Home is the dream of all human beings and money is the necessity to purchase it. All human beings perform their karmas to earn money for their livelihoods fulfilling their basic needs of food clothing and shelter, which are now overpowered & overshadowed with the esteem & luxury needs. A brand attire with a brand walk wearing branded shoes, rayban sunglasses, accessories, holding I-phone and walking out of a rich four wheeler car, hmmm, sounds like describing the actor in James bond series, well is understood as an esteem class of standard. And unfortunately all, these days are chasing the rat race aspiring to be a Bond someday.
Every common man dreams to be rich. And so does few among many with efforts and brains excels & wins to be titled as rich. Oh, sounds like narrating a movie script elaborating on the background of its lead character. Well it was important to explain this gist of money power mentality to ensure you understand well the character of Mr. Baburao, who recently approached us for his requirement of Home Loan In Mumbai. He typically resembles to Paresh Rawal’s funny character of Baburao in the famous hindicomedy film of hera-pheri. No doubt Mr. Baburao was doing well in his business and had good business turnover and profits but he had a poor CIBIL scores and surprisingly he wasn’t aware of the term CIBIL and CIBIL scores, though being classified among the class of good money/income earners.
Thus simply being money rich is not enough if you do not have knowledge and education on the aspects of vital importance which affects you. Mr. Baburao’s CIBIL was low enough for him to apply for housing loan in Mumbai because of many delayed payments remarks on his credit report. He made countless baseless arguments with us owing to the word “Delayed” emphasizing – repayment was still made towards the loan every month with late payments charges. Likewise, there are many Mr. Baburaos in our society who fails to understand the importance of timely repayments and for these Baburaos who are unfamiliar with its impact on CIBIL and the importance of CIBIL & its scores, following are the important things to remember in CIBIL.
Understanding CIBIL As A Layman
CIBIL is the authority that provides the credit ratings to you which is known as CIBIL Score. Full form for CIBIL is “Credit Information Bureau of India”. It keeps track of your each credit transaction and maintains your credit records. While it is determined by the several factors such as repayment history, outstanding loan amounts, number of loans, types of loan, credit inquiries, guarantors on the loan, etc. following is it’s precise overview:
1) Do not bounce your EMI even if the EMI amount is as small as below Rs 1000. Make timely repayments of all you EMIs. Maintain sufficient balance in your account for smooth repayments of your EMIs.
2) Avoid making late payments and clear your misconception – any late payment means an EMI bounce which is viewed negatively in CIBIL.
3) Monitor your credit utilisation ratio i.e. the amount of credit you utilize in proportion to the available credit limit provided to you. The High credit utilization ratio indicates your rising debt burden and negatively impacts your CIBIL score.
4) Avoid making multiple credit applications (whether applying for instant personal loan, loan against property, business loan, unsecured business loans, home loan transfer, credit card, etc). Banks may view you as a credit hungry person. Too many of such inquires will negatively impact your CIBIL scores as banks pull out your CIBIL report each time when you apply which gets reflected on your CIBIL report.
5) Do not add a co-applicant with poor CIBIL score to your home loan, mortgage loan or home loan balance transfer applications. A poor CIBIL score implies high risk for the banks and hence improves the chances of your loan rejections.
6) Maintain a healthy balance between secured and unsecured loans. A high percentage of unsecured loans, such as personal loan and credit cards etc affect your CIBIL scores negatively.
7) Maintain long credit history if possible, because it helps banks to take a sound decision at the time of offering you credit / loan on the basis of good record of your credit transactions. Credit cards are a great tool to build your credit history. But if you are considering closing your credit card than it is feasible to close the card that is relatively new rather than a card which you have been using over a substantial number of years.
8) Be extra careful and think twice before you sign as a guarantor for anyone because being a guarantor not only makes you equally liable to repay the loan of the applicant in his default but his loan defaults also negatively affects your CIBIL scores.
9) If you hold any outstanding debt over a period and have made settlement with the bank, do not forget to take the debt closure letter or the no claim letter from the bank.
Conclusion:
While it took us long to convince Mr. Baburao that it was his irresponsible act towards repayment i.e. the irregular payment was the root cause for his home loan rejections, hope this blog helps you to understand the reasons for your poor CIBIL scores. Remember while an average CIBIL score of 750 and above is considered to be a good CIBIL score, any score below 750 is considered to be a low/poor CIBIL score and such low CIBIL scores affects you in many ways. It hampers your eligibility (home loan eligibility, loan against property eligibility), refrains you from getting a better deal on home loan rates in Mumbai, doesn’t allow you to make balance transfer of your loan, rejects your future loan applications and it also do not allow you to take a top-up facility on your existing loan/credit.
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Loanfasttrack is a specialized Loan provider in Mumbai markets with its existence in the online market since 2015. It offers loan services in Mumbai on Home Loan, Mortgage Loan, Personal Loan, Business Loan, Car Loan, Top-up Loans & Loan Transfers.
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