Understanding your Credit Report

A credit report is a financial statement of the past credit history which evaluates the credit behaviour based on factors like payment of credit card dues and other advances taken from financial institutions. In India, the primary agency that provides credit report of every individual is CIBIL or Credit Information Bureau.

There are primarily 3 components of a credit report: 

 

Personal information: A credit report has necessary personal information such as name, address and details of the employers. All the demographic and identical information such as date of birth, contact details and PAN details are part of credit reports.

Accounts: The financial information such as advances taken, payment record of credit cards and advances and the outstanding balance of all the credit is the major part of the credit report. It also includes all the names of lenders, nature of the loan, the total amount of loan, interest rates of borrowing and outstanding amount of credits. 

Enquiries: The details of the company who have made a query about the credit report of the borrowers is also an essential component of the credit report. If multiple enquiries are made without the loan application being accepted, and the loan amount is disbursed.

Checking credit report: You can check your free credit report online with a few clicks. The process of checking the credit report is more relaxed and less time-consuming.

Here are some benefits of checking a credit report: Checking your credit report is significant because:

Know about your credit standing: The Cibil score range between 300 and 900 and 900 is considered as the highest CIBIL score. Cibil score required varies for every product from bank to bank. Generally, a Cibil score of 650 or more is regarded as a good score by banks and financial institutions. Knowing your creditworthiness is essential so that you can maintain your CIBIL score if you have a good credit score and in case of poor credit score, you can take measures to improve your credit report.

Getting better interest rates: If you have a credit score of more than 750, then banks offer loans at lower rates of interest. You should evaluate your credit report on a timely basis so that you can negotiate with the banks to get loans at an attractive rate of interest.

Checking the accuracy of credit report: If there are errors in the credit report, you can contact credit bureaus and banks to get corrections in your credit report. An accurate credit report is essential to avail the credit in future.

Getting pre-approved loan offers: Various banks and financial institutions provide pre-approved loan offers to the borrowers for different credit ranges. Pre-approved loan offers are essential as they provide loans at an attractive rate of interest. You can get appropriate loan offers if you have a better idea about your credit report.

Here are different credit score ranges:

If the borrowers have not taken any loan or not used the credit cards, then it indicates that they don’t have any credit history and they will have a CIBIL score of NA/NH which means it is either “not applicable” or no history”.

  • CIBIL score between the range of 300-599 is considered as a poor CIBIL score. With this credit score, there are more chances of getting a loan application rejected as the borrowers have a high risk of becoming a defaulter. 
  • If you have a CIBIL score between the range of 550-649, then the chances of getting a loan approved are low. This range is considered a fair range, but only a few lenders would consider providing credit if they have a credit score in this range. 
  • The credit score between the range of 650-749 is considered as a good CIBIL score. The financial institutions may approve the loan application quickly but may still charge a high-interest rate on the loans.
  • The CIBIL score in the range 750-900 is considered as an excellent CIBIL score. The chances of getting a loan approved at best interest rates are higher if the credit score is between this range. 

If you have a poor credit score here are some tips to improve your credit report:

  • Paying the credit card dues on time: To improve your credit card report make timely payment of all your credit card dues on a timely basis. Delaying the credit card payments not only means you have to pay the penalty fees, but it will also impact the credit score poorly.
  • Utilization of credit cards: The purchasing behaviour of a borrower can be determined by the purchase history using the credit cards. If the borrower is over utilizing the credit card, then it may indicate that they have poor spending behaviour. Banks or financial institutions usually keep a check on the proportion of payments done using the credit cards to the limit of the credit cards.
  • Don’t apply for loan too often: If you are making multiple hard enquiries, then it can affect your credit report negatively. Applying for multiple loans at the same time indicates that you are credit hungry. To improve the credit report, you shouldn’t apply for multiple loans at the same time.
  • Don’t default on EMI’S: Defaulting on the loan advances can impact your credit report severely. Make sure that you repay all the loans on time. If there is any pending payment, it will lead to a poor credit score.
  • Getting the right mix of credit: If you have taken more number of unsecured loans, then it is indicative of a weak credit report. To improve the credit report, the borrowers must choose the right mix of credit. For instance, secured loans like a home loan or a car loan can have a positive impact on the credit report.

Thus, a credit report is an essential tool based on which banks and financial institutions lend credit to borrowers. A good credit report means a good credit score and maintaining a good credit report can help borrowers to avail a loan at attractive interest rates.

 

Comparison of Different Gold Loan Offers from Different Banks

A gold loan is a secured loan in which borrowers have to pledge their gold futures to meet their personal and business needs. A gold loan is available for a tenure of 1 day to 36 months and can be repaid using various flexible methods such as bullet repayment, EMI scheme and Overdraft scheme. The gold rate in India starts at 9.15% and the maximum gold rate stands at 11.25%.

Here is a comparison of different gold loan offers:

Bank Gold Loan Interest Rates Processing Fee Max Tenure
SBI Gold Loan 9.15% 0.50% of the loan amount  36 months
Muthoot Gold Loan 12.00% 0.25% to 1% of loan amount. 36 months
Manappuram Gold Loan 12.00% Rs. 10 (to be paid at time of settlement) 12 months
HDFC Bank 10.50% Nil* to 1.50% 24 months
IIFL 9.24% Nil 11 months
Yes Bank 11.25% 0.75%, Minimum Rs. 500 36 months
ICICI Bank 10.00% 1% of the loan amount 12 months
Federal Bank 11.75% Nil 12 months
Canara Bank 9.85% 1% of the loan amount 12 months
Andhra Bank 10.70% Nil processing fees 12 months
Axis Bank 9.75% 1% plus GST as applicable 24 months
IndusInd Bank 11.25% Upto 1% of loan amount s 12 months
PNB 10.05% upfront fees of 0.70% of loan amount + taxes 12 months

 

SBI bank: Presently, SBI provides the lowest Gold rate in India at 9.15%. SBI bank also charges a processing fee of 0.50 % of the loan amount. The amount of gold loan offered by SBI bank varies from Rs. 20,000 to Rs. 20 Lakhs depending on the quality of gold futures. If you wish to prepay the gold loan taken from SBI bank you don’t need to pay any prepayment charges. If you want to repay the loan, you can do so by paying the entire principal amount at the end of tenure using the bullet repayment method.

Muthoot Finance Bank: Presently, you can get a gold loan from Muthoot Finance Bank at the gold loan rate of 12%. Bank also charges a processing fee of 0.25% to 1% of the loan amount. You can get a loan amount between the range of Rs.1500 to Rs. 1 Crore. The loan is available for a tenure of 7 days to 36 months, and you don’t have to pay any prepayment charges if you wish to prepay the loan. You can use the EMI scheme and bullet repayment schemes to repay the loan taken from Muthoot bank.

Mannappuram Bank: Mannappuram bank offers a gold loan at an interest rate of 12%. It also charges a processing fee of Rs.10, which is paid at the time of settlement of the gold loan. The gold loan tenure ranges between 1 day to 12 months. There are no prepayment charges in case you want to prepay the loan before the loan tenure. The loan can be repaid using flexible methods such as EMI and bullet repayment schemes.

Canara Bank: Getting a gold loan from Canara Bank can be a good option as Canara Bank offers one of the lowest gold rates in India. You can get a gold loan at an interest rate of 9.85%. However, you have to pay a processing fee of 1% of the loan amount for a tenure of 12 months. Bank charges nil prepayment charges in case of prepayment of the loan. The loan can be repaid by paying the full amount at the end of tenure.

PNB Bank: PNB bank provides gold loans at an interest rate of 10.05%. The processing fees of 0.70% of the loan amount is also charged, along with interest. You can get a gold loan up to Rs. 10 Lakhs for a tenure of 12 months. Also, in the case of prepayment of the loan, you have to pay nil charges. The repayment of the loan can be done using the EMI Scheme, Bullet Repayment Scheme, Overdraft Scheme.

Andhra Bank: The gold rate for Andhra Bank starts at an interest rate of 10.70%. Unlike most of the banks, Andhra bank does not charge any processing fees for getting a gold loan. The loan is available for Rs 10,000 to Rs. 2 Crore for a loan tenure of 3 months to 12 months. There are nil prepayment charges of Andhra bank. Also, the loan can be repaid using the bullet repayment scheme.

Best Bank for getting a gold loan: Presently, SBI bank provides the gold loan at the lowest rate of interest. In terms of processing fees, HDFC Bank, IIFL, Federal Bank are the best banks as they don’t charge any processing fees.

Summary: Comparison of different Gold Loan offers from different Banks

A gold loan is a secured loan in which borrowers have to pledge their gold futures to meet their personal and business needs. A gold loan is available for a tenure of 1 day to 36 months.

SBI bank

  • Provides the gold loan at 9.15%.
  • Charges a processing fee of 0.50 % of the loan amount.
  • Loan amount varies from Rs. 20,000 to Rs. 20 Lakhs.
  • Repay the loan using the bullet repayment method.

Muthoot Finance Bank

  • You can get a gold loan at the gold loan rate of 12%.
  • Bank also charges a processing fee of 0.25% to 1% of the loan amount.
  • You can get a loan amount between the range of Rs.1500 to Rs. 1 Crore.
  • The loan is available for a tenure of 7 days to 36 months.
  • You can use the EMI scheme and bullet repayment schemes to repay the loan

Manappuram Bank 

  • Manappuram bank offers a gold loan at an interest rate of 12%.
  • It also charges a processing fee of Rs.10, which is paid at the time of settlement of the gold loan.
  • The gold loan tenure ranges between 1 day to 12 months.
  • The loan can be repaid using flexible methods such as EMI and bullet repayment schemes.

Canara Bank: 

  • You can get a gold loan at an interest rate of 9.85%.
  • You have to pay a processing fee of 1% of the loan amount for a tenure of 12 months.
  • The loan can be repaid by paying the full amount at the end of tenure.

Andhra Bank

  • The gold rate for Andhra Bank starts at an interest rate of 10.70%.
  • Andhra bank does not charge any processing fees for getting a gold loan.
  • The loan is available for Rs 10,000 to Rs. 2 Crore for a loan tenure of 3 months to 12 months.