, you must make an attempt to keep it high, but don’t revolve your life around it. Instead try and build up healthy financial habits. First things first, draw up a financial plan, save for emergencies, buy adequate insurance cover and invest your surplus. As far as credit is concerned, don’t reach for the moon right away. Start small with a credit card and make purchases that you can repay in a single billing cycle. 
 
Also inculcate other good credit habits such as keeping your utilization levels under 30%. If you follow these good financial habits, your 
CIBIL score will automatically get a boost. The moot point we are trying to make here is that your CIBIL score is a reflection of your financial habits, so work on getting them right first. 
 
(Rajiv Raj is the Director and Co-Founder of <a href="http://www.creditvidya.com/">www.creditvidya.com</a>) 
 
(Image: ThinkStock)

Dispel all your fears due to CIBIL score. Here’s how

Ever wondered how you can afford that 5 star air conditioner or that expensive washing machine in the electronics store? Well, you may have thought of taking a loan from friend or a family member. But did you know a good credit score could help you avail a loan at an electronics store instantly. 
	 “It is important to understand that a good <keyword id="6380215" type="ORGANIZATION" weightage="20" keywordseo="CIBIL">CIBIL</keyword> Report and <keyword id="728709" type="ORGANIZATION" weightage="20" keywordseo="CIBIL-TransUnion-Score">CIBIL TransUnion Score</keyword> is very critical for having access to finance when you need it. With availability of instant credit information and score from CIBIL, finance companies are able to assess an applicant’s credit discipline and are able to sanction the loan immediately. A good CIBIL report and high CIBIL TransUnion Score can be your gateway to building a prosperous future,” said Harshala Chandorkar, senior vice president, Consumer Services &amp; Communications, CIBIL. 
	 
	She tells BI India some basic tips that will help maintain a good CIBIL TransUnion Score and will ensure easy access to finances whenever required. 
	 
	Keep track of EMIs and credit cards 
	 
	“Keep a regular check on all the loans and credit cards and ensure to make payments on them before the due date month-on-month,” suggested Chandorkar. 
	 
	Set payment alerts 
	 
	She also advises that in order to better manage payments of credit card bills, one should set up an alerts that can constantly remind you of the dues. 
	 
	Guaranteed loans: 
	 
	Its always best to keep track of your guaranteed loans and make timely payments. “The guarantors CIBIL TransUnion Score gets impacted if there is a delinquency or default on the loan repayments by the principal borrower,” she said. 
	 
	Review CIBIL Report and CIBIL Transunion Score 
	 
	Before applying for any loan, credit card or finance for electronic goods ensure to check your CIBIL Report and CIBIL TransUnion Score. This practice will help you avoid any unpleasant circumstances in the form of loan rejection. You can always work towards improving your credit history and CIBIL TransUnion Score in case it is low and apply for loans or finance opportunities once it improves.

Know
how a good credit score can help you avail instant finance at electronic stores

We have talked about how <keyword id="6380215" type="ORGANIZATION" weightage="20" keywordseo="CIBIL">CIBIL</keyword>’s TransUnion score can make or break your financial viability while applying for a <keyword id="6360217" type="PERSON" weightage="20" keywordseo="Loan">loan</keyword>. But ever wondered how is your credit score calculated? 
	 
	According to Harshala Chandorkar, senior vice president- consumer services and communication, CIBIL, while preparing the credit score, emphasis is laid on three major pointers—past financial performance, credit exposure and credit type and duration. 
	 “While calculating a person’s <keyword id="728709" type="ORGANIZATION" weightage="20" keywordseo="CIBIL-TransUnion-Score">CIBIL TransUnion Score</keyword>, 30% emphasis is given on the past performance while 25% each is laid on credit exposure and credit type and duration. Remaining 20% comprises of other factors,” said Chandorkar. Other factors include the credit utilization, recent credit behavior which comprises the remaining 20% of the score. 
	 
	So, how exactly is this CIBIL TransUnion Score calculated? One must remember that an individual with a credit score of 750 and above are generally considered financially healthy by credit institutions. 
	 
	“Your CIBIL TransUnion Score is calculated based on the information in the “Accounts” and “Enquiry” section of your CIBIL Report. The score is calculated based on how much credit is the consumer using or how many accounts are past due and by how many days?” she explained. 
	 
	In terms of the ‘trade attributes’, CIBIL takes into account whether the individual has the right mix of credit. For instance, if a consumer relies heavily on credit cards, his score will be comparatively lower than someone who uses credit cards up to a certain limit. 
	 
	Chandorkar noted that these factors are taken into consideration while preparing an individual’s credit report as these factors determine the person’s chances of defaulting on a loan if he gets one. 
	 
	A strong past credit performance strengthens an individual’s financial credibility while the type of loan taken by an individual—secured or unsecured loan helps a bank determine the risks involved in extending a loan to the person. 
	 
	It should be noted that CIBIL Report and CIBIL TransUnion Score are not pointers to whether your loan application gets approved but also plays a pivotal role in laying down the terms and conditions on which you can avail the loan. 
	 
	“The higher the credit score, the better your chances of availing the loan faster and on favorable terms. It is advisable to check your CIBIL Report and CIBIL TransUnion Score before applying for a loan. Timely payment of EMIs is most important for maintaining a good credit history and a healthy credit score,” reiterated Chandorkar.

Confused about your credit score? Know how your CIBIL TransUnion
Score is calculated!

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!

Often, while applying for a loan, we are clueless about what our <keyword id="6354680" type="ORGANIZATION" weightage="20" keywordseo="credit">credit</keyword> history is all about. The typical jargons used for credit score such as <keyword id="6380215" type="ORGANIZATION" weightage="20" keywordseo="CIBIL">CIBIL</keyword> report and <keyword id="728709" type="ORGANIZATION" weightage="20" keywordseo="CIBIL-TransUnion-Score">CIBIL TransUnion Score</keyword> unnerve us and we often end up feeling confused by the end of the loan application. But hey, don't worry! Harshala Chandorkar, senior vice president, Consumer Services and Communications, CIBIL told BI India some of the common myths about credit score. 
	 
	CIBIL decides the cut-off score for credit institutions 
	 
	CIBIL does not recommend any cut-off score to banks to help them arrive at any lending decisions. Each bank has a different risk appetite and they decide what the cut off score should be for their bank. What may be a good credit score for Bank A may or may not be a good credit score for Bank B. 
	 
	In addition to a good credit score credit institutions may also consider other critical factors like your income to debt ratio, your residential status, professional qualifications etc. while deciding on your loan application. Therefore along with a good credit score you must also ensure that all these factors are well placed before applying for the loan. 
	 
	Banks and credit institutions can access an individual’s CIBIL Report 
	 
	Consumers can directly access their own CIBIL Report and CIBIL Transunion Score on CIBIL’s website in 3 easy steps. A user will have to fill up an online form and make a payment through net banking, debit, credit or cash card. The final step would require online authentication based on the user’s credit history. 
	 
	If you are successfully authenticated, your CIBIL Report and CIBIL TransUnion Score will appear on the screen and you shall also receive it via e-mail. If you fail the authentication then you can upload a scanned copy of your identity proof and address proof on CIBIL’s website. The report will then get delivered to you via express delivery. 
	 
	A poor score will haunt me forever. 
	 
	An individual with a low credit score can gradually work towards improving it. Credit report and credit scores are dynamic and change according to the credit behavior of the borrower. Once the borrower has paid all the unpaid EMIs and has again started regularly paying the installments on the loan, his credit report will improve and reflect the regular payments accordingly. The credit score may also improve gradually.

All that you should know about your CIBIL score

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

If you are planning to buy property now or in the near future, you know by now that maintaining a good <keyword id="2054234" type="UNKNOWN" weightage="20" keywordseo="CIBIL-Score">CIBIL score</keyword> is of utmost importance. With RBI having made CIBIL score assessment mandatory, most commercial banks in India are unlikely to consider people with a CIBIL score below 750 (out of 900) for a <keyword id="6354730" type="UNKNOWN" weightage="20" keywordseo="Home-loan">home loan</keyword>. 
 
In case your CIBIL score is unsatisfactory, here are five things to do if things are not in your favor for a home loan application. 
 
Check for errors in the report 
 
Even after maintaining a good credit behavior you find that your CIBIL score is low, check your CIBIL report for errors. Sometimes discrepancies can appear on your CIBIL report for no fault of yours. There can be wrong information about an overdue loan that has been closed from your end, or a mix up of identity that may have occurred when the bank was passing on your credit information to CIBIL. If you spot such an error, you need to approach CIBIL with a request for the rectification of the same. This is called raising a “dispute request”. 
 
CIBIL will then route your request to the Dispute Resolution Department. This team will then analyze the error and resolve it with the help of the relevant bank, which has given the said information to CIBIL. Once the issue is resolved, the updated information is put up on your credit report in approximately a month’s time. After the dispute resolution process is complete, you can make your home loan application. 
 
Make an infallible repayment plan 
 
If there are no errors in your CIBIL report and your credit score is low due to bad payment history, you have no choice but to rectify it. Here’s what you can do to get your CIBIL score back in order. 
 
· Start by tackling the costliest debt. 
· If it is credit card debt which is your pain point, clear out all your dues at once. 
· If need be consider liquidating some other assets to pay off your credit card dues 
· Don’t cancel your credit card. Keep usage on hold for a while, and ensure that the utilization is under 20%. 
· Make bill payments on credit cards well before the due date. 
 
You may have to cut down on some expenses and get into strict financial discipline to achieve this goal, but unless you do it, there is no way you can improve your CIBIL score. 
 
Consider co-applying with your spouse or parent 
 
If you have to take a home loan and there is no choice, despite a poor credit score, you can consider co-applying with your spouse if she has a good credit score. You may also consider taking a loan with your father if he is still working and has an impeccable credit history. 
 
Put down a higher down payment 
 
If you have set your heart on a property and are not willing to let go of it no matter what, you can also consider putting a higher down payment of more than 20% of the purchase price. Your bank may be willing it lend if you show some credibility on that front but may still offer you a loan that may be a higher rate of interest than the prevailing rates in the markets. 
 
Approach a smaller bank 
 The largest commercial banks may not be willing to give you a home loan with a <keyword id="3255932" type="UNKNOWN" weightage="20" keywordseo="poor-CIBIL-score">poor CIBIL score</keyword>, but there are regional rural banks, co-operative banks or even family banks that may still be willing to give you a home loan with a poor CIBIL score. Of course the interest rates may be higher in such banks and the paperwork and application process may be much more elaborate, but you may just able to get a loan out of such banks, even with an unflattering CIBIL score. 
 
Stay on rent a little while longer 
 It’s great to dream about having your own home, but there are literally a million expenses you have to think about when you actually go about buying one. Taking on a <keyword id="6500467" type="ORGANIZATION" weightage="20" keywordseo="mortgage">mortgage</keyword> with a poor credit score will escalate your costs further. Considering all of this, it may make better sense for you to stay on rent for a little while longer and save up a little more for your own home. You can concentrate on improving your credit score in the meanwhile. 
 
A poor CIBIL score just before you apply for a mortgage can indeed be troublesome, but you need not lament about it because it is not something that will stick to you forever. All you have to do is get into a strict financial regimen and get your credit history back on track in order to get your CIBIL score in order before you make a fresh application for a mortgage. 
 
 
(Rajiv Raj is the Director and Co-Founder of www.creditvidya.com) 
 
(Image: ThinkStock)

Six hacks to tackle low CIBIL score before making a home loan application

Your <keyword id="2054234" type="UNKNOWN" weightage="20" keywordseo="CIBIL-Score">CIBIL score</keyword> is a measure of your financial health. A good <keyword id="2405124" type="UNKNOWN" weightage="20" keywordseo="Cibil-Report">CIBIL report</keyword> and CIBIL score of 750 and above can help you get easy access to <keyword id="6354680" type="ORGANIZATION" weightage="20" keywordseo="credit">credit</keyword>. But did you ever wonder how the CIBIL score is calculated, or what are the factors that may take it downhill? Here are six things that you must know about CIBIL. 
 
How is your CIBIL score calculated? 
First, you need to know the components of the CIBIL score and the weightage they carry. 
· The pattern you follow in paying off your credit card and loan EMIs has the highest weightage of 35% and thus is the most important factor impacting your CIBIL score. 
· Next comes the “credit utilisation” that carries a weightage of 30%. Credit utilisation ratio is arrived at by calculating the balance outstanding on your existing cards as a percentage of the total credit limit on all your cards. 
· The third factor carrying a weightage of 15% is the “length of credit” or how long have you been servicing debt. 
· The number of “hard inquiries” on your CIBIL report has a 10% weightage on your CIBIL score. Every time you apply for a new loan or a credit card, it gets registered in CIBIL as a hard inquiry and shaves off a few points from your CIBIL score. 
· Lastly bearing a 10% weightage on your CIBIL score is the “mix of credit”. A healthy mix of secured and unsecured credit, will have a positive bearing on your CIBIL score. 
 
Now that you know what goes into the calculation of your CIBIL score, here a few mistakes you need to avoid to keep your CIBIL score intact. 
 
Making late payments It doesn’t matter how many <keyword id="6387037" type="UNKNOWN" weightage="20" keywordseo="credit-cards">credit cards</keyword> you own, but if you develop a habit of not paying the total outstanding amount within the billing cycle, you may be heading towards a disaster. Ensure that you spend judiciously and make all credit card repayments on time. The same holds true for loans, missing even one repayment can bring your CIBIL score down substantially. 
 
Exceeding credit utilisation above 30% 
Having a higher limit on your credit card, doesn’t mean that you have to use it completely. This ways, you’ll be inviting an overwhelming debt trap, as a higher credit utilisation means that more points being knocked off your CIBIL score. Therefore, keep a conscious check to see that your credit utilisation remains under 30% at all times. 
 
Closing old credit cards Do not commit the mistake of closing a credit card that was given to you by your parents once you are proficient enough to own a bunch of cards yourself. The reason being that if the card carries you name, it means that CIBIL has been recording your <keyword id="2490224" type="UNKNOWN" weightage="20" keywordseo="repayment-history">repayment history</keyword> (assuming that your Mom or Dad have been footing the bill for the same). You simply need to ensure that you have cleared the balances as this will help you gain brownie points for maintaining good credit history. 
 
Appearing credit hungry 
We are often credit card issuers and money lender to avail easy credit, but one should try to escape as much as possible unless you are in dire need of it. Applying for too many credit cards or loans will make you appear credit hungry and a considerable number of enquiries on your CIBIL report will bring your CIBIL score down. 
 
Not having the right credit mix If you are thinking that you are better off not availing credit at all, you are wrong. In fact, it makes a lender wary because he can’t access your credit history to asses you. On the other hand, what adds on to your CIBIL score is having a good mix of credit such as a home loan, car loan, a <keyword id="180660" type="UNKNOWN" weightage="20" keywordseo="personal-loan">personal loan</keyword>, etc. along with a maximum of two or three credit cards. Remember, the crux of maintaining a good CIBIL score is to use credit responsibly. If you are aware of your spending habits and are making timely repayments, you have little to worry about! 
 
(Image: Thinkstock) 
 

(About the author: Rajiv Raj is the director and co-founder of <a href="http://www.creditvidya.com/">www.creditvidya.com</a>)

6 things about CIBIL every young adult should know

Sachin Khare, a resident of Mumbai, recently saw an advertisement for a 3 BHK apartment in Mumbai’s upcoming suburb. The apartment was all Sachin had ever dreamt of- plush locality, modern amenities and close to his place of work and most importantly fitting his budget. Sachin, an MBA with honours from a reputed management school was a topper of his class and got a job at one of the leading technology company in Mumbai. Having started with humble beginnings from Satara in Maharashtra, a home in Mumbai was Sachin’ s dream come true. 
	 However, despite his salary and job credentials, to Sachin’ s astonishment, his loan application got rejected basis his <keyword id="6380215" type="ORGANIZATION" weightage="20" keywordseo="CIBIL">CIBIL</keyword> Report and low <keyword id="2796743" type="UNKNOWN" weightage="20" keywordseo="CIBIL-TransUnion">CIBIL TransUnion</keyword> Score. A distraught Sachin couldn’t fathom the reasons behind the rejection and at first thought it could be a mistake due to his name being a common one. On accessing his CIBIL TransUnion Score and report from CIBIL, Sachin realised that his score was low as he had not paid the EMI’s on the <keyword id="6360098" type="UNKNOWN" weightage="20" keywordseo="Education-loan">education loan</keyword> he had taken for completing his MBA course. It then dawned on him that in his aim to own his dream house and save money for it, he had completely neglected paying his education loan, thereby costing him his dream of owning a home in Mumbai. 
	 
	Like any other loan, it is vital to know that an education loan is a credit facility provided to help one pursue his/her higher education. Like any other form of credit, education loans have to be repaid once one completes his/ her course and gains employment. Also like any other loans and credit cards, education loans are also reported to the CIBIL and get reflected in the borrower’s CIBIL Report. 
	 
	Repayment of an education loan generally starts within six months of the student taking up a job or one year after the course ends, whichever is prior. An education loan default occurs when the borrower fails to repay the education loan EMI’s. Defaults on repayments of education loans will reflect in the borrower’s CIBIL Report and negatively impact his/her CIBIL TransUnion Score and hence like in the case of Sachin, if one defaults on an education loan it could impact the chances of getting a loan for many more important milestones in the future like the dream home or the car he/she aspires. 
	 
	Also in more developed economies, an individual’s CIBIL Report and CIBIL Transunion Score is a critical reputational collateral and is used for multiple purposes by various institutions. Employers review it before recruiting a new employee; landlords require it before renting out an accommodation and of course telecom providers check an applicant’s credit history before assigning limits. 
	 
	Duly paying your education loan installments on time, each month, is the best thing that could be done to maintain a good CIBIL TransUnion Score. Nevertheless, if you find it difficult to re-pay your education loans, consider an option of negotiation. Banks are open to negotiation. Request the banker to increase your loan repayment term and settle for a lower EMI. This may help reduce your loan burden significantly. 
	It is never too early to start thinking about your financial future. All these tips will pay off, and definitely help you avoid hurting your CIBIL TransUnion Score and CIBIL Report and thus safeguarding your dreams. 
	 
	About the author: This article is written by Harshala Chandorkar, senior vice president, Consumer Services and Communications at CIBIL

Know
how education loan can mess up your credit score!

It isn’t rocket science to know that you can buy expensive electronics stores by taking instant <keyword id="6360217" type="PERSON" weightage="20" keywordseo="Loan">loan</keyword>s. However, not everyone can get a loan instantly. There are a few things that you need to do in order to buy those fancy electronics through EMIs. BI India lists down those few important things to do before you apply for a loan at the electronics store. 
	 
	Keep track of EMIs and credit cards 
	 “Keep a regular check on all the loans and credit cards and ensure to make payments on them before the due date month-on-month,” suggested Harshala Chandorkar, COO, <keyword id="6380215" type="ORGANIZATION" weightage="20" keywordseo="CIBIL">CIBIL</keyword>. 
	 
	Set payment alerts 
	 
	She also advises that in order to better manage payments of credit card bills, one should set up an alerts that can constantly remind you of the dues. 
	 
	Guaranteed loans: 
	 Its always best to keep track of your guaranteed loans and make timely payments. “The guarantors <keyword id="2796743" type="UNKNOWN" weightage="20" keywordseo="CIBIL-TransUnion">CIBIL TransUnion</keyword> Score gets impacted if there is a delinquency or default on the loan repayments by the principal borrower,” she said. 
	 
	Review CIBIL Report and CIBIL Transunion Score 
	 
	Before applying for any loan, credit card or finance for electronic goods ensure to check your CIBIL Report and CIBIL TransUnion Score. This practice will help you avoid any unpleasant circumstances in the form of loan rejection. You can always work towards improving your credit history and CIBIL TransUnion Score in case it is low and apply for loans or finance opportunities once it improves.

Now you can get easy loans at an electronics store if you follow these tips

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!

Jairam Shetty, a General Manager with a leading FMCG company has been planning his retirement for a while. Having saved a sizeable amount for his post retirement plans, Jairam along with his wife Asha, were looking at investing in a holiday home in Palakkad in Kerala. 
	 
	A highly disciplined man, Jairam ensured that his finances were in order and his bills duly paid on time. He only used his corporate credit card for official expenses and almost nver used his personal credit card. He did however give his daughter, a B-school student residing at a hostel in Pune, an add-on card for having access to finance in case of emergency. 
	 Being the disciplined man that he was, Jairam made it a point to regularly pay all his utility bills, <keyword id="6360217" type="PERSON" weightage="20" keywordseo="Loan">loan</keyword> EMIs and corporate credit card bills month on month before the due date. However as his daughter did not use the add on credit card during the first few months of her stay at the hostel, Jairam assumed that his daughter may not use this card and did not bother to keep a tab on its bills. 
	 As time flew, Jairam forgot about the add-on card given to his daughter and was all set to purchase his new holiday home in Palakkad. As a practice, Jairam accessed his <keyword id="6380215" type="ORGANIZATION" weightage="20" keywordseo="CIBIL">CIBIL</keyword> Report and <keyword id="728709" type="ORGANIZATION" weightage="20" keywordseo="CIBIL-TransUnion-Score">CIBIL TransUnion Score</keyword> to check his financial health and credit history before applying for a loan for this holiday home. Having acquired his report, he realized that his CIBIL TransUnion Score had dipped below 700 due to non-payment of dues accrued in the last couple of months on his credit card. On reviewing his credit report diligently, Jairam realized that these missed payments were on the add-on credit card he had given to his daughter a year back. 
	 
	A man well versed with banking and financial nitty-gritties, Jairam knew that he will now have to forestall his holiday home buying plans till his credit score improves and he is able to get a loan. But the first thing he did after this revelation was to talk to his daughter and explain to her the critical need of using credit card wisely and paying credit card and loan dues on time. Jairam also organized a guest lecture at his daughter’s B-School by one of his banker friends on CIBIL TransUnion Score and need for financial discipline for a prosperous future. 
	 
	It is imperative to know that the usage and payment pattern of add-on credit card given to spouse or children is captured in the principal card holders credit report and will affect his/her CIBIL TransUnion Score directly. An add-on card is an additional card which you can apply for against your primary credit card and will have all the features applicable on your primary credit card. If you are going to give an add-on card to your dependent spouse or children you need to make sure that he / she uses the credit card facilities prudently and ensure timely payments of the credit card dues. Therefore it is very important for the primary credit card holder to educate the user of an add-on credit card about using the credit card wisely. Remember that add-on cards mostly do not get a separate credit limit, it shares the credit limit on the principal holder’s credit card. Hence if your dependent spends Rs. 20000 on his/her add-on card, your collective limit comes down by Rs 20000. 
	 
	Here are some basic guidelines on managing add-on credit cards for ensuring a healthy credit report and score: 
	 
	1) Educate your dependent spouse or children on the responsibility and the terms and conditions of the add on credit card before giving it to them 
	 
	2) Mutually decide and agree to monthly spending cap on the add on credit card 
	 
	3) Monitor the spending on the add on credit card and ensure that it is always within the agreed cap 
	 
	4) Set all credit transactions alerts to one mobile number / email ID. So, that you have a clear understanding of the usage of your all add-on credit cards. 
	 
	5) Review your CIBIL Report and CIBIL TransUnion Score regularly to keep a track of all your credit obligations and your credit score 
	 
	Jairam, however was wise that he checked his CIBIL TransUnion Score in advance and did not have to face the embarrassment of loan rejection. Having been the disciplined man himself, he managed to gradually build back his CIBIL TransUnion Score and get the loan for his holiday home. 
	 
	About the author: The article is written by Harshala Chandorkar, senior vice president, Consumer Services and Communications, CIBIL

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