credit score – Tedxyouth Caltech http://tedxyouthcaltech.com/ Sat, 26 Mar 2022 06:49:03 +0000 en-US hourly 1 https://wordpress.org/?v=5.9.3 https://tedxyouthcaltech.com/wp-content/uploads/2021/10/icon-5-120x120.png credit score – Tedxyouth Caltech http://tedxyouthcaltech.com/ 32 32 Loan Rejection with High Credit Score Reasons: Why Banks Reject Home, Auto and Personal Loan Applications Even When Credit Score is High https://tedxyouthcaltech.com/loan-rejection-with-high-credit-score-reasons-why-banks-reject-home-auto-and-personal-loan-applications-even-when-credit-score-is-high/ Mon, 14 Mar 2022 05:10:34 +0000 https://tedxyouthcaltech.com/loan-rejection-with-high-credit-score-reasons-why-banks-reject-home-auto-and-personal-loan-applications-even-when-credit-score-is-high/ Reasons for rejection of a loan application by a bank with a high credit score: why banks reject a mortgage, car or personal loan application even when the credit score is good By Rohit Garg Credit scores are booming in the market, from highly reliable credit bureaus to floating offers from payment platforms. It is […]]]>

Reasons for rejection of a loan application by a bank with a high credit score: why banks reject a mortgage, car or personal loan application even when the credit score is good

By Rohit Garg

Credit scores are booming in the market, from highly reliable credit bureaus to floating offers from payment platforms. It is important to understand the purpose of these different scores and their impact on your credibility as a borrower. Many factors are considered by other evaluators of your scores, based on your information. Then there are specific criteria for calculating scores if you have applied for a loan.

Risk managers are responsible for securing a bank’s bets to protect them from bad debts. In doing so, they may consider factors that are not used in the overall assessment. This may result in your application being rejected even if you are only just outside the threshold. Let’s see how to secure loan approval by understanding the various parameters involved.

Employment status and monthly income

Having a steady job and earning a viable income to cover your loan repayment terms are crucial aspects of being eligible for a loan. The loan application includes a myriad of questions regarding your career and finances, all of which are used to statistically calculate your credit score. The threshold may seem fair, but the riskiest prospects are automatically rejected. This process may be discretionary in many cases.

Previous data

Rating agencies do not consider traditional information from a loan applicant, unlike banks. It’s hard to let go of your tainted past, especially if you’ve already gone bankrupt. Being on the bad books of financial institutions can be very detrimental to your future reliability. Always being on track with your debt commitments and making scheduled payments is key to being classified as a performing asset for banks.

Frequent borrowing problem

If you inquire with too many banks for a loan at the same time and even one of the applications is rejected for some reason, it could damage your credibility. It’s always best to stick with your bank as you mutually benefit from each other, and the relationship manager ensures your application is approved.

On the other hand, if you have an existing loan from a financial institution and you apply for a new loan, your chances of getting it decrease due to over-indebtedness. Credit card loans are also red flags when you already have a running loan account.

Bank Policy

There can be no problem with your credibility. However, if the bank’s portfolio exceeded the loan penalty limit in a given period when you applied for a loan, the bank could rationalize your score to de facto reject it. Banks also compare details of other financial institutions for defaulter history.

CIBIL report

It can be considered as a qualified report if you have a good score with comments under certain sections. You might be in the habit of repaying your debt commitments (DPDs) late, or you might be the guarantor of a delinquent loan. Even defaulting on tax payments affects your credit score. All of this reflects negatively on your credibility.

Crucial Reports

If most of your assets are pledged or mortgaged, this indicates your indebtedness. If a bank can’t get hold of your property for its safety, it’s difficult to sanction your request, even if everything else is favourable. Your secured/unsecured loan ratio must also be favorable to secure you a loan. Also, the applicant should be aware of the EMI to income ratio, which is crucial in evaluating the loan application.

Abstract

Banks have strict guidelines regarding loan disbursements with bad bank policies and laws. It would help if you were diligent in managing your finances. Some banks have also started to integrate credit scores into credit card bills. You should never take a devalued score lightly and thoroughly educate yourself on the reasons for the same. If it is an anomaly, it must be reported immediately to the bank concerned. In case of ignorance on your part, you must remedy it as soon as possible.

General scores should be used as a guide to guide you through a custom score. A credit score of over 750 is considered highly desirable. Since sheet music is freely available to everyone with a bit of your details, you should definitely consider how this changes.

(The author is CEO and co-founder of SmartCoin.)

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How to compare and apply for a personal loan online – Forbes Advisor INDIA https://tedxyouthcaltech.com/how-to-compare-and-apply-for-a-personal-loan-online-forbes-advisor-india/ Wed, 16 Feb 2022 04:49:34 +0000 https://tedxyouthcaltech.com/how-to-compare-and-apply-for-a-personal-loan-online-forbes-advisor-india/ Nowadays, people are increasingly meeting their short term monetary needs by using low cost credit facilities, mainly personal loans. The transformational change in the banking and lending systems has greatly benefited consumers as well as financial institutions. Consumers have won because it allows them to borrow money easily and quickly; technology absorption ensured speed and […]]]>

Nowadays, people are increasingly meeting their short term monetary needs by using low cost credit facilities, mainly personal loans. The transformational change in the banking and lending systems has greatly benefited consumers as well as financial institutions. Consumers have won because it allows them to borrow money easily and quickly; technology absorption ensured speed and penetration. Financial institutions have improved their profitability because they are able to get a higher interest rate (compared to secured loans) on unsecured loans.

The Reserve Bank Of India (RBI) has an omnibus classification of personal loans, which includes various categories such as consumer durables, gold loans, education loans (table below); however, individuals consider personal loans to be short term unsecured credit facilities, listed below under “other personal loans”.

The growth of the personal loan category clearly exceeded that of gross bank credit. However, even within the overall classification of personal loans, the “other personal loans” category (i.e. the traditional personal loan) has grown even faster than the group as a whole, i.e. i.e. in the past two years, 2020 and 2021, growth has been dizzying 12% and 24% respectively; and, as of December 2021, outstanding personal loans stood at a whopping INR 9.37 lakh crores.

With the uncertainties afflicted by Covid, the demand for personal loans (PLs) has indeed exploded, especially since a personal loan is an unsecured loan, i.e. it is not necessary to give a guarantee. A consequence of the frenzied competition between lenders is the long-awaited digitization of PL processes, from onboarding a client to verifying credentials, closing the arrangement and finally transferring funds. to the borrower.

Digital banking services have primarily reduced bias resulting from human intervention and also provided a much improved user experience by making processes more transparent and easier to navigate.

Are you eligible to apply for a personal loan online

Anyone with a monthly income above INR 15,000 can be eligible for a personal loan. However, banks, NBFCs, and fintech companies have additional criteria for approving personal loan applications.

Apart from the monthly income threshold, consumers are also required to show an acceptable credit score, a healthy repayment history and income stability in the future.

Bankers also check the existing credit facilities used by the customer, if the cumulative monthly repayments are less than the monthly income. If net monthly repayments are already above an individual’s earning potential, the application is likely to be rejected.

How to compare a personal loan online?

Almost all banking channels, NBFC partners and fintech companies clearly mention the interest rate, relevant fees and other terms and conditions on their respective websites. Consumers looking for personal loans can maneuver or browse through individual lenders’ web sections to compare and contrast multiple offers.

  • When comparing personal loans online, the main differentiators include the applicable interest rate, processing fees, stamp duty, and any other hidden fees. You can self-assess the authorized loan amount, repayment term and applicable interest rate before continuing with your plans.
  • Visiting each bank’s website one by one can be a tedious exercise. It may be faster to access the platforms of some well-established financial services companies, which host a ready comparison of personal loan offers. It is best if you have a rough idea of ​​your own creditworthiness and thus focus your attention on the lenders most likely to suit you, i.e. traditional banks, NBFCs, fintechs.
  • If you are a salaried person with a good credit history, you can opt for banks like HDFC Bank, Axis Bank, ICICI Bank, Kotak Mahindra Bank; independent borrowers could evaluate NBFC offers; a borrower new to credit should look to fintech lenders. Conversely, you may wish to leave your contact details and you will receive customer service based phone calls based on which you can make an appropriate selection.

How to apply for a personal loan online?

After a thorough comparison of the different personal loan offers, you can continue with the selected provider. Some banks, NBFCs, and almost all Fintech companies have easy-to-navigate mobile apps that allow you to apply for various financial products, including personal loans, online.

However, if you are unfamiliar with online processes, all financial entities have voice customer support, through which representatives from the bank, NBFC or fintech company guide you through the process. online request. A “phy-gital” hybrid path is a good option to get familiar with fintechs.

Applicable interest rates

With the ongoing record repo rate scheme maintained by the RBI, a client with a healthy repayment cycle, an outstanding credit rating and a limited number of existing debt securities, can avail a personal loan at a rate of interest as low as 8.5% to 9%.

Typically, the interest rate on a personal loan ranges from 9% to 20%. The interest rate is in the low range for most public sector banks and private sector lenders: these institutions have the luxury (lower cost of funds) of onboarding quality clients, i.e. say those with a top notch credit history.

NBFCs and fintechs can extend PL to new borrowers and those with an unenviable track record; but this easy credit has a relatively higher cost.

INDICATIVE COMPARISON

term of the loan

The repayment term of a personal loan varies from 12 months to 60 months. As an exception, some banks are willing to extend the tenure beyond the five-year term to accommodate a large note facility.

amount of loan

Generally, you can avail any amount between INR 20,000 and INR 50 lakh as a personal loan. Some new age fintech lenders even give loans of INR 1,000. The principal amount that will be sanctioned entirely depends on the level and sustainability of income, credit rating, repayment history, existing liabilities, rate of credit utilization, dependence on credit for needs periodicity, the frequency of seeking credit facilities and the number of active credit accounts. including functional credit cards.

Other expenses

In addition to interest rates, financial institutions charge a processing fee which can be a fixed amount or a percentage of funds disbursed. In addition, there may be stamp duty charges, as well as penalties for non-repayment or potential failure to meet monthly equivalent installments (EMIs).

A significant percentage of personal loans are fully repaid before the end of the term. It is therefore relevant to confirm the cost of the partial/full prepayment of the loan.

Deadline for receipt of funds

Financial institutions have varied arrangements. With a greater push on digital inclusion, most lenders have created fully digital processes for personal loan applications and disbursements.

Aggressively entering the personal loan market, several lenders are gradually offering instant loans in which funds are credited to your account in less than 30 minutes. Where Instant Disbursement is not on the cards, funds will be received in 4-5 days outdoors.

End-use commitments

Although most lenders ask for an end-use statement, personal loans can be used for the full range of expenses, i.e. weddings, moving, renovations, medical emergencies, vacations or others.

Role of credit score

The credit score plays a vital role. Borrowers in the upper percentiles are welcomed by financial institutions and will always have access to the best deals and multiple options. On the other hand, there are only a handful of banks, NBFCs and Fintech companies that are open to extending new credit to subprime borrowers. and people with a faulty repayment history.

Conclusion

With the introduction of online process, the whole journey of getting unsecured loans has become easier and faster. However, caution is advised lest this newly created borrowing facility drives consumers into a debt trap. In addition, financial institutions must also be careful in granting credit loans, as these loans could lead to higher default rates.

Digital banking, including online borrowing, is a rapidly changing landscape, so you can expect ever-increasing innovation and convenience in the process of obtaining a personal loan.

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Should I apply for a personal loan online or not? To find https://tedxyouthcaltech.com/should-i-apply-for-a-personal-loan-online-or-not-to-find/ Thu, 08 Nov 2018 08:00:00 +0000 https://tedxyouthcaltech.com/should-i-apply-for-a-personal-loan-online-or-not-to-find/ When everything – from groceries to gadgets – is available online, why should credit be far behind? However, are online loans a good option for you? A sudden cash crunch can strike anyone’s life out of the blue. At times like these, all you need is quick, hassle-free access to credit. Armed with your smartphone, […]]]>

When everything – from groceries to gadgets – is available online, why should credit be far behind? However, are online loans a good option for you?

A sudden cash crunch can strike anyone’s life out of the blue. At times like these, all you need is quick, hassle-free access to credit. Armed with your smartphone, you search for a quick credit option and before you know it, you come across dozens of online platforms promising to provide loans, each promising you approval within minutes. , easy installments and convenient repayment terms. But how do you know which is the best deal, or are online loans a good option in the first place or not? Let’s dig deeper for answers.

1. Easy online loan options

First, when everything from groceries to gadgets is available online, why should credit be far behind? So, in step with modern times, banks and other financial institutions offer dozens of online financial products for you to choose from. However, the trust factor comes into play when accessing credit online. If a personal loan is guaranteed by a trusted commercial bank in India, you can be assured of its credibility.

So what are the benefits of accessing loans online? Here they are:

# Convenience: Needless to say, one of the main reasons to consider online loans is the convenience factor. The documentation for these loans is kept to a minimum. If you have the documents at hand, you literally apply for a personal loan in minutes, by uploading the necessary documents. You can do this from the comfort of your home or office, without having to go to a bank branch.

# Fast intervention : Online personal loans offer on their main USP a fast turnaround time. Not only do you get instant approval, but the money arrives in your savings account within hours. Therefore, if you find yourself faced with an emergency that requires you to immediately disburse a certain amount, an online loan can immediately come to your rescue.

2. Does your CIBIL score matter?

However, if it all sounds too good to be true and you think accessing credit online from banks is the easiest thing to do, hang in there a bit before you rush to apply. As a borrower, you should be aware that potential lenders pay close attention to your CIBIL score when assessing your creditworthiness. So, if you have a low CIBIL score, your loan application may not be approved.

3. Atypical credit score

The other advantage of borrowing from such lenders is that they do not rely solely on traditional parameters for loans and consider other atypical parameters for loans. For example, a P2P lender may consider your social media footprint from professional networking sites to assess your current career position and prospects for career advancement.

Based on other such atypical parameters to assess your financial situation, they determine your solvency. In such assessments, the CIBIL score may be given less importance when calculating your eligibility, depending on the risk appetite of the lender.

That said, it is prudent to maintain a good CIBIL score to gain access to timely credit at competitive interest rates. A good credit rating is a measure of a person’s financial health. Just as maintaining your physical health, with regular exercise and diet, maintaining your financial health is just as important with good credit habits.

(By Ajit Venugopalan, Managing Director, SVC Co-Operative Bank)

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