When it comes to advising someone, we Indians as a race will outperform others. Two things that are peculiar to a large part of population is that I know it all and will advise even if not asked. Leaving the lighter note behind, let us move to some serious matter. It is easy to preach than to practice – as the saying goes, when it comes to one’s financial matters, it becomes slightly more difficult. All of us know the importance of sustained savings but how many of us are actually put a certain amount from our earning every month towards this objective. And if it comes to something like credit, it is far more difficult since most of the population is unaware and advising and following something will be even tougher.
Bite only what you can chew
This is something that many of us would have heard from our elders. Do not bite what you cannot chew. The same is so true to credit. We must not get ourselves exposed to credit more than what we can afford. We at Credit Sudhaar come across so many people who did not follow this basic rule and eventually landed into debt trap. In more than often cases, it is on account of credit cards. One can get multiple credit cards where the credit card companies keep increasing the credit limit over the period and keep sending lucrative offer that temp one to spend on the cards. It is similar to going to a hyper market and buying more than what you had intended for. In case of purchases on cards go beyond ones means to pay up completely, the debt starts mounting. On account of high interest rates and continued spends the outstanding reaches a point where one is only able to pay up minimum due amount.
You have to be very prudent when it comes to spending on the credit cards or taking loans.
Delay can be disastrous
Once you have taken any line of credit, be advised that it is your sole responsibility to pay up in time. You cannot afford to miss the payment even by a day. Put reminders, mark off calendar, put up in to do list; do whatever is required to ensure that your payment dates do not miss out. Many feel that missing the payments by a few days is ok till the charges and penal interest is being paid. This is not true. Delay of even one day gets reported to credit bureau and consistent default would only lead the underwriter to correctly assume that you are callous about your responsibilities towards the lenders.
We have also come across some cases where people think that paying up the high interest rate trade lines is much better in case one is going through a financial stress. Now this may not be true to all. Home loan interest rates are much lower than any other form of credit but a default on this line will have much more severe impact than defaulting on other lines.
You would need to manage the finances to ensure that all EMIs, irrespective of the product are getting paid in time.
Avoiding can be fatal
If at all you land into a tough financial situation and are unable to pay up the banks, do not avoid the calls from them. Always be available since it would lead to building some confidence into the collectors. It is advised that you proactively contact the banks and apprise them of the difficult situation at your end. They may work out a new repayment plan and even extend a lower rate of interest which will suite your finances.
On the other hand if you avoid the calls and contact efforts from banks, the collection effort is only going to get tougher and it might put you in further stress.
Annual check-up are must
Similar to your physical wellbeing, where one undergoes annual checkups despite leading a healthy life; you should also run a check up on your credit health to avoid any surprises. We keep getting queries on how to get loan without CIBIL check while we would love to address queries like how to remain credit healthy or how to ensure that the credit score does not dip. Today, you are entitled to free reports from the credit bureaus in India. And that it is available for free and that too just a few clicks away, do obtain your credit report and check it for any wrong updates, anomalies or misses. It is your data and you must ensure the correctness of it. An hour or two per year will only help in keeping your credit score intact.
Practice of the advice if what will help in have seamless access to funds from lenders for various needs that may arise from time to time and also getting it at a preferred cost.
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