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How to get a good credit score this Diwali

Last updated on: October 14, 2013 09:42 IST

In an online chat with Get Ahead readers on October 14 Harshala Chandorkar, senior vice president, consumer relations, CIBIL, answered readers' queries on how they can improve their credit scores.

Here's the unedited chat transcript:

haresh: What is a credit score? How can I get a good credit score?

Harshala C: CIBIL Report is a month on month record of an individual's loan-related EMI (home loans, personal loans, automobile loans and so on), credit card or overdraft payments.

The CIBIL TransUnion Score is a 3 digit numeric summary of an individual's credit history. The Score is derived by using the details found in the "Accounts" and "Enquiries" sections on the Credit Information Report (CIR) and ranges from 300 to 900 points.

An individual's CIBIL TransUnion Score provides a Credit Institution with an indication of the "probability of default" of the individual based on his/her credit history. The closer the individual's Score is to 900, the more favourably the loan application will be viewed by a Credit Institution.

vishal: What factors shall I take as not to get trapped under loans? My brother has almost 3 lakh of credit card outstanding. Could you suggest any measures to help him come out of it. This outstanding amount includes more than Rs 2 lakh of credit card interest and late payment charge

Harshala C: The most important aspect that you must keep in mind is that never borrow or spend on your card more than what you can afford to repay. You may get into a debt trap if you do so.

Your brother should approach the banks for settlement. If you do go in for a settlement the bank will report the status as "settled' on that particluar card. Some banks also give an option to convert the credit card dues into a loan. Please remember that the credit card interest would be very high and that of a personal loan is lower.

It is important that once your brother has settled his dues or converted them in a loan he should make timely payments and should not default.

salim: Dear Harshala Mam, please tell me ten things that will help me getting a good credit history and credit score?

Harshala C: Here are a few tips for a good credit score:

• Avoid late payments or defaults as far as possible

• Reduce your utilisation of credit card limits: While increased spending on your credit cards may not necessarily negatively affect your Score, 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.

• Maintain a healthy mix of credit: A higher concentration of home loans or auto loans (commonly known as Secured Loans) is likely to be more favourable for your credit score than a large number of unsecured loans.

• Monitor your co-signed, joint accounts monthly.

• Monitor the loan accounts for which you have stood as a 'guarantor'

• Avoid behaving "Credit Hungry": If you have made many applications for loans, or have recently been sanctioned new credit facilities, a lender is likely to view your application with caution. This 'Credit Hungry' behaviour indicates your debt burden is likely to, or has increased and hence may be less able to service additional debt obligations

shirish: How can I take advantage of having a good credit score? I stand at 900.

Harshala C: If you have a good credit score and a healthy credit report you may be able to avail loans and credit cards faster and without any hassles. Infact with a good credit score you may even be able to avail instant loan approvals from some credit institutions.

Another benefit of a high credit score and a healthy report is that banks prefer such loan applicants. If you have a high score, you may also be able to bargain for better terms and conditions on your loans or credit cards.

Prathamesh Sakharkar: Where can i check my credit score? Incase of any discrepancy whom do i write, to improve it?

Harshala C: You can access your credit score and report on CIBIL's website in 3 easy steps:

• Step 1: Fill online form- Visit http://rediff.ly/1gsxk and duly fill in the online request form

• Step 2: Payment – Make payment of Rs. 470 via Net banking / Debit / Credit / Cash Card• Step 3: Authentication – Answer 2 questions based on your credit history

If you are successfully authenticated you can download your credit report consisting your credit score and also receive it via e-mail. If you fail the authentication then you can upload scanned copy of your identity proof and address proof on CIBIL's website. The report will then get delivered to you via express delivery

• Review the report thoroughly and identify if there are any inaccuracies• If you find discrepancies then log in to CIBIL's Dispute Resolution webpage: http://rediff.ly/22npj

N Thakurta: My credit score is 692, I hold 5 cr. cards, I don't keep any OS . However in 2002 I took a Personal Loan of 70K and paid it up by 2006 without defaulting a single EMI but in my CIBIL report it is showing as 'Settled' - when I approached the bank they had no clue about it - they even returned the PDCs - but CIBIL report still shows "Settled"

Harshala C: Please log in to CIBIL's Dispute Resolution webpage: http://rediff.ly/22npj

CIBIL's Dispute Resolution Department will analyze and route the dispute to the lending institutions for confirmation. We will coordinate with the bank to correct the inaccuracies.

amit jagdish shah: i have a score of 675 please tell me how can in improve the same...

Harshala C: The most important factor is to make payments on time on your loan EMIs and credit card dues. If you have missed any payments in past, do ensure that you make timely payments and build a positive credit history and improve your score gradually.

swamy achari: Dear Harshala Mam, Pls tel me how can i improve my credit score i stand at 743 point , i want to god credit history...pls help for me for good credit score thanks

Harshala C: Some tips to maintain a good credit score

• Always pay your loan/ credit card dues on time

• Maintain a healthy mix of credit

• Apply for new credit in moderation

• Monitor your co-signed, joint accounts monthly.

• Monitor the loan accounts for which you have stood as a 'guarantor'

• Review your credit score and history frequently

waman: How can I know if goods that I am buying using my credit card could land me into a debt trap? How can I avoid getting into one?

Harshala C: When you are using your credit card you should spend only as much as you can afford to repay back. If you do not pay the entire amount due to the credit card company you will be charged rate of interest on not only the amount outstanding but also any new purchases that you may make on the card. This rate of interest generally ranges anywhere between 30 - 36 per cent pa

shaishav: I have three credit cards and my outstanding on each of these has always been paid in full before the due date. Could you tell me if I am leaving beyond my means?

Harshala C: If you making full payments on your credit card outstandings it certainly wont have any impact on your credit score. But you would need to look at your income and the spending on your cards to conclude whether you are over spending or not. You should plan your finances and save for future goals.

mustafa: Like financial health advisors are there people who we can call as credit health advisors? Where can I find them?

Harshala C: Many banks have Financial Literacy Counselling Centres which help consumers in credit and debt management.

shabbir-nooruddin: I have kept Rs 2400 balancewith scb cc in2005 for some dispute, now my cibil report statements shows outstanding of rs64000-00 with cibil.how i can settle the issue with the bank.from SHABBIR

Harshala C: Please contact the grievenace redressal cell of the bank to resolve your dispute with them. Alternatively you may also raise a dispute online with CIBIL on CIBIL's Dispute Resolution webpage: http://rediff.ly/22npj

Please remember that CIBIL can only make changes to your report, once the bank submits the updated/ corrected data.

bhanu: My daughter had taken a personal loan from a pvt sector bank and since she is late in her monthly payments by more than 6 months the bank's loan recovery agents are harassing her? What remedial measures do you suggest? What can she do to stop this harassment?

Harshala C: If your daughter is in a financial duress and is not in a position to repay the loan she could contact the bank for restructuring the loan or for a settlement. When banks disburse a loan consumers are expected to pay their EMIs to the bank. If not, the bank will contact the consumer for repayment.

amit jagdish shah: Please help with suggestions to improve the score....what is the mim score requirement if i want to take the housing loan.

Harshala C: While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a credit score of 750 and above.

sudaram: Harshala I want to know if we should buy gadgets and consumer goods using my credit cards this Diwali? What are the pitfalls of festive shopping that I should guard against?

Harshala C: Try these tips to help you keep your finances intact and shop smart this festive season:

• Set a limit for your money so that you spend your money cautiously. This will help you better plan your finances around your end-of-year spending

• Make a list of all the people you need to buy for, and determine a spending cap for each person to help you stick to your budget

• Choose appropriate gifts that allow you to stay within your spending caps and make a list of your gift ideas

• Do shop around to find which store is offering a better discount. Take some time to do some research. Pick up the phone, or shop online, and shop around for the best prices.

Kumar: in jan 2013 i had a due with Standard Charted Bank CC , they came for settlement and sent me the papers , but keeping CIBIL score in mind i declined the settlement offer and paid them everything ... will my cibil score get effected in this issue ??

Harshala C: If you have missed your payments earlier, the missed payment will impact your CIBIL TransUnion Score. You can build a positive credit history and a good score by ensuring that you make timely payments on all the loans and cards that you may have opted for.

Shiv Shanker: I had taken a mortage loan on my house property for Rs. 40,00,000/- I had paid more than 50 per cent now bank people are forcing me to pay the remaining amount quickly. But my problem is that I cannot pay them in given time will give me bad CIBIL report and how can i take a cibil report

Harshala C: Have you missed any EMIs? The bank cannot force you to repay the remaining amount quickly. The EMI and the tenure would have been fixed when you took the loan. Please ask them why are they asking you to repay the loan quickly and not as per your payment schedule.

HARENDAR CHAUHAN: Hi Mam, I had recently taken a home loan from one of the NBFC's. However my ECS mandate was rejected by bank due to signature mismatch. I informed the NBFc but even then they did not took any action. When i made a hue and cry they said they will get it revised in CIBIL. My score is now 583. Can they get my CIBIL score revised? Regards

Harshala C: If there is an error from their side in reporting the credit information they can certainly make correction by coordinating with CIBIL.

GSREEKANTH MURALIDHAR: I've cleared all my outstanding dues of Credit Card Statements around 1 year back. I am planning for a Home Loan in next 6 months will the bank clear my loan. Upto what time the CBIL score affect approval in my Loan

Harshala C: Please check your CIBIL Report and Score before applying for a loan. While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a credit score of 750 and above.

Rajesh Gohad: My Cibil report shows one old credit card with 71 Rs pending for a long time. Recently I cleared that. The CCC will send me the No Dues certificate. Does this mean that the CIBIL report will be updated. Also the CIBIL report does not reflect correct salary there. Does that matter while applying for a home loan

Harshala C: If the credit card company send us the updated information the same will get reflected in your credit report. The salary reflected in your credit report is the salary that you may have mentioned in the application form when you would have applied for a loan or card. The home loan company will require salary slips, etc to look at your latest slaary.

Praveen Kumar: hi how do I come to know that which bank has reported to CIBIL and how can one come with good CIBIL score after having a bad CIBIL score

Harshala C: You can access your own credit report to loook for the information being reported by each bank.

Rajesh Gohad: Is there any authority over CIBIL or its on their own and will do what they want

Harshala C : Banks and Financial institutions report credit information pertaining to borrowers to CIBIL, which is then collated in form of a credit report.

mohit: Madam, good afternoon, how can i see my CIBIL score ?

Harshala C: You can access your credit score and report on CIBIL's website in 3 easy steps:• Step 1: Fill online form- Visit http://rediff.ly/1gsxk and duly fill in the online request form • Step 2: Payment – Make payment of Rs. 470 via Net banking / Debit / Credit / Cash Card• Step 3: Authentication – Answer 2 questions based on your credit history

meghna rungta: My CIBIL score is 530. I later learnt that even after, one settles the dues with the banks, they do not update the same with CIBIL.I've settled all my dues for my CC and a personal loan (from ABN AMRO) in 2006.. Now Please advise how do I get my CIBIL score updated, Thanks

Harshala C: CIBIL will route the dispute to the bank for confirmation. Please remember that CIBIL can only make changes to your report, once the bank submits the updated/ corrected data.

Gautaman T: Is there any way to apply for one's credit score online?

vk: hiii... my credit score is 817... is that a good score?

Govardhana: Hi Mam i have recently applied for the Home loan and got the approval also will that reduce my CIBIL score

Harshala C: We will have to look at your complete report and the details pertaining to your other loans, credit cards and the payment history
pertaining to those loans and cards before concluding what impact will it have on your credit score.

Ashutosh Gawade: Dear Harshala Mam, how settling of credit card dues affect CIBIL score?

subramanyam: Hi,I had a home loan with axis bank and paid the EMI's on time. I prepaid the loan and got back the documents. Yet CIBIL report shows that I late on my payments and there is loan balance. I raised a dispute DIS0713062626 in July. Till now there is no reply from CIBIL/Axis bank. It seems no one is bothered about wrong data being reported in CIBIL.

Harshala C: We apologise for not being able to resolve your dispute. Request if you could send your CIBIL Service Request number so that we can look at it on priority.