Credit health is a state of complete financial well-being. The absence of indebtedness merely does not mean than one is credit healthy. Credit health has several components including a good track record, a good credit score, good income-expense ratio, absence of delinquency, healthy debt burdens loads, the ability to access credit on favorable terms and a host of other parameters.
Consider the case of Rajesh Gupta, who was running from one bank to another, desperately looking for a mortgage loan. However, his loan application was rejected by all the banks. He then approached a known NBFC (non-banking financial company) for a loan and managed to get his loan approved, but at a rate that was 1.5 per cent more than what private banks were offering. On his friend’s suggestion, he approached a professional company that worked in areas of improving one’s credit health and signed up with this company. His credit score at that time was 623, which was why most private banks had refused to lend him. The professionals at the credit repair company worked on his credit health and brought got his credit score up to 815. Now, he is going in for a loan with a MNC bank at a much lower rate.
Let’s take another case of a customer, whose credit report had a delinquent account tagged, which he claimed was not his. He did not know about this and had applied for a loan for his son’s higher education. Though he had already visited the bank and also the bureau to get it rectified, nothing happened. He then approached a professional credit health improvement company, which helped him get this account off his credit report. He is finally able to send his son abroad for higher studies.
Credit Score and its importance
An individual’s credit health is measured by a three-digit number in his/her credit report, called the credit score. A Credit Score denote an individual’s creditworthiness. In other words, it is a numerical measure of an individual’s Credit Character. Credit Scores in India range from 300 to 900 irrespective of the credit bureau from which these are generated. A score of 750 and above is considered to be a good score.
Gaurav Wadhwani, founder, Credit Triangle, says “Credit score has relevance in almost every facet of life from loans, rates of interest on loans, telecom connections, jobs, to insurance premia, etc.”
The importance of a good credit score and credit health can hardly be over- emphasized. In spite of this, Credit score remains one of the most ignored aspects of financial health and this can have an adverse impact on one’s ability to borrow. There needs to be more awareness about credit health and credit scores.
Credit health improvement firms work towards making their customers credit healthy by restoring, enhancing and protecting their credit. Various services offered by credit repair firms include: credit health improvement and tracking (compilation of reports from all bureaus, analysis of multiple reports, error tracking and reconciliation), score improvement programs, debt reconciliation/settlement and assistance in loan processing.
On the operations front, Gaurav Wadhwani said, “Credit health improvement companies offer unique programs and guidance to assist customers in availing loans, credit cards and other credit facilities on more favorable terms through enhanced credit health.”
To resolve a customer’s credit issues, these companies first aim to interpret his/her credit reports accurately. This is followed by a process of identifying errors in the credit reports, if any, followed by a comprehensive analysis. In the final phase, these companies lay down a detailed roadmap for the customer to improve his/ her credit health. These companies handhold customers through each stage of their customized programs, till their credit issues are resolved and their credit health enhanced.
Credit score is a crucial indicator of an individual’s credit health. It is important to remove all discrepancies from your credit report in order to improve your credit health. Sensitizing people about their credit behavior and score would help them manage their finances better and improve their credit health.
Credit Triangle is a one-stop solution for all your credit and finance needs. We help you with credit health management, repair and improvement.