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Resolve for healthy credit behavior

Resolve for healthy credit behavior

15 Jan 2013
Financial Chronicle

Edition: Page 11


In the New Year it is imperative to have a strategy to better your financial health. The lending market in India has had its share of challenges in this year.

This may lead to some lenders changing their lending criteria thereby impacting access to new credit.

There is increased awareness on the significance of healthy credit behaviour and its influence on an individual’s repayment capacity.

Credit scores will evolve to be a popular parameter when seeking any services — banking, insurance or even mobile phone connections.

The Credit Information Companies Regulation Act permits all the above mentioned service providers to access credit bureau databases.

This enables them to accurately review the borrowers past repayment patterns and their propensity to default before allowing them access to credit.

Let’s resolve to maintain diligence for a credit healthy 2013:

1) Engage in routine credit checks every quarter by accessing credit information reports from at least two bureaus. This helps in tracking any issues that may be affecting the credit profile. If a discrepancy is noticed, one must connect with the lender to correct the report.

2) Limit credit inquiries: Not all credit inquiries are bad, but it is true that most inquiries may impact individual scores and risk profile.

When searching for new lines of credit, there is a greater chance of increased levels of debt burden, thereby increasing the possibility of a default in repayment.

3) It is recommended that one keeps track of all open credit lines and closes unused lines of credit. Keep only credit cards that are used frequently and housekeep them regularly.

4) Make bill payments as soon as possible: Even if they are written-off, overdue payments are still reflected in credit reports.

5) Ensure all contact details are updated with all lenders

6) One must work towards achieving a reasonable repayment track record in advance of making a loan purchase.

Sanjay Patel MD & CEO, Equifax Credit Information Services