The Benefits of Having a Good Business Credit Score

It is an established fact that banks and financial lenders look at your personal credit score before extending a home loan or issuing a credit card to you. But did you know that credit scores apply to businesses as well? Well, just like individuals, businesses are also entities that buy, sell, require loans and hence, can be assigned credit scores too. The score for businesses is called Business Credit Score. This score is a determination of the company’s creditworthiness or the likelihood to pay back loans.  Similar to a personal credit report, a business credit report gives a snapshot of various credit facilities availed by the business and repayment history on each of these facilities to the bank. Business Credit Score is calculated on various parameters such as profits of the business, turnover of the business, financial activities of the business and many such details of the business that determines the credibility.

Benefits of having a good business credit score

1. You will receive a better loan term

Businesses have many options to obtain financing including banks and other financial lenders. You qualify for a business loan when you are one of the following:

•         Private Limited or Limited Company
•          Partnership or Proprietorship Company
•         Chartered Accountant
•       Self Employed Professional

When you have a good personal credit score, you are most eligible to receive loans easily and even at a lower interest rate. The same applies to a business credit score. In India, the business credit score varies from 300 to 900. When your business credit score is more than 700, lenders find it safe enough to lend you a loan. 

2. You can conveniently secure the capital required for your business expansion

As a company expands, it may require the purchase of additional equipment or capital to cater to the growing expenses. While applying for a loan, one of the factors considered by the lender would be the business credit score and credit history. Of course, there are other factors that as well such as business revenue, assets & liabilities, profits, the collateral value of the equipment that the company seeks to purchase with the loan proceeds, and so on. With a good business score, you will be able to secure a hassle-free loan for your business.

3. Protects your personal credit score

Banks do not stop at merely a business credit score check. They also insist on checking the lendee’s personal credit score. By checking personal credit report, the lender gets to know how diligent the key decision-maker of the business is in managing his or her personal finances and how much loan outstanding the decision-maker holds in personal capacity. If you have a good business credit score, your personal credit score won’t hold much weight, thereby, relieving the burden off your shoulders.

How to check your business credit score?

CRIF High Mark is a business credit bureau providing a credit score for your business. You can get your CRIF business credit report and Score in just 3 simple steps:

1. Fill in your Business Details such as name of the business, PAN, address, name of authorized signatory, PAN of authorized signatory
2. Secure pay for your report
3. Upload your documents such as a scanned copy of PAN, Address proof, etc.

Your report will be sent to you within 7 working days upon successful verification of the shared documents.

8 Steps to Getting Out of Debt

Can debt accumulation hurt mycredit score and financial planning? How do I ensure to stay on top of my credit report? How do I get out of this vicious cycle of debt? If you have ever pondered over these questions, now is the time to act upon it.

‘Debt’ is a word many dread having as a part of their lives, but it may inevitably crop up at some point in your life. Although it may seem difficult, it isn’t an impossible task to get rid of debt altogether. The benefits of clearing debts are multifold!

• You restore your control over your finances
• Getting out of debt helps your credit health
• Building wealth becomes easier & faster

Related Read: 7 Quick Tips to Increase Your Credit Score

As much as one works towards clearing them as soon as possible, the day-to-day expenses don’t help in getting rid of the weight of debt. However, there are a few strategies that you can implement to clear your debt sooner than later! Managing debt should be an integral part of making a financial plan. If you continue to go with the trend of increasing your debt year after year, you end up being in the negative of your net worth.

If you are looking to shed some ‘debt weight’ from your finances, here are 8 steps you can follow!

Step #1: Ensure that you pay your loan EMIs on time

To maintain a credit score needed for personal loan, paying your loan EMIs on time honestly does half the job. If you devise a plan and stick to it, paying off all your debt will be a cakewalk. If time permits, focus on clearing one debt at a time. Clear the debts that have the highest chances of penalization & interest rates; move in a descending order thereafter.

Step #2: Align your expenses properly

The aim is to plan in such a way that there is enough left to fend for yourself through the month and pay your debts & dues on time. Your expenses should not cross over to your share of the money set aside to pay loan EMIs. So, make a budget as per your income and expenses laid out clearly. Once you know the percentage of your income you must dedicate to debt clearance, it will be easy to align your other expenses.

Step #3: Clear your credit card dues first

To maintain a good creditscore, you must pay your credit card dues on time. So, if you have accumulating dues on your credit card, focus on clearing them first. This will play a role in maintaining your credit score. Ensure that you keep your credit utilization ratio to 30% to 40% of your credit limit.

Step #4: Prioritize your debts as per due dates & amount

You can choose to clear debts in 2 ways. You can clear debts with a high interest rate first and then move in a descending order. The other way is to clear debts as per amount. If there is a loan amount that you can clear in one or two payments, then clear those first and then move to the bigger loans.

Step #5: Prioritize loan EMI payments as per penalties

Focus on those debts which have high penalties. The last thing you want amidst stringent expenses is an added expense of a fine or probation. So, make sure you also consider clearing debts based on the penalties. Pay the ones with high chances of penalties first and then move on to the remaining loans.

Step #6: Set up Auto-debit wherever possible

Netbanking platforms for most banks offer the handy feature of auto-debit, which you can use to pay your credit card dues. You can also use this feature to take care of your other monthly expenses. So, a good move will be to make use of this feature on a date soon after your salary debit.

Step #7: Create a plan for debt clearance & follow it

Once you take care of clearing the accumulated debt, move towards putting a plan in place. This plan should focus on your income, debts, expenses & be date specific in every section. To avoid debt accumulation, you need to be disciplined and pay your loan EMIs & other dues on time. So make a plan & stick to it!

Step #8: Never let your debt accumulate beyond your control

Now that you have successfully paved your way out of debt, don’t sit back & relax! Make sure that a situation of multiple debts doesn’t repeat itself. Stick to paying no more than one or two EMIs at a time.

If you clear your debt on time, not only will your life be easy to manage, it will better your credit score too! If you are currently going through the phase of clearing multiple debts, checkpersonal credit score from CRIF, one of the leading credit information companies in India first & plan with these steps accordingly!

4 Benefits of a Good Credit Score?

You might have heard about a good credit score, but do you know its importance? Read on to find out what financial benefits you can achieve with a good credit score.

Many people know about credit score, but they may not be aware of how a good score can simplify their financial life! The better your score, the cheaper it is to borrow money from lenders. A strong score of 750 or more can give you access to lower interest rates on credit cards. In short, most of your financial goals such as buying your dream car and house, where you might require a loan, need a good score.

1.       Quick Approval of a Loan and Credit Cards

Most lenders rely on your credit score to determine whether to approve your new credit card or loan application. When you have a poor score, typically below 500, lenders consider you to be a risky borrower; hence, the chances of your application getting rejected are higher. A good score ensures a better chance of your application for a loan or a credit card being approved. In other words, you can confidently apply for a loan or a new credit card.

2.       Lower Interest Rates on Loans

With a good credit score, you may qualify for best interest rates on a loan. For example, for a home loan, a bank charges an interest rate of 10.50% p.a. to a person with a score of 750 or more and 12% for someone who falls in the credit range 650-750. So, the person with a better score benefits with 1.5% during the entire term of the loan. The less money you pay on interest, the faster you will pay off your debts. This way, you create no harm to your credit history as well as you can easily manage other expenses. Conversely, a person with a poor score can have a negative impression on lenders. They might consider you as an irresponsible borrower. Even if they approve your loan application, you might have to pay a higher interest rate on loan.

●        Negotiating power

When you have a good credit score, you have the leverage to negotiate the terms of your loan. You can also negotiate a lower interest rate on your credit card. Additionally, you can bargain on the other attractive offers you might have received from other companies. This is how you get rewarded for working hard at maintaining a good credit history! In case you have a low score, you may not have the negotiating power on a loan or a credit card. In fact, the options available for you might be limited. 

Related Read: A Quick Infographic on how to Become A CRIF Credit Score High Achiever.

●        Better Credit Card Options and Higher Credit Limit

Finally, with a good credit score, lenders consider you creditworthy. They may lend you more money, as they are confident you may pay back all the money on time. Based on your score and debt to income ratio, you can apply for a higher credit limit on your current credit line, viz- credit card/loan or on a new account.

Not only you have a better chance of higher credit limit, but you have an option to avail some of the best credit cards in the market. You can easily opt for credit cards offering you some of the best features like higher rewards rates, valuable sign-up bonuses, concierge resources, etc.

With these great benefits, a good credit score is highly desirable. If you have a poor score, you can work towards improving it. Check all the best ways to improve your credit score with CRIF.  CRIF is one of the RBI regulated credit bureau in India that gives you credit report and score in the most accurate form. Make sure you know the facts right and maintain a credit score that is above 700 to acquire financial assistance whenever needed. 

How Student Loans Can Impact Your Credit Score?

Many college students and their parents have either been through or will be going through the process of opting a student loan, as a support for their educational expenses. Whether you are a student or a parent, it is important to understand that the loan you take today can influence your ability to opt for future loans or credits. Besides the obvious benefit of paying for your education, a student loan is a good opportunity to build your very own ‘credit score’ from scratch.

In case you are wondering why you need to have a ‘credit score’ at all, then know that a credit score is a numerical representation of your financial credibility; It greatly impacts your ability to borrow in the future. Lenders view your credit score as a tool to establish whether you are eligible for a loan before they hand you over the money. Thus a student loan is a great start to building your own credit profile. In order to build a strong financial character, you need to know the various effects a student loan can have your credit score.

1. It will open your credit file

Most parents/guardians manage to pay for their kids’ schooling with their existing income. College is the time when you may first contemplate opting a loan considering the fees and other expenses. A student loan then is your debut into the ‘world of credit’ and a beginning of your credit history. Your credit file will open with all the four credit information companies.

2. It will add length to your credit history

One of the deciding factors in calculating your credit score is the credit age, and age comes with credit history. The longer your history, the higher your score will be. Taking a loan at a young age gives you an opportunity to steadily build your score till the time you start applying for credit cards and additional loans.

And even though your account will close after complete repayment, your record stays on the report for several years giving testimony of your credit conduct.

3. On-time payments can keep your score growing

When you are prompt in paying your installments on time, nothing like it! This is the fastest way to enter into the good books of money lenders. You are potentially creating better chances for yourself for a loan or a credit in the future. After all, the only thing that concerns lenders is getting repaid and on time.

Note that there could be times when you may not be able to pay your installment due to some reasons. There is an option deferring your installment by requesting the bank. Once your bank approves, you eliminate the risk of harming your credit score while also heaving a sigh of relief.

4. Late or missed payments mean quick damage

While good conduct requires a long time to establish your good behavior, one delinquency is quick enough to pull your score down. Hence, it is always recommended to either pay on time or report to the bank in case of late payment. However, there is also an understanding that most lenders do not immediately report your late payment and generally give you a grace period of 60 days.

5. Help create credit mix

Credit mix simply refers to the mixture of credit you have such as credit cards, home loans, auto loans, etc. Having a student loan can add variety to your credit profile. Credit mix is something lenders appreciate. This helps boost your credit score. If you want to see how your credit report looks like or want to find out your personal credit score, you can check one for free from CRIF High Mark.

Building credit can play an important part in your financial and personal life. A high score can make qualifying for new loans or credit cards easier, may save you money with lower interest rates or insurance premiums and potentially help you secure your future.

6 Common Myths And Facts About Credit score

Sometimes, credit Score can be a very complicated subject especially for people who have just started being accountable towards their finances. Most of the times people fail to understand why it is essential, what factors are used to calculate a credit score, how they can check their credit report etc. This ambiguity often gives birth to many half-truths which eventually misconstrues the entire theory of credit Score and why it is essential for your financial health.

What does Credit Score mean?

Credit Score represents your credibility and helps lenders analyze your financial capabilities, credit risk, and behaviour. The score is an outcome of your financial activities like payments history, active loans, length of credit history and credit card utilization ratio. A good credit score ranges from 700 to 900 and any score below 500 is considered as a bad credit score.

Below we are negating 6 common myths about Credit Score:

· Checking your Credit Score too often can bring a dip in your credit score:

The fact is your credit score is not affected by the number of times you check your credit score. There are two types of inquiries, hard and soft. A hard inquiry takes place when you’ve taken an action (i.e., applied for credit) and a lender pulls your credit report in order to review your credit. This type of inquiry can cause a drop in your credit scores. A soft inquiry occurs when you check your own credit score. This type of inquiry does not lead to any change in score.

· Closing credit card and other credit accounts increase my credit score:

The longer the credit history, the better it is for your score. Closing a credit card is more likely to hurt your credit score than to help it, particularly if you close the card with a balance. Credit scoring models don't assess risk by how much credit you have available, but rather by how much of that credit you're using — a ratio known as "credit utilization". So, leaving accounts open, especially if they’re in good standing, is typically better for your credit score.

· There is only a single credit score:

It's likely that the credit reports from all the four credit bureaus will be slightly different and, therefore, so will the credit scores. The primary reasons being not all accounts will be reported to all four credit-reporting agencies, accounts on consumers' credit reports are not always updated at the same time and credit reporting companies' scoring models are different.

· Paying off collections immediately removes it from your credit report:

Your credit report reflects your credit history, which includes all your accounts and their associated payment statuses – both on-time and late payments. Late payments and collection account stay on your credit report for a fair period. So, simply paying off a debt will not immediately remove it from your report. Each time your credit report is pulled, your credit score drops.

· Bad credit score means = No Loans: A bad credit score makes it harder to get approved, but it’s not the only factor that creditors and lenders consider when they’re evaluating your creditworthiness. Income, Age, Amount of debt are other factors that play a role. You can be approved even with a bad credit score but you may be required to show collateral or given a higher interest rate.

· If I am keeping my credit activities on check then I do not need to know about my credit score:

The fact is it is essential to check your credit score at least once a year with RBI regulated credit bureaus like CRIF to have a clear picture of your financial status. CRIF allows you to have a free check once a year. Sometimes your financial activities affect your credit score and you stay unaware about it. Checking your credit score yearly can help you plan your activities accordingly for a more stable and error-free credit report.

CRIF is one of the RBI regulated credit bureau in India that gives you credit report and score in the most accurate form. Make sure you know the facts right and maintain a credit score that is above 700 to acquire financial assistance whenever needed. 

Understanding Credit Information Report- A Real Life Report Card!

A credit score can tell your creditworthiness in numbers but a CRIF Credit Information Report can explain to you the numbers of the above.

Imagine, you’re applying for a new loan and you need a CRIF Credit Score. Higher the score like 700+ is higher the chances, and lower the score is lower the chances of getting a loan. But how is this score determined and why did you get the XYZ Credit Score? The answer is in your CRIF Credit Information Report.

What is a Credit Information Report?

In simple words, it is an explanation of whether you should be sanctioned a loan. A Credit Information Report, also known as CIR, is a detailed report based on your past loans, repayment performance, loan inquiries, and overall credit history to determine a strong case for or against permitting you a new loan.

While a Credit Score is a numerical representation of an individual’s creditworthiness based on their past credit performance, CIR is a detailed study of what this Credit Score means and how it may affect your chances of getting a loan. In other words, a CRIF Credit Score provides probability but CIR backs it up with analysis and explanation of your performance history. Both are essential to understanding your creditworthiness.

How is your Credit Information Report procured?

Normally, banks and other financial institutions submit a month-on-month record of their customers, both individuals, and companies, to Credit Bureaus. Credit Bureaus are companies licensed by the Reserve Bank of India to operate as Credit Information Companies. Since CRIF is an RBI-approved Credit Bureau, this information is highly confidential that assures it is only used for record keeping and retrieved when registered lenders, banks or other financial institutions enquire for a loan application.

What does a Credit Information Report include?

CIR is a detailed report that covers your-

· Personal information such as your full name, gender, date of birth, contact numbers, address, place of employment and various identification numbers like Voter ID, PAN, Passport, etc.

· Account history contains details of your current and past loans and credit accounts, including the type of accounts you own, creditor’s name, current balance, credit limit, etc.

· Inquiries that include your number of applications for a loan or credit card at a financial institution and

· Credit Score: A three-digit statistical number that evaluates your creditworthiness. The credit score ranges from 300-900. Any score above 700 is considered good.

Why is Credit Information Report important?

Just like your Credit Score, CIR helps you to get a new loan. But with CIR, you as an individual or a company can understand why your score is high/low, identify and rectify errors (if any), and predict the possibility of getting a loan early on. In simpler words, it gives you an answer beforehand so that you can take a wiser decision of whether to apply for a loan or not.

How often does a Credit Information Report change?

Since records usually get updated on a monthly basis with new data, it is recommended to keep a tab on your CIR regularly.

How can you maintain a good Credit Information Report?

CIR analyses your credit history and inquiries, so keeping your current repayment transactions on time and simply checking your CRIF CIR and Credit Score regularly is a must. Besides disciplining your credit behavior like paying EMI’s and card dues on time, keeping your credit card balances low, managing your debt(s), limiting applications for new credit, etc. are some other useful ways to ensure you maintain a good Credit Score and Credit Information Report.

To check your current CRIF Credit Information Report,

Click HERE.

Is Credit Score the Only Criteria While Taking Loans

Credit score, a three-digit number provided by any of the four credit information companies in India, plays a crucial while taking loans. But it is not the only criteria which lenders take into consideration. Here are a few things besides a credit score that the lenders consider before they hand you that loan:

Age

Younger people are considered to be abler to repay a loan. The logic being that they have more time and energy to earn money and are more probable to repay the loan. Generally, banks prefer salaried employees between the age group of 21 to 60 years. The age criteria shift by 4 years for self-employed people ranging from 25 to 65 years.

Employment Stability

Your job stability holds a substantial weight with the lenders. Your career gaps not only bother the next company you are eyeing, but also the money lenders. Frequent job switches also indicate unstable behavior. For salaried people, they should be employed for more than 2 years in the current role and for business people, they should be running a business for at least 5 years. This, however, is quite subjective and is dependent on other conjoined factors like the organization you are working at, your annual CTC, the growth factor of your profile and so on.

Credit Score:

Credit score or credit report holds an important stance in getting you a loan at lower interest rates. Maintaining a good credit score increases the chances of getting loan with added multiple negotiating options those are related to tenure, loan amount, EMI (Equated Monthly Instalment) and interest rates. If in case your lender(s) finds you at risk with a default payment history, huge outstanding loan, or fraudulent track record, thereafter lenders have every right to cancel your loan application or might charge higher interest rates to lower their risk.

Past and Present Financial Situation

Finance digs into your past, but thank God it is only limited to monetary matters. Your financial history is very well considered by the lenders to build your personality. Details such as your payment patterns, defaults, and irregularity if any, is considered by the lenders to gauge the risk they are investing in. Obviously then, if you were a serial (payment) offender, your chances of landing yourself a loan are unfortunately bleak. Not otherwise though! Lenders also consider your current financial status and quite ironically, you are more likely to get a loan if your financial status is already good.

Existing EMIs

In case you are already paying your EMIs while you look for another loan then you are inviting more difficulties. But if you really need a loan, then you need to prove that you are earning a decent income and are left with an adequate amount of money even after paying all your EMIs and other expenses. If you are juggling well, then the banks won’t mind handing you the money!