Credit Triangle

What’s Better for a Low-Credit Auto Loan: a Bank, or an NBFC?

Posted on 24 February, 2022 by Credit Triangle

auto loan

These days, it is extremely simple to purchase any product on the market. Just like when you go into an appliance store, decide what you want, and the shopkeeper will give you a variety of financial options to get the product. The same is true for automobiles; purchasing a vehicle is one of the most exhilarating experiences one can have. You must conduct extensive research before narrowing down your options for a vehicle. After you’ve narrowed down your car options, you’ll need to look into the auto loan options on the market. Examine their processing fees, auto loan interest rates, and so on. In terms of interest rates, HDFC car loan interest rates are the best in the market.

What would you do if you had recently missed a couple of credit card payments and were certain that your credit score would suffer as a result? Do you abandon your original plan to get the car? Do you intend to put down a large sum of money? Is it worthwhile to make a large down payment?

The correct answer is that when it comes to auto loan, you have a lot more options than with other types of loans. The reason for this is that a car loan is a type of secured loan. Until you repay your loan, your car serves as collateral for the bank. Various banks and non-banking financial institutions will gladly finance your car loan. Various banks and non-banking financial institutions will gladly finance your car loan. The main question here is who you would choose to finance the car loan with.

Let’s see which is better: a bank or an NBFC.

Bank

When you apply for a car loan at a bank, you will be subjected to a stringent verification process. When it comes to loan processing, banks are quite adamant. The loan process may take weeks to complete because they have a lengthy checklist to complete before they can process their loan. If your credit score is low, you will have to process a loan with high processing fees and higher interest rates than other market standards. There are some advantages to taking out a bank loan, such as receiving an overdraft facility upfront if your payment patterns are excellent. In addition, your bank may have a pre-approved loan for you towards your account, which can get you a loan in no time at all.

Non-banking financial companies

When you enter the car loan market, you will discover that there are numerous NBFC options available to you that can provide you with a loan. Some car manufacturers have their own financial institutions that offer car loans for their own brands at a much lower interest rate. There are numerous advantages to obtaining a vehicle loan from an NBFC rather than a bank. Even if you have a low cibil score(credit score checking free), NBFCs will gladly finance your vehicle. If you are specifically looking for a used car, the best option is to take out a loan from an NBFC. The processing time to disburse a loan is shorter than that of other banks. When it comes to wooing a customer and convincing them to buy their financial product, NBFCs take a competitive approach. When it comes to loan processing, NBFCs have fewer rules and regulations than banks, giving them an advantage.

The bottom line is that they both have advantages and disadvantages. When you decide to buy a car, do extensive research on your financing options, and shortlist the best option available to you. cibil score in free to check take an auto loan.

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4 Steps to Buy a House with Bad Credit – CreditTriangle

Posted on 21 February, 2022 by Credit Triangle

Purchasing a home has never been easy; you usually make a lot of plans for it. How much will you save, how much will you earn, and are you truly prepared for this long-term commitment? Once you’ve decided on such fundamentals, the next step is to create a checklist of secondary considerations. There are factors such as where you should buy the property, how far you are willing to go in terms of budget, which bank has the best home loan offers, which developer you would choose, and so on.

Your credit score is the most important factor in determining your chances of getting a loan. Your financial transaction information is kept on file with several credit bureaus. When you apply for a loan or financial product, the lender will look at your credit report to see if they can lend you money. You can consider your credit score excellent if it ranges between 700 and 800. Anything less than 700 can hurt your chances of getting a loan.

You’re probably wondering if I won’t be able to get a home loan if my credit score is less than 700. Is it possible for me to get home loans with bad credit? Don’t worry; even if you have a low credit score, you can still get a home loan. However, you will have to work harder than others with a high cibil score.

Here are four options for buying a house with bad credit.

Larger down payment will definitely help.

If you have a low credit score, you will have no choice but to make a large down payment. To save a lot of money, you will have to cut back on many personal expenses, but it will benefit you in a variety of ways. A larger down payment allows you to take out a smaller loan, and any housing finance lender would be happy to lend less than the property’s actual market value. You’ve probably seen a lot of advertisements from various developers offering you a house with a 99 percent loan option, and so on. Your cibil score must be excellent in order to be eligible for such a scheme.

Describe the lender.

A bad credit score is not the end of the world; you can still get a loan. One of them is to explain to the lender why your credit score is so low. You must have lost your job or been in an accident that prevented you from making all of your payments on time. Despite a low cibil score, some lenders are willing to listen to your plea when you apply for a loan because they, too, want to lend you money. Just make sure your reasons are genuine and that you have the necessary documentation to back it up. This does not guarantee a loan, but it may increase your chances of getting one.

Consider a private mortgage.

When you think of a loan, you always think of large financial institutions with good home loan interest rates. There are many other smaller financial institutions that would consider giving you a loan even if you had a bad credit report. The interest rates will be higher than market rates, but you will be able to obtain a loan.

Try all of the methods to raise your score.

This is the most important way to obtain a home loan without any complications. There are numerous methods for increasing your cibil score in a short period of time. You can begin by making all of your payments on time to improve your credit score. There are numerous ways to obtain a mortgage with a bad credit score, but each option has drawbacks that can harm you in the long run. It’s a good idea to think about your credit options before making a wise decision to buy a house.

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Why Is Credit Report So Confusing ? CreditTriangle

Posted on 18 February, 2022 by Credit Triangle

Financial concepts are sometimes hard to understand. Do you find your credit score confusing too? If yes, you are not alone. In recent years the importance of credit score has increased manifolds. It has become the most important measure that banks use to make loan approval decisions. But a common man finds it hard to comprehend what goes into CIBIL score calculation and how it affects him.

While most people know that a bad credit score can prevent them from qualifying for a loan or credit cards, beyond this information there is a lot of confusion. What is the difference between the credit score and report? What score is good enough for you to get loan approvals? What should you do to improve your score? How does credit card usage affect credit score? Questions like these may baffle you.

Let’s throw some light on these concepts so that your credit score no longer puzzles you.

Credit score and credit report are two different things

A credit report contains some basic personal information and summary of all your credit accounts- your balances, how you make payments, how much credit is extended to you vs how much you have charged on the credit card, age of the accounts etc.

A credit score is a numerical figure calculated on the basis of the information in your credit report. The credit bureaus have a credit scoring algorithm for CIBIL score calculation. They give different weightage to different aspects of the report and accordingly arrive at a score that reflects the credit risk associated with lending you money. Lenders check this score to form a quick impression of whether you are worthy of lending money or issuing a credit card. A credit score is thus a reflection of your credit behaviour and a means of interpreting what’s there on your report.

There is more than one credit score

There are four major credit bureaus in India that maintain your credit related information. Each bureau has its own report and a credit scoring algorithm for arriving at the score. So different bureaus may arrive at a slightly different figure based on the weightage they give to different aspects of your credit information. So the score that you check yourself from one bureau might be different from what your lenders see, if they use your score from a different bureau.

Credit card usage is necessary to improve score, but carrying a balance isn’t necessary

Unused credit cards will not help in improving the scores. You will need to charge expenses and keep them active. But that does not mean that you need to carry a balance on your credit card to show that you can handle debt responsibly. It is not at all required to improve credit score. You need not pay any interest. Just charge small expenses on the card and keep it active. In fact paying the balance in full at the end of the billing cycle is a sign of healthy credit behaviour.

Factors that affect credit score

The two factors that have the highest impact on the credit score are the payment history and credit utilization. A history of on time payments on past loans suggests that a person is responsible in handling debts. It increases one’s credibility and gives a boost to the score. Similarly, a person who does not use more than 30% of available credit limit suggests that he does not rely too much on credit. Such a person will most likely repay the loans responsibly and hence has a good credit score. A good experience in handling both revolving and installment accounts and a long history of managing credit also demonstrates your creditworthiness to lenders and hence affects your score positively. Late payments, maxing out your credit card limit, and too many hard enquiries pose a risk to the lenders and therefore affect your score negatively.

Whenever your credit report is updated with new information your newly calculated credit score will change. Healthy credit habits will ensure a good credit score in the long run.

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What Is A Credit Score? – CreditTriangle

Posted on 16 February, 2022 by Credit Triangle

You are planning to take a loan for the most favorite car you had thought once buying or a house you always had imagined or the business you wished to expand, would take you to a journey of going to banks, making inquiries, checking the best quote and the interest rate offered to you and then finally deciding which option would suit you the best in terms of tenor, rate of interest, processing fees and pre-payment charges. Now the point is, how do banks or non-banking financial institutions decide the rate of interest or other charges? What are the criteria?

Suppose you and your friend went to a bank. You both earn almost the same, your age is same, the family background is also similar. And you both apply for the same loan is the same bank. But you were offered 11.5% interest rate whereas your friend was offered 10.25% interest rate with little lesser processing fees and pre-payment charges. Now that would make you think if the external factor looks the same, why are the other things different? So you finally decide to know the details deeply of why your friend was given lower rates than you. And here would be the analysis of what you would get.

You had never done a CIBIL Score Check. Which is one of the major factor of the interest rates being processed? Lower the credit score more is the interest rate and vice-versa. The credit score ranges from 300-900. Where 300 is the lowest and 900 is the highest. Any score beyond 750 is considered a good score. People below this score are considered red zoned, and the one above 750 are greed zoned. It’s not that, if you have a score below 750 you will not get a loan, but the % of interest will be higher. Now let us take into consideration why the score is low or high? Basically, what are the factors that decide the score? There are 5 factors whose combination results in the score.

Payment History (35%)

The major factor which determines your credit score is the payment history. How well-organized you are in making the payments of the credits you have taken, shows how responsible you are. Banks can make a note of your previous payments and decide if you will be an asset for them or not. If previously you have made blunders in payments or didn’t pay regularly, the score dips badly and makes it difficult for you to get a loan. If the score is not good, and it’s becoming difficult for you to get a loan; in that case, you can try for loans for bad credit. But ultimately the loss will be yours only.

Amount owed (30%)

The total amount which is taken by you, in any means of the credit i.e. by credit card or a loan also has second major thing determined in the score. The amount of the revolving credit and the fixed credit is in the amount owed.

Length of credit history (15%)

How long is your credit account active, and how old is your account also determines your score. Some people make the mistake of closing the older accounts thinking they are not of any use but that creates a dip in the score. So, keep the accounts active.

Types of Credits (10%)

There are 2 types of credit. Fixed or installment based credit and revolving credit with a mix of secured and unsecured credit. The type of credit you have will also contribute to the score. It’s healthy if you have a good mix of all types of credit.

New Credit (10%)

The new credits you take is also a determining factor of your score. New credit means you are becoming more responsible towards your repaying responsibility. But do not overdo, else this would also hamper your score.

Always manage the credits you take responsibly. If you check your score and you feel there is some mistake, get a detailed report and check. Work with that diligently and patiently to get your score in the green zone!

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What is The Meaning of Credit Freeze?

Posted on 14 February, 2022 by Credit Triangle

As a user of credit, you are probably aware of the fact that it is mandatory for all to have a good Cibil score in order to get timely access to credit. Your score is literally your ticket to a loan or any other line of credit, so as a user, it is likely that you are bothered about its safety, especially in the times that we live in. Late in 2017, Equifax, one of the leading credit bureaus worldwide admitted that it had suffered a data breach as a result of which personal financial information of credit users in the US, UK, and Canada had been exposed which left millions of consumers vulnerable to identity thefts.

Identity thefts, if they are not identified on time can have a damaging impact on your Credit Score that may take years to rectify. The thief may take a fresh credit card or loan without the intention of ever repaying them. They can also take up the credit utilization to a very high limit or open multiple credit lines can result in an avalanche of hard inquiries on your credit report. All of these actions will result in your inability to access credit when you need it.

What then should be done to protect yourself from dire consequences? There is always the prudent practice of keeping a periodic check on your credit report, but what happens in case of a data breach? The damage in such cases is way worse than a low CIBIL score as you then bring upon yourself the peril of financial theft. To ensure that you do not bring upon financial doom on account of such an event, it may be the right time to consider a credit freeze.

What is credit freezing

Simply put, credit freezing is requesting the credit rating agency not to share your credit information with any organization or person. This means nobody has access to your credit records. In order to freeze your credit records, you need to get in touch with the credit bureaus (In India there are three bureaus dealing with consumer credit CIBIL, Experian and Equifax), provide some basic personal details and request them to freeze your credit records. You can do this through mail or a letter by attaching your personal identification details.

Benefits of credit freezing

If you are living in fear that your credit information is not safe, freezing your credit is the best thing to do. Unfortunately, many consumers in the past have had to go through the trouble of raising a dispute with credit bureaus after they have found out that their credit identity had been compromised and multiple lines of credit had been issued in their name. This in turn resulted in a low CIBIL score, which took them a fairly long term to rectify, not to mention the mental harassment that they had to undergo. Credit freezing may thus be looked at as a prevention rather than having to resort to a cure after the damage is done.

When in need of credit- Unfreeze

Firstly, credit freezing does not impact your existing lines of credit or CIBIL score. Neither does this mean that you credit records or keep track of. This means you need to go on making repayments on your existing line of credit and do all it takes to maintain a good credit score.

You can keep your credit records frozen temporarily and can unfreeze it with the similar procedure of writing into the credit bureaus. It is prudent to unfreeze your CIBIL records when you are in process of making an application for a fresh line of credit. When you make an application for a new loan or a credit card, the lender must access your credit records as a mandatory credit assessment procedure. The failure to access your records will work against you, and your application may be rejected as a result.

Therefore, if you are planning to freeze your credit records as a preventive measure, go ahead with the same. However, do remember to unfreeze your records at the time of applying for any new credit. You can even check with the concerned lender about the credit bureau they refer to and unlock your records at that particular bureau instead of unlocking all three at once.

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Secrets About Credit Report No One Will Tell You – CreditTriangle

Posted on 2 February, 2022 by Credit Triangle

If you are a financially conscientious individual, you already know by now that your credit score is a important three digit numeric that is regarded as a barometer of your financial health. The details of your credit score feature in your credit report. This is a document that a credit bureau like CIBIL compiles on the basis of how you handle your credit.

This document is referred to by traditional lenders as a part of the credit assessment process. A blemish free credit report can thus be called a ticket to timely credit at competitive rates of interest. You thus need to be in the know of your credit report. Here are some secrets about your credit report that no one will tell you, that will help you maintain healthy credit record.

No credit does not mean a good CIBIL score

Those who are wary of credit tend to think that having no credit exposure is a good thing and it reflects well on one’s credit report. On the contrary, having no credit exposure works against you. When you have no credit record on your CIBIL report, lenders cannot assess your ability to repay a loan that you may need urgently.

A non-existent credit record may make them wary of giving you a loan when you need it the most. Thus it is advisable to keep at least one credit card and make small transactions such as utility payments with it. Timely repayment of credit will help you establish and build a good credit record.

Secrets About Credit Report No One Will Tell You - CreditTriangle

You can access one free CIBIL report in a year

You may have read many financial education articles that advocate that you need to keep a periodic check over your CIBIL report. You can access your credit report as many times as you want in a year by paying a fee of Rs 500 each time. However, what you may not be aware of is the fact that CIBIL, India’s premiere credit bureau, provides the facility of one annual CIBIL report check free of cost. Thus if you do not use credit often, you can access one free CIBIL report annually to ensure that your credit health is in order.

Your CIBIL report will carry details of a loan you stand as a guarantor for

You may have a stellar credit record as you are financially responsible. A friend or relative who you are very close to may thus want to stand as a guarantor for a loan he needs. You think of it as a just a formality and agree to act as a guarantor for his loan. What you may not be aware of that by standing as a guarantor for his loan, the details of this loan account appear on your free CIBIL report and any default on the same will reflect on your report as well. This may bring your score crashing down and impact your ability to opt for credit when you are in need of the same. Thus think very carefully before you agree to guarantee someone else’s loan.

You can get a loan with a poor CIBIL score

If your CIBIL score is poor and your CIBIL report is in bad shape because of some mishaps, do not fret. While a traditional lender will not give you a personal loan without CIBIL check, you can avail of a loan from a non-traditional lender such as a P2P lending platforms. These are virtual loan marketplaces where you can get in touch with a lender directly. While it is not to say that these lenders do not give out Personal loans without CIBIL check there are other atypical credit assessment methods that these lenders carry out. These include tracking your social media footprint and assessing your future income prospects.

Armed with this information about your CIBIL report, you can make a conscious effort to keep your CIBIL report blemish free for access to cheap and timely credit.