The festive times are here with the next three months lined up with Dussehra, Diwali, Christmas and New Year celebrations. To celebrate their first Diwali post their wedding, Priti and Aseem, a young couple working in Mumbai, decided to get a LCD television for their home. Over a weekend, they visited the popular electronic store in the mall near their house. But to their dismay, they realized that they did not have enough savings for purchasing the desired television, as it was costing significantly higher than their budget. The young couple decided to postpone their LCD television purchase for another year and confided into the sales person at the store that it is out of their budget at the moment.
The sales person at the store then counselled Priti and Aseem on the available finance opportunities at the store which they can avail for purchasing the much needed AC. There was an in-house counter of a leading personal finance company at the store itself Aseem and Priti went to understand the terms and conditions of the consumer durable loan for purchasing the TV. On discussing with the finance company representative, the couple was pleasantly surprised to know that they can instantly avail a loan for purchasing the TV at feasible terms and conditions and take it home the same day. Aseem then filled the loan application form and provided all the requisite details and proofs. The finance company representative instantly checked Aseem’s credit score and history on his computer, based on the details he had provided in the form. He found Aseem’s credit score and report satisfactory as it aptly met the company’s lending criteria for consumer durable loans. He then explained to the couple that because Aseem had a high credit score and a good credit history, the finance company was able to provide them finance for purchasing the TV instantly.
Having worked in a financial BPO, Aseem had an understanding of the importance of a good credit score and a healthy credit report for availing credit cards and home loans. But only now did he realize the larger role that an individual’s credit score and report played in his life. Due to a good credit score he and his family could now immediately enjoy watching an LCD TV without having to wait for another year to purchase the same.
Having experienced the benefit of financial discipline and a good credit score, the couple resolved to continue to maintain a good credit history and set down some ground rules on managing finances:
Keeping track of all loans and credit card EMIs:
Keep a regular check on all the loans and credit cards and ensure to make payments on them before the due date month-on-month.
Set payment alerts:
In order to better manage payments of credit card bills set up an alert on phone and email so that you are reminded of the dues even if you forget.
Keep track of loans you have guaranteed:
If you have guaranteed a loan then do ensure that the payments on this loan are being made regularly and there is no delinquency or default on them. The guarantors credit score gets impacted if there is a delinquency or default on the loan repayments by the principal borrower.
Review credit report and score regularly:
Before applying for any loan, credit card or finance for electronic goods ensure to check your credit score and report. This practice will help you avoid any unpleasant circumstances in the form of loan rejection. You can always work towards improving your credit history and score in case it is low and apply for loans or finance opportunities once it improves.
It is important to understand that a good CIBIL Report and score is very critical for having access to finance when you need it. With availability of instant credit information and score from CIBIL, finance companies are able to assess an applicant’s credit discipline and are able to sanction the loan immediately. A good CIBIL report and score can be your gateway to building a prosperous future.
The author is Chief Operating Officer, CIBIL