You don’t need a stellar credit score to qualify for a mortgage

When lenders say their doors are open to home buyers who don’t have the best credit profiles, should you believe them? If you’re a first-time buyer, qualified on income and other key criteria, but you happen to have a FICO credit score in the mid-to-upper 600s, do you really have a shot at getting a mortgage?
The answer is probably yes. But the latest statistics on credit scores and mortgages overall are sobering. Not only are average scores on new loans closed by lenders continuing to rise, there’s also growing evidence that large numbers of people with middling credit scores are simply not applying for mortgages. It’s not that they’re getting turned down; rather, they’re self-selecting themselves out of the mortgage market, possibly because they assume their credit scores will get them rejected wherever they apply. In the process, they may be needlessly missing a chance to nail down 30-year fixed-interest rates in the mid-3-percent range to buy a home.

●FICO scores on mortgages closed in May were up in all loan categories. The average score on conventional loans — those eligible for sale to giant investors Fannie Mae and Freddie Mac — was 754, according to Ellie Mae, a software firm that tracks the field. That’s high by historical norms and is up two points since February. FICO scores run from 300 to 850. The higher the score, the lower the perceived risk of default.
●Scores on Federal Housing Administration and Veterans Affairs mortgages also have risen, but they are significantly below those at Fannie and Freddie. The average score at FHA last month on loans to purchase homes was 686. At VA, it was 707. The average American has a credit score around 695, according to FICO.
●New research from the analytics firm CoreLogic found that dramatically fewer people with FICO scores in the mid-600s are applying for loans compared with earlier decades. In 2005, roughly 25 percent of applicants had FICO scores of 640 or less, but by 2015 that had dropped to just 5 percent. Rejection rates for these applicants have not risen significantly — lenders “are matching the market” with loan approvals, according to CoreLogic deputy chief economist Sam Khater. The problem is “that people with lower credit have not come back” in the same numbers as before the financial crisis, he said in an interview.
What’s going on? Have home mortgages become the exclusive preserve of the credit elite? Or have potential buyers with middling credit scores somehow gotten this message from banks and other lenders: “We don’t make mortgages to folks with scores like yours anymore, so don’t bother to apply”?
John Taylor, president and chief executive of the National Community Reinvestment Coalition, an umbrella group representing hundreds of local community organizations, thinks it’s definitely the latter. “The spigot’s been turned off for working-class people” who want to buy houses, he told me. “People are being turned down, and they don’t believe the banks are going to make loans to them.”
Mike Fratantoni, chief economist for the Mortgage Bankers Association, disagrees. He thinks the mortgage market overall is strong, rejection rates have not increased and the high credit-score averages on Fannie-Freddie loans reflect an important shift that is underway. Premium reductions at FHA, coupled with premium increases by private mortgage insurers, have driven more sub-700 FICO buyers to FHA and away from Fannie and Freddie, he suggests. Nearly 40 percent of new-purchase loans at FHA last month had scores between 650 and 699, and 20 percent were between 600 and 649.

Bob Walters, chief economist for Quicken Loans, one of the highest-volume mortgage lenders, says “there’s a misperception,” especially among millennials, “that you need 20 percent down and great credit” to qualify for a mortgage in 2016. Yet with FHA loans requiring just 3.5 percent down, generous underwriting rules on debt-to-income ratios and other application factors, that’s just not the case.
Bottom line here: There’s no reason to be a no-show in the home-purchase market if you know where to target your application. If your FICO score is well below 700, you can pretty much forget about Fannie and Freddie. Apply to lenders that specialize in FHA-backed mortgages, where your odds of success are much better. Lenders insist that they want your business and are not looking to turn you down, as long as you’re qualified. So call their bluff: Give it a shot.

Author: https://www.washingtonpost.com/
Reposted By : http://www.credit4loan.com/

Rising NPAs, loan frauds drive banks to detectives' alley

NEW DELHI: Burgeoning cases of non-performing assets (NPAs) and piling loan frauds have led banks to private detectives for conducting 'undercover' operations to unearth hidden data against defaulters who have cheated them of crores of rupees before vanishing into thin air.
With these cases having gained prominence recently in the wake of some huge defaults like those by Kingfisher AirlinesBSE 3.03 % and its owner Vijay Mallya, banks have brought out advertisements and approached private detective agencies to mine information against fraudsters.
As per official records, a number of banks have sought empanelment of detective agencies with their assets recovery divisions to not only "locate the missing/absconding NPA defaulter" but also to "ascertain their present occupation, income streams among others".

"We have been helping the banks on these issues for quite a few years now but this time there is pressure on them to catch not only the small but also the big fish. Private detective agencies are working on thousands of such case across the country.

A large public sector bank recently sought help to tackle the NPA menace and wants private sleuths to "unearth uncharged properties of the defaulter for recovery action with the help of documentary evidences".

We have been helping the banks on these issues for quite a few years now but this time there is pressure on them to catch not only the small but also the big fish. Private detective agencies are working on thousands of such case across the country.

"In order to ensure that the banks get vital information on defaulters and absconders, our agents are conducting undercover operations as we cannot go and just knock on the doors to obtain such information in these cases," Chairman of the Association of Private Detectives of India (APDI) Kunwar Vikram Singh told PTI.

He said despite the job requiring special skills to conduct covert operations, the APDI's collective success rate in tracing bank defaulters has been as much as 90. He said absconders and fraudsters many a time exist "right under the nose" but under a changed identity.

Singh said his detective firm Lancers Private Limited is at present working with banks like SBI, Bank of India and Bank of Patiala on such cases many of which have come to it in the recent past.

"The banks are up against some of the smartest brains when it comes to non-payment of loans and huge defaults. There is not much staff with any of us to physically get information against such entities and hence private detectives hold the key to this problem.

"It is ensured that when we bring on board a detective agency we enter into a confidentiality agreement with them called the NDA (Non-Disclosure Agreement) which mandates that such snoop information about the defaulter will be protected from any public disclosure," he said.

As per a fee chart prepared by a leading bank, it will pay Rs 7,500 (in a single case) to the snoop agency for providing data about people connected to the defaulter like the borrower, guarantor or director of the firm.

In case the detectives get documentary proof of assets (not in records of the banks) of the defaulter which can be attached, an amount of Rs 20,000 for each such property located will be paid.

"We have collected property papers worth hundreds of crore against such defaulters in the past. This is a very specialised job and we have deployed some of our best agents for the task," Director of a Delhi-based snoop firm Hatfield Detectives Pvt Ltd Ajit Singh said.

Banks have also sought from these agencies, as per the scope of work agreement, some non-traditional sources of information against the defaulters which the bank "cannot access by utilising normal channels like CIBIL database, internet and local enquiries."

An agreement brought out by one of the banks states that private sleuths need to "locate the borrower, co-borrower, guarantor, mortgagor, including their legal heirs who are either untraceable or not available at the addresses given in bank's records."

Detectives also need to "ascertain latest information about their present address, occupation, businesses, income streams, details of all their assets, their location, whether in India or abroad, and value and ownership related information."

"Government investigative agencies like police, CBI, Income Tax department or the Enforcement Directorate have their limitations. Banks also have manpower issues in their special debt recovery units. Getting private detectives on board will surely get us the desired results as past experiences have not been bad in this domain," the banker said.

Author :- http://economictimes.indiatimes.com/

Reposted by: http://credit4loan.com/

Points to keep in mind when lending to friends and family

When 32-year-old Sourabh Thanekar's friend desperately sought money from him for a medical emergency in the family , the Ahmednagar-based finance executive did not think twice about parting with Rs 40,000 immediately. Two days later, a shocked Thanekar realised his friend had lied and had taken the money only to buy the latest model of a high-end smartphone.
While Thanekar was unfortunate enough to have been conned by someone he considered a friend, lending money to friends and relatives is common practice in our country. From small hand loans given to meet real and imagined emergencies to large sums meant for setting up business ventures, money changes hands with little or no paperwork and an often misplaced sense of trust.

The open-ended nature of the agreement usually ends in defaults, with money lost and a relationship broken in the process. While it is difficult to say no to requests for money from loved ones, here's how you can handle the situation without burning any bridges.

Before you lend money, ask yourself if you can afford it. Remember that you are unlikely to getthe money back for a long time to come, if at all. Figure out if you can deal with an emergency with whatever you have left. If you are working towards a financial goal such as buying a house or saving for your child's education , consider to wha extent your generosity can set your plans back.

Manoj Kalwar, 31
Lent Rs 40,000 to a friend who claimed a medical emergency and instead blew the money on partying.
"Today, I cross-check with common friends and relatives before giving anything to anyone."
Says Tarun Birani, Founder and CEO, TBNG Capital Advisors: "Keep 5% of your savings in liquid funds to help dear ones in the event of a financial emergency." Allocating a fixed portion of your money to cater to such situations won't affect your other goals. Even if you know the borrower well, do a due diligence. Don't accept their reasons for needing the money at face value, like Thanekar did. Mumbai-based IT engineer Manoj Kalwar found himself in a similar situation.

Hounded by a friend who wanted money for a family member's medical treatment, Kalwar lent him Rs 40,000 over three months in 2014. Later he learnt that his friend had taken Rs 1 lakh on the same pretext for some others as well. Only, no one ill in his family was ill. He had blown the money on luxuries.

Not the one to give up, Kalwar pursued his friend for six months and recovered the amount. "I keep my emotions aside while lending money now. I also cross-check with common friends and relatives before I lend," Kalwar says.

Hounded by a friend who wanted money for a family member's medical treatment, Kalwar lent him Rs 40,000 over three months in 2014. Later he learnt that his friend had taken Rs 1 lakh on the same pretext for some others as well. Only, no one ill in his family was ill. He had blown the money on luxuries. Not the one to give up, Kalwar pursued his friend for six months and recovered the amount. "I keep my emotions aside while lending money now. I also cross-check with common friends and relatives before I lend," Kalwar says.

Shounak Potdar, 31
Gave Rs 50,000 to a friend as downpayment for a car.
"I now discuss the repayment schedule so that the borrower understands that I need the money in future."

According to Viral Bhatt, Founder and Advisor, Money Mantra, compulsive borrowers are to be avoided. "Learn to turn down requests after lending money a couple of times. Also, politely ask them to first repay the outstanding amount when they approach you for new loans," he says.
Another factor to consider is how close you are to the person seeking the loan . Sapna Tiwari, Chief Financial Planner, Rupeewiz, says, "Ask yourself how long you have known the person and how often you interact. It will help you decide whether the person is really a close friend or an acquaintance."
The reasons for borrowing can appear pressing sometimes. IT professional Koyel Ghosh found herself helping her friend, who had lost a job, pay off an education loan EMI of Rs 25,000. She never got the money back. "Check the financial status of the borrower before you lend," she says today.

Koyel Ghosh, 30
Ended up paying an EMI of Rs 25,000 for a friend who did not have a job. She never got the money back.
"It's important to check the financial status of the borrower before you lend."

A common problem faced by most lenders is the inability to ask for their money back. Pune-based engineer Shaunak Potdar lent a friend Rs 50,000 as down-payment for a car. He never saw the money again. When the transaction is among friends and family, the borrower rarely feels a sense of urgency to repay the loan. As there is no deadline, repayment becomes last priority. There is no late payment fee, no stiff interest rates or penalties. The borrower has no motivation to take the repayment seriously. "When I lend today, I politely discuss the repayment schedule so that the borrower understands that I need the money in future," says Potdar.
When you are approached for money, don't part with it immediately. Buy time to verify the need. During that time, the borrower could approach others for help and get it, bringing down the quantum of loan he needs from you. Even then, do not give the entire amount sought. Rohit Shah, CEO of financial advisory firm Getting You Rich, says "Give 30% to 40% of the requested amount. That way, in case the borrower fails to repay, you will not be left with a massive bad debt."
Sometimes a lender unwittingly plays into the hands of compulsive borrowers. For instance, pleas for loans from distant relatives and acquaintances. Ankur Kapur, Founder, Ankur Kapur Advisory, explains, "The reason why the borrower is knocking on your door could be your lavish lifestyle and habit of discussing your financial status in social gatherings." Word spreads quickly and unscrupulous elements try to cash in.

Rohan Dhulla, 35
Loaned Rs 2.5 lakh to a friend to start a new business.
"Now I study the feasibility of a business plan before lending money for new ventures."

When distant relatives or colleagues seek financial help, try to resolve the issue for them rather than helping them to take an easy way out with a loan from you. "Advise them to take loans against fixed deposits or gold at low interest rates from NBFCs. Also explain the importance of contingency funds," says Kapur. You can play mentor to a colleague who needs money. "Ask your colleague to approach HR for advance salary if the amount required is large," says Shah.

Adds Tiwari, "If there is no financial awareness among colleagues, arrange a workshop on financial planning for them." In this age of startups, seeking money from relatives to start a venture is common. This not only helps the borrower avoid high interest bank loans, but also serves as a safety net against harsh penalties, should the business fail, making repayment difficult.

In 2014, a friend of Mumbai-based entrepreneur Rohan Dhulla approached him for Rs 2.5 lakh to set up a business. Dhulla agreed to lend. An agreement was drawn up, whereby Dhulla got 15% stake in the company, and the loan had to be returned within two years with 10% interest. In the first five months, Dhulla got back Rs 55,000 before the venture sank. Now he is contemplating buying out his friend's share and getting the business back on track.

If a friend or relative asks you to be guarantor when they seek bank loans, don't agree unless you are sure about the borrower's ability to repay. If the borrower defaults, the bank will recover the amount from you.

If you must lend
1. Draw up a written agreement. Give the document legal sanction by getting it notarised.

2. Work out a repayment schedule. Mention a time frame within which you want the money back and how much needs to be returned monthly.

3. Remind the borrower politely if repayment schedule is not followed. If the problem is chronic, help borrower resolve money issues by guiding him.

4. Don't hesitate to charge interest. It would obviously be less than what is charged by banks and credit card companies.

5. If the relationship is really important, treat the loan as a gift. Lend only an amount you can write off.

Author : http://economictimes.indiatimes.com/

Reposted By : http://credit4loan.com/

Should you give your teenage child access to a credit card?

You may think that teenage children and credit cards are a recipe for disaster but before you dismiss the idea give it a second thought. We live in a world that is dominated by credit where everything from groceries to gadget are now being bought on the credit card and the generation next may well loose the use for cash! In a world like this, it is very important to give children the exposure about the use of credit and the need to build a good CIBIL score and make an attempt to increase it as well. So if you have been toying with the idea of giving your teenaged kids access to a credit card, here are some compelling reasons to go ahead with it.

A good start to building credit

Till your child reaches the age of 18, she will not be authorized as a primary user of a credit card. She can however use an add on card on which you are the primary holder and by doing so the card issuer begins reporting her credit usage to CIBIL which gives her a head start on building good credit. When you give her the add on card, you must educate her on the responsible use of the card and the need to make timely repayments. Ensure that she makes the best attempt to repay the outstanding amount with the pocket money she earns or some odd jobs that she may take up along with her academics during vacations and the like. Teaching her responsible use of credit is a life skill that will help her improve her CIBIL score when she grows up and has access to more credit lines.

Using plastic money for the right reasons

It is important for you as a parent to tell your teenage child that using a credit card per se is not a bad thing so long as it is used responsibly. She should not be intimidated by the idea of using the card, but use it for the fact that it is indeed supremely convenient. Whether she needs to grab a quick bite between classes or make a dash to the bookstore and does not have the cash on her, a credit card can come in handy.

Aid in an emergency

Much as you would like to protect your child from all evils and untoward situations in life, the truth is sometimes life may throw a spanner at them. Your teenage child may thus find herself stuck in a situation that is not so pleasant. For instance, God forbid she misses a connecting train or a bus when she is on a school or college trip and may have to get a ticket on her own. Besides there may be medical emergencies as well where access to a credit card may prove to be a stitch in time.

Preparedness for life

Children who do not have access to finances at any early stage or are shielded from all financial decisions or situations in the family at the early stage in life may get a rude awakening when time comes for them to handle finances on their own. However, with guided access to a credit card in their teen years they grow up to be responsible individuals who are then equipped to handle credit responsibly for the rest of their lives.

Parental guidance

While making your teen an authorized user of your credit card or giving her an add on card is a good idea here are the things you should most definitely do:
• Keep a close watch on the credit card statement and encourage her to review the bills with you so that chances of unauthorized uses are waived off
• Encourage her to keep receipts of whatever purchases she makes and match them against the statements
• Always pay the outstanding amount in full within the billing cycle on time
• Tell her how crucial timely repayments are to build a good CIBIL score
• Check your own CIBIL report periodically and explain to her how to keep a watch over one’s CIBIL score
• Teach her that lending her credit card to anyone no matter how close is a strict no-no.
• In case of a lost card, ensure that it is reported immediately

Finally, be prepared to deal with some teenage drama and be ready for situations where blames will fly thick and fast, but where it is necessary to put your foot down like setting an account limit is the best way to avoid unpleasant or even rude shocks at a later date. Your teenage child may be quick to judge you or blame you, and may even come across as ungrateful, but as parent you are undoubtedly preparing your child for life by giving her access to a credit card from her teenage years.




Author :- http://www.moneycontrol.com/
Reposted By :- http://www.credit4loan.com/

How this 7 points checklist makes your home buying easy

When two colleagues at a software company, Mayank Patil and Sundar Iyer, decided to purchase a property in the suburbs of Mumbai, they had a different set of experiences altogether. Over the next eight months Mayank got into a number of challenges like lack of clarity on title of property, bank refusal to fund the project, delays by the builder in getting basic amenities. On the other hand Sundar started his house hunting with a seven points checklist on the key points to address while acquiring the property. Not surprisingly, Sundar’s journey was a lot simpler and largely hassle-free. In traditional Indian parlance there is aphorism that - “Marrying off your child and building a house are the two biggest challenges that a man faces.” But if you plan and execute the purchase of your property like Sundar instead of Mayank, chances are that your journey will much smoother.

Here is the seven point checklist that Sundar opted for while purchasing the property.

1. Does the property fit into your budget, tax framework and financial plan?

When you buy a property, banks will be willing to fund the property. Most banks and home financing companies will finance up to 80-85% of the cost of the property. The balance will have to be brought in as your equity margin. Ensure that you have these funds available with you. Secondly, check your CIBIL score, which is offered online for a small fee. If you CIBIL score is high in the range of 750-900 you stand a much better chance of getting a loan at different loan providers. Thirdly, ensure that you can afford to pay the EMI. The thumb rule is that your EMI for the home loan should not be more than 40% of your net take home salary after considering your routine expenses. This is also the criterion that the banks will use while financing like five times of your gross salary. Lastly, ensure that you are able to get the full tax benefits. There is a tax exemption of Rs.200,000 under Section 24 for interest on home loan, an additional deduction of Rs.50,000 for first-time buyers and an outer limit of Rs.150,000 under Section 80C for principal repayment. You need to structure your EMIs in such a way that you are able to make the best of all these provisions.

2. Check the location and amenities of the property

This may appear to be quite elementary, but a little bit of focus can save you a lot blushes later. Ensure that basic requirements like provisions, vegetables and other household needs are just a stone’s throw away. The closer your property is to a bus-stop or railway station or metro station, the more convenient it is for you to commute efficiently. Ensure that getting from your house to the city centre or your office does not involve too many traffic snarls and road chokes. These minor issues can make life a lot easier when you move into your new house. Also check out the water supply, sewerage and electricity connection agreements and approvals from the municipality.

3. Check out the rental potential and resale value prevailing...

When you buy property, there is a strong investment angle to it. As an investment, there are two things you need to consider. What is the rental value of a similar property? The rental value in most cities ranges from 3-5% of the value of the property per year. The higher the rental potential as a percentage of the price you pay, the better it is. Secondly, you also need to evaluate the re-sale value and potential of the property. You may always need to move to another city and you do not want to be stuck with an illiquid property, nor do you want to do a distress sale. Above all, you also need to ensure that you are not left with negative equity; meaning your loan outstanding must not be more than the value of the property.

4. Understand the actual cost of the property you need to pay

Buying a property can be quite a nuanced affair. What your builder or seller tells you is the cost at which he is willing to sell the property. There are other adjunct costs that can add up to quite a bit. The registration cost is about 1% of the value of the property while the stamp duty varies by state and can add up to 2-4% depending on the state in which the property is located. Most builders impose additional costs like building fund, club fees, gymnasium membership fee, car parking charges etc. In addition, you may also have to bear additional costs like estate agent fees, land surveyor fee, notary charges, legal opinion fee etc. Add all these up to get a picture of your actual cost. More importantly, understand the difference between carpet area, built-up area and super built-up area. Most builders quote the price based on super built-up area which includes common corridors and common space. What you must understand is the carpet area which is the area you will actually get to live in.

5. Check that the title deeds and paper work are crystal clear...

This is the most important step. Ensure that the title deeds of the builder/seller are clear. You can check these link documents at the office of the sub-registrar. Ensure that there is no encumbrance, pending legal case, property dispute or lien on the property. A lawyer can help you check these items for a nominal fee. Remember, your financing bank will do all these checks but it is always safer that you also get these checks done independently. Any deficiency can lead to problems when you try to sell the property later. Also once you make the initial payment ensure to get the allotment letter if it is a builder and an “Agreement of Sale” if you are buying an existing property. Your purchase of property will be completed only after the sale deed is executed and registered with the registrar. Normally, this sale deed will have to be hypothecated with your financier and you can keep a photocopy of that.

6. Executing the purchase and follow up activities

Once you take possession of the house, immediately inform the bank as your tax benefits will kick in from that date. The period prior to that has a different tax treatment as pre-construction period. With the sale deed, you can register the property in your name. At this point you will have to pay the stamp duty, so prepare yourself financially for the same. Once the property is registered in your name, the payment of municipal taxes on that property becomes your responsibility. You need to ensure that municipal taxes are paid on time without fail, as it is an important proof of continued ownership.

7. Possession and future maintenance...

Remember, the builder is responsible for maintenance of the building for a period of 18 months after the Occupancy Certificate (OC) is given. Also remember to get a car parking allotment letter with a map of the parking lot. By the end of the 18 months, the builder along with representatives will initiate the formation and registration of the society, which will elect its representatives and take over the management of the society from then on.

What Sundar managed to do was to adopt a more methodical and checklist approach to buying a property. This enabled him to plan his property purchase much better, saving him the hassles. Here is a 5-point summary of the points that you need to consider as a property buyer:

• Check what you are able to buy and the best deal that banks can give you
• Compare properties, estate agents, financiers and pick the best deals
• No laxity on paperwork. The devil lies in the details, so get involved in the detailing
• Ensure the property adds value in terms of location, resale price, amenities etc.
• House is a long term investment. So, envisage your needs for the next 10 years.

Author :- http://www.moneycontrol.com/
Reposted :- http://www.credit4loan.com/

Is a home loan balance transfer your best option?

If one wants to take advantage of the falling interest rate regime and is not too happy with the lender with which he is servicing his home loan, he has the option of refinancing or opting for a home loan balance transfer. If you are in the early stage of your home loan tenure, here are the things to take note of if the idea of a home loan balance transfer has been playing on your mind.

A bank offering you a home loan balance transfer may make it sound like just a signature and an NOC from your existing lender, but the process of a balance transfer in reality is not that simple and requires careful consideration. Firstly, a home loan transfer makes sense only if you are servicing a loan at a higher interest rate than its counterparts in the market, you wish to lower your EMI and improve your cash flow.

A refinancing or a balance transfer will only make sense if your current lender is not flexible and is unable to give you some flexibility in your repayment process. This is however an unlikely phenomenon as banks are more than happy to reset the interest rate on your existing loan as they would not like to let go of a customer. Also if you wish to lower your EMI, there is no reason why your existing bank cannot do so, especially if you have been a diligent borrower making all your repayments on time.

Not the cheapest option

If this is sounding like a campaign against home loan balance transfers, it is because we want to tell you that this option comes with costs such as a processing fee that will be charged by your new lender as well as some other charges like stamp duty and the likes that a customer is required to pay but is not informed about upfront. Therefore, a refinance may prove to be costlier than you thought it was. But in the unlikely event that your existing lender is not even ready to give you a patient hearing, here are the things to consider while opting for a balance transfer:

A time taking process

If you have decided to go through the process of a home loan balance transfer, do bear in mind that it will not happen overnight because it is almost as long drawn a process as getting a new loan sanctioned and you will have to go through the entire rigmarole of paperwork all over again.

Opt for a balance transfer in the early stages of home loan tenure

In the earlier stages of your home loan tenure, the interest component of your EMI is high. Thus it is wise to go in for a refinancing option in the early stages of your home loan tenure. If you have only a few years left in repayment of your home loan, incurring additional expenses with a balance transfer, not to mention the hassles it involves with paperwork and the time taken – not worth the effort. Further if you are planning to move out of the property soon, a balance transfer is not a good idea for you.

Do it for the right reason

In conclusion, it is fair to say that it is wise to opt for a balance transfer only when your current lender refuses to listen to any request to reset interest rates or any other service request has not been paid heed to. But if you are contemplating a home loan balance transfer because your track record of repayment is not great with your existing lender, you can be rest assured that no new lender will be willing to take you on as a borrower as well! Whether it is a fresh loan or a refinance, a CIBIL score of 750 is therefore a must!


Author :- http://www.moneycontrol.com/
Reposted By:- http://www.credit4loan.com/

For loans over Rs 5 cr: RBI may share defaulter details if probe agencies want the info

THE Reserve Bank of India has indicated its willingness to share details regarding borrowers who have taken large loans of over Rs 5 crore with the government if such information were to be sought by vigilance and investigative agencies, or for court cases. A database of loans of over Rs 5 crore is currently maintained by the Central Repository of Information on Large Credits (CRILC), which was set up the RBI last year. The repository has been set up to improve assessment of credit risk by the banks, early detection of non-performing assets (NPAs), and to improve recovery of loans. While refusing to share the entire database of large loans with the government, the central bank will provide details as may be needed by the investigative agencies, Finance Ministry sources said.

Such information will enable these agencies to ascertain the entire credit history of large borrowers and help with investigation of loan cases where proper due diligence was not followed, they said.


The RBI set up CRILC in order to collect, store and disseminate information on large credits of banks and non-banking financial companies. CRILC collects information at one place and member banks can have access to this information. It enables banks to have a better view of the credit history and the status of all loans taken by the borrower. Banks are also required to report Special Mention Accounts, where principal or interest is overdue for period up to 90 days, to the repository. Such loan accounts are classified as NPAs. The Finance Ministry wanted access to the database to have a better view of large loans that are sanctioned and disbursed. Sources said private sector banks objected to the regulator sharing the entire information with the government, since the latter also being the owner of public sector banks has a conflict-of-interest in gaining data on commercial activities of its competitors. Data from Cibil, the agency which collates information on credit, showed that 6,819 wilful defaulters owed banks Rs 74,699 crore until December 2015, up from Rs 22,332 crore that 3,703 wilful defaulters owed until December 2012. The ratio of top 30 NPAs to NPAs above Rs 1 crore (large borrowers) as on March 2015 for scheduled commercial banks is 51.79 per cent, according to Finance Ministry data. An amount of Rs 1,30,156 crore was classified as NPAs in PSBs for borrowers exceeding Rs 500 crore as on December 2015, the data shows. Last month, the RBI submitted to the Supreme Court a list of defaulters owing Rs 500 crore or more to public sector banks just three months after the apex court ruled that the RBI is “clearly not in fiduciary relationship with any bank” and that it cannot hide information solely because of the embarrassment it may cause. But while submitting the list, the RBI said it was “extremely necessary” to keep these names confidential otherwise it would dent the “fiduciary relationship” between the RBI and the banks, and between the banks and customers. The RBI’s affidavit was filed in response to a reply sought by a bench led by Chief Justice T S Thakur, which had in March taken suo motu cognizance of The Indian Express report that Rs 1.14 lakh crore of bad loans had been written off by state-owned banks between 2013 and 2015.


Author :- http://indianexpress.com/
Reposted :- http://www.credit4loan.com/

IBM Security to safeguard CIBIL data against cyberattacks

NEW DELHI: Credit Information Bureau India Limited (CIBIL) has partnered with IBM Security to secure its critical business systems against cyberattacks. Under the agreement, IBM Security Services will provide a customized security operations framework to monitor real-time threats and help CIBIL proactively identify fraud.

CIBIL collects credit information pertaining to borrowers from banks and credit institutions which are its members. It then collates this information into credit reports and credit information solutions and provides them to banks and credit institutions to help evaluate risks, while lending to customers.

IBM Security Services will provide round-the-clock proactive security log monitoring and real-time validation of suspicious threats using IBM X Force Intelligence. The company has also built an integrated Security Operations Center (SOC) for incident reporting and management, which will detect and monitor security events and phishing attacks in real-time. The CIBIL website will also be monitored in real-time with daily scanning for signs of malware infections.

An individual's CIBIL report and CIBIL TransUnion score, other than his/her income, are two of the most important tools used by lenders to evaluate applications for any loans or credit cards.  

Author :- http://timesofindia.indiatimes.com/

Reposted By :- http://credit4loan.com/

A little financial planning will help you to study abroad

With the dollar remaining strong, studying in a reputed foreign institution seems to be a distant dream. While most banks are willing to offer education loans for higher studies, but is it enough for us to just sign the documents without any planning?

We list down a few tips for a better financial planning before you go overseas for your higher education.

Scout for the best loan option

It is a tedious job but it is extremely important for anyone to go through and compare the various loan options available to you. And once, you zero in on the offer that you feel suits you, you can negotiate the terms and conditions.

Remember fluctuating rupee

It is important to remember that fluctuation in rupee value will impact your loan. One must remember that the loan will be rupee denominated and hence on conversion into your desired foreign currency, the amount will be lower.

"A student has to be prepared to bear this foreign exchange risk. For example, a student applies for an education loan of Rs 20 lakh. However, if the rupee weakens further due to exchange rate fluctuations, there would be an increase in the cost of education from the rupee perspective," said Harshala Chandorkar, senior vice president, Consumer Services at CIBIL.

Plan your course of action

In most cases, parents often sign up as a guarantor for the loan availed by you. So, its better to plan your course of action beforehand because if you delay the EMIs or default on them, it will adversely impact their CIBIL report as well.

"Rupee depreciation also adds to the woes of many parents who fund their children's education from their savings as they have to shell out more money. As a guarantor on your education loan your father / mother is liable for its repayment in case you fail to pay the EMIs. His / her credit report will show the details of this education loan and defaults will also show if you do not repay the EMIs on the loan. Thus, your repayment behavior will also impact your parents' credit score," she added.

Spend carefully

While you are overseas, pursuing your higher studies, it is important to do budgeting and know how much can you spend. Becoming a spend thrift can put additional burden on your financials, thus forcing you to delay or default on your loan repayments, negatively affecting your CIBIL report. In case, you cannot avoid certain expenses, consider taking up a job to meet your additional expenses.

"If you have taken a loan to study abroad, timely repayment should be the top most priority. Like any other loans and credit cards, education loans are also reported to the CIBIL and get reflected in the borrower's CIBIL Report. Transactions related to repayment of your education loan will also get reflected in your CIBIL Report and impact your CIBIL Transunion Score. Irregular or non-repayment of EMIs on your education loan will lead to an unhealthy CIBIL Report which can hamper your chances of availing any other loan or credit card in the future," said Chandorkar.


Author :- http://www.businessinsider.in/
Reposted By :- http://credit4loan.com/

Home loan delinquencies more than halve in last 5 years: Cibil

MUMBAI: The largest credit information company Cibil has said the proportion of bad loans in the housing segment has more than halved in the past five years.

The percentage of non-performing assets (NPAs) from the home loans segment has dropped to 0.57 in March 2015 compared to 1.06 at the end of 2010, it said in a report.
The company attributed the lower delinquencies to availability of timely credit information for lending.

It can be noted that all the lenders check the previous history of potential borrowers with a credit information company like Cibil before taking a call on the loan proposal. The past history also helps the lenders in pricing the product.



The Cibil report said Mumbai and Pune account for most such enquiries from banks for availing the details of potential borrowers, which is followed by Delhi and Bengaluru.

It said 3.9 lakh new home loan accounts were opened in the January-March quarter of this year.

It can be noted that in the face of slowing demand from the corporate segment, all banks have been focusing strongly on the retail segment, and within that the high value home loans have been a favourite.

Even though a longer tenure loan can result in potential asset liability mismatches, banks are interested in this stream as the segment is considered very safe because of the low probability of NPA.

On credit cards, which constitute a part of unsecured lending, the Cibil report said there was a growth in new accounts to 10.8 lakh for the January-March period, as against 8 lakh in the year-ago period.

On the asset quality in this segment, Cibil said there has been an improvement to 1.06 per cent as of March 2015 as against 3.27 per cent at the end of 2010.

The financial capital leads in the credit card applications as well, followed by Delhi and Bengaluru, it said.

Author :- http://economictimes.indiatimes.com/

Reposted By :- http://credit4loan.com