How to use a personal loan to correct your bad credit history?

One of the hardest responsibilities today, is managing your finances. Given the extent of today’s economy, plenty of individuals are facing financial difficulty. Because of this difficulty, even paying monthly bills will seem like a tedious process. Over time, this can quickly, increasing putting you in a financial trouble. At the same time, it will affect your credit score. To another individual, it may not seem like a big issue when the credit score is affected, until the time comes to apply for a loan.

You may find yourself with loan applications that are either getting rejected, or loan offers that are unaffordable. So what is the step you can take to correct this problem? For one, you can reduce all your debts and correct any delayed payments. But if you don’t have the sufficient funds for it, you can always apply for a persona loan. But with a loan on hand, there is always an added of risk of your credit score plummeting more. Here is how you can ensure that this loan will correct your credit history.

Check the value of your debts

The first step you must take is to consider the financial value of your debts. This will provide you with an idea of how much of funds you will need to apply for in a persona loan. This is a crucial step to take, as it furthermore sets the criteria for your loan, namely the personal loan interest rates, tenure and EMIs. You can either opt for a loan amount that will cover all your debts in total, or a substantial amount that will help you cover at the most urgent or largest debt you have. In this way, the overall debt will be reduced, which in turn can improve your credit score.

Look for low interest rates

One of the main drawbacks of a personal loan is the interest rates. Since this loan comes under the category of unsecured loans, the personal loan interest rates tend to be on the high side. However, they should not discourage you from applying for this loan. The best way to overcome this issue is by approaching banks or financial institutes that offer this loan with low interest rates. Shopping around and compering loan rates is one way to know if you can afford it. At the same time, you can use the information your find in your research as leverage to negotiate for better loan rates.

Tenure of the loan

Like any other loan, the personal loan interest rates will play an important role with the repayment tenure and vice versa. A personal loan repayment tenure can be anywhere between 1 year to 5 years. A short tenure will lead to high internet rates, whereas a long tenure will include a low interest rate. Calculate the most appropriate loan tenure that will suit your needs and help you solve your debt problem, will lowering your credit score in the long run.

What are the habits you need to become a highly effective credit card user?

Amongst the different banking cards, credit cards have proven to be the most favorable option. However, when it comes to using a credit card, there is a huge financial responsibility you will need to take on. For one, you need to keep track of your expenditures. At the same time, you also need to consider the repayment dues and the interest rate. Additionally, if you make a late payment, there is a high chance it can affect your CIBIL score. The only way to ensure that the credit card will benefit you in the long run is to ensure that you develop an effective habit when it comes to using this card.

Make timely repayments

As a part of the credit card usage, you will need to repay back the borrowed funds over time. This is an important habit you will need to inculcate at the time you get your credit card. This repayment process reflects on your CIBIL score. Even a single delayed repayment will lower your credit score. Individuals with a perfect CIBIL score do not miss a single payment on all the credit lines they opt for. This is the same step you will need to take. In order to make this process convenient for you, ensure that you automate your payments so that you avoid any scope of delaying or missing a single payment. Ensure that the account connected to your credit card payment is well furnished for this purpose.

Maintain a minimum outstanding balance on your credit card

There will come a time where you will have an outstanding amount on your credit cards. This can occur if you recklessly use your card or impulsive purchases. Alternatively, emergency financial requirements such as a medical emergency may require you to use the card to make a large purchase. While you may not be able to completely clear the outstanding balance in a single go, you can ensure that there is minimum outstanding balance on your card. A large debt on your card will invariably affect your credit score. However, by reducing the size of the debt, you can prevent it from lowering your credit score drastically. To avoid any unnecessary expenditures in the future, you must never spend anything on your card which you cannot afford to repay in full at the end of each billing cycle.

Use your credit card only when necessary

In order to keep above the competition, plenty of banks and financial institutions will offer your good deals and discounts on their credit card, if you only you use them. However, this credit, should only be used when absolutely necessary, even though it is easily or readily available. Excessive use of this available credit will unbalance your credit score in a blink of an eye. To avoid any possibility of hampering your credit score, you must only use your credit cards if there is a requirement for it.

Don’t wait, buy a house within your budget today!

Purchasing a home may be a requirement for many individuals but today, it also stands as a means of investment for the future. But when it comes to the decision to purchase a property, various factors are required to be taken into consideration. For one, the price of the property is the leading factor for purchase. But the value of this price in turn will change, depending on factors such as future infrastructural growth and value of the land amongst many others.

Yet the decision yet remains whether you should purchase a home now or wait in the future. But there are several factors that will favor you, if you only purchase your home today. If you only purchase your home within a budget, here is how it can benefit you.

Affordable EMI’s

One advantage of a purchase of a property is that the value only appreciates, and rarely ever depreciates. Plenty of banks and institutes have accepted this factor, and taken this into consideration when applying for loan to finance the purchase of a home. Therefore, this makes it easier for one to calculate the ideal loans rates in terms of interest, tenure and even EMIs. You can even use the loan EMI calculator to work out the loans rates that will benefit you in the long run keeping in mind the budget you have at the moment. This in turn will help you plan your finances, in order to save up sufficient funds to sell out the property after a given time, and purchase a larger property from the proceeds of this purchase.

Tax benefits

Although financing a home purchase with a loan will affect your finances, you can get plenty of tax benefits out of it. For one, if you sell the purchased home after a period of three years, there is no requirement to pay any capital gains, if the funds are reinvested in a property. This tax benefit, in addition the savings in rent and appreciation in the property value will ensure that you can purchase a home on a budget, and improve it for a higher value.

Additionally, you can also get an income tax deduction on the home purchase. Under Section 80C, you can get at most a 1.5 lakh deduction on a home loan principal amount. For a couple, it would mean Rs. 3 lakh. Under Section 24, you can get a deduction of Rs. 2 lakh on the interest that is paid every year, if the purchased house is self – occupied. For a couple the amount will be doubled. Alternatively, if the house is given on rent, the entire amount can be claimed for deduction. With these factors, in the tenure of the loan, you will get financial returns that will benefit you

Future selling price

As mentioned previously, the value of property appreciates in the future. This will work as an advantage for you in the future, especially if you the value of the property appreciates. Additionally, you can also alter the property to increase its value, which can be overall sold a price that is higher than its original purchase price. You can use the loan EMI calculator, to assist  you in this step.

4 reasons why your loan application can be rejected?

A loan is a great way to fulfill any financial requirements or assist in financial expenditures. In addition to this, you can opt for loans that will suit your need to perfection, for example, a car loan to purchase a car, or a business loan to finance one’s business. However, as a part of the loan application process, you will need to satisfy certain loan criteria. These criteria may differ from the type of loan you may need to apply for. While you can always use the loan calculator to check your loan eligibility and avoid the possibility of loan rejections, here are some factors you can consider when applying for the loan.

• Joint loan with your sister or friends:
As a part of the loan application process, another individual may apply for a joint application. However, certain banks have restrictions when it comes to fulfilling the criteria for the joint loan application. For one, there is a restriction when it comes to sisters applying for a co – applicant. Alternatively, banks do not provide a co – applicant status to friends of the applicant. However, you can choose to opt for a loan with your parents as co – applicants.

• Your loan application has been rejected before
It is not a wise move to keep applying for a loan impulsively and without proper rationalization. If your loan application gets rejected, it will be recorded in your CIBIL record. Therefore, you must weigh the pros and cons before applying for loans anywhere. With every loan application you make, wait for a feedback or an offer before applying for a loan in a different institute. This will give you a chance to rectify any error or even update your credit score before you apply for you next loan application

• You are a compulsive job hopper:
Banks place a lot of importance on job stability when it comes to applying for a loan. Certain banks even insist that an applicant should be employed with their workplace for a certain tenure before they are eligible for any loan. However, this tenure can change depending on the institute and loan type you are applying for. Additionally, if your company’s future indicates that it is not financially stable, the bank you are applying for a loan, has a right to reject your applicant.

• You had to pay when you were a loan guarantor
When you stand as a loan guarantor for other loan applicants, you have to stand responsible in the event that the individual does not repay the borrowed funds. When this occurs, you will be responsible enough to repay back the funds. This in turn, will affect your CIBIL score, and consequently your future loan applications.

Are you aware of these personal loan EMI calculator benefits?

There will come a time in your life, where you will be required to make a large expenditure wherein your current income may not suffice. At such a stage, you can opt for the personal loan. Amongst all the different loans available, the personal loan comes with no add on frivolousness while providing the right monetary stimulus to your requirement.

But applying for the loan alone will not satisfy your financial requirement. You will also need to ensure that you can repay the borrowed funds. Additionally, you will also need to take into consideration the interest rates and the processing fees which will be added to the overall loan amount. This overall amount needs to be repaid on a monthly basis, through EMI’s. But how can you ensure that the EMI amount will match your income will balance your other debts? Through the personal loan EMI calculator, you can calculator the EMI amount that is most applicable to you. Here are some of the other benefits of the personal loan EMI calculator you can take advantage of:

Amortization table at the end of the calculation:

When it comes to calculating the personal loan amount you need to repay back, plenty of factors will be taken into consideration. For one, the principal amount is taken into consideration. At the same time, the various additional fees will also be added to the loan amount. Finally, the interest rate is also calculated on the overall loan amount that is taken, along with the tenure of the repayment. Once this whole amount is calculated, it is further divided into various EMI’s which will be required to repaid on a month on month basis, until the tenure is met. Overall, this may seem like a tedious job to calculate, especially manually. However, the personal loan EMI calculator will make this calculation into a quick and convenient process. At the same time, the resulting calculation will be formulated in an amortization table, which will provide your EMI’s in a detailed breakup.

Help compare loan products

Every individual will have different financial requirements. Keeping this in mind, plenty of banks and financial institutes offer competitive rates, with a promise to satisfy your financial requirements. However, to ensure that these offerings match your requirements, you can use the personal loan EMI calculator, to calculate the amount taking into consideration the offering of each of these banks. This will provide you with relevant details and information that you can use to compare each offering to know which the best personal loan offer is.

Provides you with sufficient resources to negotiate terms

Most banks will provide you with personal loan offerings with different rates. These offering may not satisfy your requirements. But by using the personal loan EMI calculator, you can calculate different results which, you can use as leverage to negotiate the final loan amount.

Apart from these factors, there are plenty more benefits of the EMI loan calculator which you can take advantage of. However, in the end, you must ensure that you consider all the loan factors before applying for the final loan.

How to manage your credit utilization ratio on your credit card?

Amongst the several banking cards that are available, the credit card is one of the most popular choices. However, when applying for a credit card, there are certain factors you may need to take into consideration. No doubt, you will consider the interest rates and the benefits that come with this card. However, you will also need to consider the credit utilization ratio.

Credit utilization is the ratio, between your credit card expenditures and the sanctioned limit for the card. This canbe calculated for your individual card or cumulative cards. The overall spending on your card as compared to the total sanctioned limited on all your cards it eh cumulative credit utilization. This ratio is important as it can affect your CIBIL score.
A high ratio indicated that you are credit hungry while managing a poor debt. This indicated a risky behavior when it comes to borrowing. A nil ratio does not reveal important details about your expenditures, which in turn can affect your CIBIL score. Given below are the steps you can take to maintain this ratio:

Reduce your expenditure:

This is one of the simplest ways to maintain your ratio. However, it may not be the easiest step to take. Review your history and check to see if you can reduce any unnecessary or impulsive expenditures. At the same time, you will need to avoid making these same expenditures in the near future.

Opt for a higher credit limit:

Opting for a higher credit limit can decrease the spending factor or increase the credit limit factor. Amongst both options, opting for the bigger limit will be more beneficial. In order to increase your limit, you can review your credit card issuance. Most banks offer to increase the credit limit after a certain expenditure tenure or usage. You can always check with the card company to find out if you are eligible for this increase. 

Apply for an additional credit card:

If you cannot raise the credit limit on your card, you can always apply for an additional card. This card will raise your overall available credit limit.This will make it easier for you to control a high credit utilization ratio. However, you must ensure that your expenditure is spread smartly over all the available cards you have, while ensuring that the dues are paid off.

Distribute your expenditures between all cards:

As mentioned previously, you can always apply for an additional credit card in order to increase the overall available credit limit. However, you can always take your current credit cards into consideration, and review each card’s expenditure separately. Ensure that the consecutive expenditures are distributed judiciously over all cards. Additionally, ensure that your expenditures are synchronized with your billing cycle and due dates.

When should you say a ‘yes’ to a persona loan?

Earning an income is a great way to manage your expenses and save your finances for the future. However, at some point in your life, you will fall short of funds, which will require you to seek an alternate source to gain the required finance that will fulfill the requirement. Amongst the different options that are available, the personal loan has been a viable one. Given below are the various reasons why you should say a yes to this loan in such a situation.

No collateral required

Most loans are divided into two categories, namely the secured and unsecured loan. In the secured loan, you would need to provide an asset of an equal or a substantial amount in comparison to the loan amount. In other words, you will be required to provide collateral.However, in an unsecured loan, you need not provide any collateral. This makes it easier to apply for a loan, without any hassle of getting the appropriate asset for security. Therefore, if you do not have any assets of relevant value and require funds, you can always opt for this loan for financial assistance.

Short processing time

As a part of the loan application process, you will be required to submit a certain set of documents pertaining to the loan you are applying for. For example, when applying for a business loan, you will need to provide the income tax returns, abusiness plan for the future and a document validating the reason for the loan and its usage towards the business. This is no different for the personal loan. However, unlike other loans, the persona loan requires minimum documentation, namely pertaining to your identity profile and income report. Such documents take a few hours or days to be verified and processed, thus reducing the overall processing time of a loan as compared to other loans. In the event you are looking for quick finances, the personal loan makes an exceptional option.

Repayment affordability

Every individual possesses different financial habits and different expenditures. This can lead to different financial requirements, especially when it comes to large expenditures. At this stage, you can opt for a personal loan amount that will fulfill your financial requirements. However, at the same time, you need to ensure that you can afford the loan. Keeping this in mind, banks and financial institutes set eligibility criteria which need to be satisfied before your loan application can be processed. In the process of verifying your loan application, your income, current debt to come ration and your credit score will be taken into consideration.

Apart from these reasons, there are plenty more you can refer to. In the end, however, the decision to apply for the loan and to repay it is your responsibility. Personal loans must only be used as a last resort to meet an unavoidable expense, as taking on any debt is a financial decision that can last a lifetime.