7 Bad Financial Habits that may Bankrupt You - Bad Financial Habits

 Bet you really want to know what are the 7 bad financial habits that are strong enough to cause bankruptcy? Powerful title, huh?

However, in truth, there are habits which can cause this. The good news is, though, bad habits can be broken and new, good habits can be supplanted in their stead. It is never late to break a bad habit, especially if it is affecting your personal finance adversely.

Now, without further ado, here are the 7 bad habits you need to break, or you just might go broke.

Stop spending more than your income: This alone will bring you closure to debt and possibly bankruptcy, unless you are careful. Your income is limited, let’s face it. Let’s not spend more than you earn.

Don’t ignore your bills: You’ll be surprised to know how many people do this, and thus continue to fall in debt. People take loans, and then when the time comes to pay EMIs, they procrastinate. People also tend to give themselves excuses to justify their actions. Thus, their interest rate for such loans continues to rise. This is the way many people fall into a debt cycle, and ultimately become bankrupt.

Don’t use your credit card like it’s free money: Banks and other lenders want you to think that credit card is free money, and it can be if you use it correctly, but it can also bring you a world of trouble. Credit card EMIs are high. If you use your credit card like an ATM, by the way, the interest rate is much higher.

If you use credit cards in the right way though, your loans can become interest-free. To do that, you need to pay back the loan before the due date, after which the lender charges interest.

Don’t think that you are not smart enough: In today’s time, you need to take control of your own finances. You need to plan for your own retirement, save for an emergency fund, have various insurances, and more. It is all up to you. The excuse that all this is too complicated and difficult doesn’t cut it anymore. You can research on and learn about almost anything online. Besides, you can always hire a professional finance planner to help you out.  

Don’t make saving hard: You may have habits, such as too-frugal spending, which is saving impossible. If you spend on things on the drop of a hat, it is high time you smell the coffee of reality.

Don’t complain about your paychecks: Complaining about your salary will not do any good for you. On the contrary, it will only ensure that you remain in the same situation. Instead, take up side gigs, try freelancing, start a small business, to make more money.

Don’t think that money brings happiness: While it is true that money brings happiness, it does so up to a point. There are other things which bring you happiness, including giving money to charity.

As you have seen, these are the bad habits you need to break if you want to bring your personal financial situation out of debt and even bankruptcy.

5 Ways to Reduce Money-Related Stress - How to Reduce Financial Stress

When it comes to stress related to money, it does not matter if you are rich or poor. It will affect you. Of course, money related stress for the rich and the poor shall be very different, but it will be there. Did you know that more than 61% of the population has money-related stress and problems?

Most of us think that if we just had more money, we would not have any problems in life. But then how will you explain the money-related stress which the rich people are in? It only takes one bankruptcy to propel back an affluent person into the lower ranks of society, let’s not forget. So it is not a question of having more money. It is more about better money management.

So, how can you have less money-related stress in life?

In this blog, we are going to show you 5 ways to de-money-stress!

Don’t monitor your accounts too much: It is not a healthy habit to log in to your savings or checking account each day to check your funds. No, it is not healthy at all. It is paranoia. Neither is it healthy to get text messages after every change in your account. Look, you are not Sherlock Holmes. Don’t try to be. It is highly stressful, does not help anything, and besides there is no mystery!

Focus on needs only: You may think that you really NEED the latest smartphone or the latest sports car, but those luxury items are not what you need. Those are your WANTS. In other words, you can do without them. Things you actually need are food, clothing, shelter and love. Once you cut down the frivolous things from your life, you'll know how many things you do not need. It’s actually liberating to know how much you can live without.

Set up spending limits: It can also be freeing to know how much money you can save by not spending. Set up a budget or limits to what you can actually spend per month. Leave a little bit of flexibility in the beginning, in case this is the first time you are setting spending limits or making a budget. If you wish, you can make it a hard limit. It’s totally your choice, but know that the latter brings results faster.

Designate an amount for everything, from eating out to entertainment. That way, when you do spend on them, you can do so guilt-free. And if money runs out? Well, you’ll know where you overspent and you can improve on that next month. This tip alone slashes down your money-related stress level!

Use money as a tool: Money is only a tool to use for buying things. If you already live a comfortable life, what then is the use of more money? You can save that instead of spending everything now! More money, if you are living a comfortable life already, won’t bring additional comfort or security. Remember, money is just a means of exchange.

Having money does not equal happiness always: More money does not always bring more happiness nor improve the quality of your life. People find joy when they have little money too, while some of the wealthiest people in the world are unhappy. Try finding joy in other things in your life apart from money. Be grateful for the things you do have.

Steps to Transfer a Car Loan - How to Transfer Your Car Loan to Another Person?

 Steps to Transfer a Car Loan

Transferring an auto loan wasn't allowed earlier, but there are two different ways to do it now. One way is to modify your existing lender - notify your lender that someone else will be purchasing your car and repaying the rest of the loan.

The other way is to do a balance transfer and seek a new lender who will pay off the remaining debt and issue a new loan to the new borrower. Let me tell you the various steps involved in transferring an auto loan to someone else.
Check Your Auto Loan Documents

Before you feel too elated by the prospect of unburdening yourself of this financial anxiety, read and re-read your auto loan agreement. The first thing that you need to make sure is that your lender allows a car loan transfer.

Reading a loan agreement can be quite a chore. Be patient! If your loan agreement papers say that transfer is not allowed, then you're barking up the wrong tree. Sorry!

If you're sure that the plan is actionable, seek the lender's help to get clarity on the loan transfer process.
Find A New Borrower

Since you have already decided to transfer your loan to someone else, I am assuming that you need to find a buyer. If you have already found one, you're in a win-win situation! If you are still struggling to find a new buyer/borrower, cheer up! A car dealer can find one for you.

Just approach some recognized and trustworthy second-hand car dealer, and they will find you an interested buyer from their long list of contacts.
Get Loan Transfer Approval

First things first - get the green signal from the lender. The new borrower must prove his creditworthiness in order to qualify for the car loan transfer. He/she should have a stable income and a clean track record of credit repayment with banks. The new borrower will now be responsible for repaying the loan.

So, isn't it obvious that the lender will conduct a thorough background check before deeming him/her fit for the loan and approving the loan transfer?

A single default in the prospective borrower's past can adversely affect his/her credibility and might compel the lender to disallow the transfer of your auto loan to the concerned person. If you have found someone with a stellar credit history, then you are in luck! You can approach your lender to initiate the formalities related to auto loan transfer.

The new borrower must submit a few necessary documents like proofs of identity, address and income. Additionally, a form requesting the transfer of the auto loan should also be submitted by the new borrower.

Change the Car Registration

When you are planning on selling your car, you need to change the car registration too. It is not just a fleeting formality but a necessary prerequisite to transferring the loan documents. You need to visit the nearest RTO (Regional Transport Office) for completing this formality.

Once you submit the required documents and pay the necessary charges to initiate the re-registration procedure, the RTO will take around 14 days to process the request.
Approach Your Insurer

When you sell your car, you wouldn't want to bear any further liabilities associated with the car. This involves your car insurance expenses too. Approach your current vehicle insurance company to check the terms and conditions for transferring your car to another individual. You must ensure that the new owner, who is taking over your loan, complies with the insurance requirements.

Submit all the necessary bank documents to the insurance company to let them make the necessary changes so that you are exempted from paying any additional premium.
Remember...

You should know that it'll be futile to visit the RTO or your vehicle insurer before the lender gives you a formal approval for your loan transfer request. Unless you furnish the necessary documents from the lender, neither the RTO nor the insurer will entertain your requests.

Once you get through all the above-mentioned procedures smoothly, you can go back to the lender, submit all the necessary documents and get the burdensome loan off your shoulder. However, brace yourself to pay a certain loan processing or loan transfer fee to the lender. The charge is mostly based on the tenure of the loan, and the amount that is left to be paid.

However, rest assured that spending a few bucks here can leave your bank balance at peace once the transfer is successful.

Secured and Unsecured Loans - How Do Unsecured Loans Work?

Before you decide to choose one, you should know which would be the most suitable one for your needs. Read on to know more about these two types of loans and understand how they work.
Secured Loans

When you provide the lender with collateral (a personal asset that has equal or greater monetary value than the borrowed amount) against the money that you borrow, it qualifies as a secured loan. It is called 'secured' because the collateral serves as a security for the lenders. In case you fail to repay the loan, the lender can confiscate the asset and sell it off to make up for the loss. Home loans, Auto loans and Secured credit cards are a few examples of this kind of loans.

How Does It Work?

When you take a secured loan, you promise a valuable asset to the lender in case you fail to repay. You get to keep this asset as well as build your credit as long as you are making timely payments. If you fail to pay, the lender can take away the asset. When you successfully pay off the entire loan, the asset becomes yours completely.

Secured loans are considered to be of lower risk as the collateral ensures that the lenders are not at high risk of loss. Hence, it is easier to qualify for a secured loan even if you do not have a high credit score. When you take a secured loan, you might be able to borrow larger amounts at lower interest rates and better terms.

What Happens if You Default?

Well, if you take a secured loan, you agree to hand over the collateral to the lender in case you fail to pay. Therefore, the lender has the legal right to take possession of the asset. If you fail to pay your auto loan, the car will be repossessed by the lender. If you default on your home loan, the lender will foreclose your home. If you are unable to pay your secured credit card bills, the lender can forfeit the security deposit.

All these instances will have a negative impact on your credit score, and leave a derogatory remark on your credit report. A serious delinquency like a repossession or a foreclosure can remain on your credit report for seven years.
Unsecured Loans

An unsecured loan doesn't have any collateral attached to it for security. The lender judges you by your creditworthiness before lending an amount to you. It is comparatively difficult to qualify for an unsecured loan and it is mandatory that you have a good credit history. Credit cards and personal loans are examples of unsecured loans .

How Do Unsecured Loans Work?

Unsecured loans do not include any collateral. Hence the lenders have nothing to claim if you default; they take a huge risk when they lend the money. However, the lenders and the borrowers must agree to certain terms for repayment. These terms generally include the time by which the money has to be returned and the interest rates that are applicable.

You cannot get an unsecured loan approved until you have a good credit score and prove that you are creditworthy. Usually, unsecured loans have a higher interest rate and stringent terms.

What Happens If You Default?

If you fail to repay an unsecured loan, your credit score takes a blow. There might not be collaterals against unsecured loans, but that doesn't let a borrower escape easily. Usually, late payments are the most important factors that affect your credit scores. Lenders can impose an exorbitant rate of interest on defaulters. The burden of defaulting on such a loan might drive you into debt.

A delinquent account could be written off to a third party agency as a collections account. If you are a severe defaulter, lenders could take legal actions against you and you could land in a terrible lawsuit. All of these will add a derogatory remark on your credit report; future lenders will find these remarks on your credit report, interpret them as red flags and refuse to give you credit.
Secured and Unsecured Loans - Their Impact on Credit

Irrespective of the type of loan, if you default on a loan, your credit history will suffer. Your credit score will certainly reduce, but a few other factors in your credit history will determine the rate of this reduction.

When you default on an unsecured loan, you get a few chances to make amends. Your credit score reduces by 50 to 100 points, depending upon the time of delay; you get more than 120 days to make the payment before your account is written off as a delinquent account.

However, if you default on a secured loan, the lender immediately seizes the collateral and reports it to the bureaus; such a derogatory remark can single-handedly reduce around 100 to 150 points.

Repossession and Its Impact on Your Credit Score - What is Repossession?

 How Can Repossession Damage Your Credit:

Apart from hurting your emotions, a car repossession can also hurt your credit report.

• Late payments: A car repossession followed by a missed payment can reflect on your credit report for up to seven years.
• Repossession: Following a car repossession, the credit bureaus may include a derogatory remark in your credit report which can stay for seven years. It will also take down your credit score by at least a 100 points.
• Collections: If you defaulting on your car loan, the lender can hand over your debt to a collections agency. A collections account generally stays on your credit reports for seven years, even after you repay the debt.
• Court judgments: The lender or the collections agency can sue you if you fail to repay an auto loan. A derogatory remark will certainly be added if the matter reaches the court.

You must also know that each of these derogatory remarks might be recorded as separate entries on your credit report. If your car is repossessed, your credit score can suffer multiple blows from the same incident.
What are the Costs Involved in Repossession?

Along with your credit account, your bank savings account also takes a major blow when your car is repossessed. The procedure itself can cost you a fortune. The lender can take away your car, resell it and ask you to pay the difference amount. This difference amount (financially termed as "deficiency balance") includes the remaining loan balance with its interest, as well as any expenses incurred during repossession.

Let's say you had taken an auto loan and presently owe Rs.10,00,000 to the lender. You fail to repay. The lender hires a tow truck for Rs.5,000 and two men for Rs.2,000 each to get the car back, Rs.1,000 for storage and then auctions the car off at Rs.6,00,000. You will have to pay a deficiency balance of Rs.4,10,000.
How Can You Recover a Repossessed Vehicle?

Getting back your repossessed car is not an easy job. However, there are few ways that you could try.

You could buy back your repossessed car by paying the entire amount you owe. This includes your missed payments with interest, reimbursement of the cost of repossession and also (in most cases) paying off the remaining loan balance in full. Alternatively, you could also buy back your car at the repossession auction.
How to Avoid Repossession?

When you fail to make an auto loan repayment, the lender can take possession of your car at any moment - whether you are at home or at work or amidst a medical emergency. They can take away the car without any prior information or warning. Playing hide-and-seek won't help in such a dire situation. You could try the following ways to solve your problem.

• Communicate: Prevention is better than cure. Before the lender takes a step towards repossession, you should try talking it out. Communicate your situation to the lender - tell them that you are struggling to arrange the money. They might be considerate enough to give you a deferral or restructure the terms of the loan.
• Sell: Repossession is a complicated and exhausting process. Try your best not to let situations roll into it. If your vehicle's resale value is more than what you owe to the lender, you should sell the vehicle off yourself and settle the debt. It will keep you out of the hassles of repossession.
• Voluntary surrender: If you can foresee the chance of repossession looming around, it would be better for you to voluntarily surrender the vehicle to the lender before they try to repossess it. It will hurt your credit score anyway, but you could make a good impression for future lenders by showing that you take responsibility for your finances.

How to Repair Your Credit After Repossession?

A repossession will be a serious blow to your credit health. Your credit score will drop significantly; it will leave a derogatory remark on your credit report for the next seven years. To pull yourself out of this mess, you should pay off the remaining loan balance, protect all your other credit accounts and make timely payments to improve your credit score gradually.

Stock Market vs. Mutual Funds: Which is Better?

The time you take for learning about individual companies is crucial for investing in the stock market. Learning about mutual funds usually takes lesser time. Unless you are a seasoned investor or are prepared to put in a substantial amount of time and effort needed to become one, it isn't beneficial to invest in equities/stocks directly.
Stocks Versus Mutual Funds
The Risk Factor

Stocks are more exposed to market-induced risks than mutual funds. Funds pool stocks under a stock fund or bonds under a bond fund. This streamlines the returns and reduces risk due to two reasons:

    If one of the companies in the fund has a poor manager, a doomed strategy, or is simply performing miserably, the loss incurred from that company is neutralized by the companies which perform well.

    Investing in mutual funds is less time-consuming and takes less effort.

From the fund manager's perspective, it takes time to research about the mutual funds, which could pose a major challenge. Fund managers keep updating the companies listed in your kitty; hence, it's sometimes difficult to understand the composition of your fund.

You can look at the past performance of your fund, but when your manager changes the companies listed under your fund, the performance can change dramatically as well. Additionally, mutual funds impose annual management fees, while stocks only bear an initial outlay cost.
Risk-Return Tradeoff

Mutual funds reduce investment risk by pooling stocks or bonds under various types of funds. Diversification in the investor's portfolio substantially reduces the risk; poor performance of a few companies is counterweighted by the good performance of other companies/businesses.
Investing in stocks can be time-consuming

Learning how to invest in stocks can be time-consuming. You need to conduct extensive market research and understand the direction of movement of the stocks and the reason behind such trends. Only then can you determine the most suitable investment option.

For investing efficiently, you'll need to study the financial reports extensively to know the profitability of the company and the strategies that can be employed to increase returns from investments.

To choose mutual funds, you don't need to learn how every company that you have invested in is performing; that's the mutual fund manager's job. However, you'll be required to research the historical performance of the mutual funds. Apart from that, you also need to find out the most promising sector.

Investing in both the financial instruments needs extensive knowledge of the market and the economy as a whole
Tax Liability

All equity portfolios need the investor to relentlessly update his/her portfolio by buying and selling shares as the desirability of the stocks keeps varying. When you're trading shares by yourself, you will be attracting tax liability.

However, in an equity mutual fund, such trading is done by the fund manager and you don't incur a tax liability because the transactions aren't made by you. Using the tax multiplier, you can calculate the amount of tax that can be saved. This might seem like a small amount, but it makes a huge difference in the long run.

Are you Disciplined Enough?

The stocks should be spread over at least five sectors with a fixed amount allocated to each sector. A certain percentage should be held only in large companies since they tend to be more stable when the market is strenuous. These rules establish a framework which ensures that the portfolio stays safe and diversified from shocks which could hit particular sectors or stocks.

Individuals who invest in the stocks rarely have the discipline and knowledge to do so.
Minimum Investment Size

Everyone looks for higher divisibility in their investments. One of the primary advantages of investing in mutual funds is diversification of the portfolio into smaller and more flexible blocks, starting with amounts as low as 100 rupees. On the other hand, if you want to have an equally diversified portfolio with stocks, you'll require a huge sum of money as a head start.
Cost of Investing

You must pay a fee to a mutual fund manager unlike investing in stocks where you aren't liable for paying any extra amount to someone else for managing. Active management of funds is an affair which doesn't come free of cost. In the case of stocks, apart from the brokerage fees and security transaction tax, you'll also need to pay charges for opening a demat account, which isn't required if you're investing in mutual funds.

Overall, it is relatively cheaper to invest in stocks. Mutual funds charge a fee for the fund manager's services. With stocks, the only charge is the transaction charge.

8 Budget-friendly Health Tips for Busy Indian Women

 

1. Take a minimum of 7-8 hours sleep: Amidst your busy schedules, erratic work shifts, and household responsibilities, most women feel restless and don't sleep well, which leads to health issues such as headaches, back pain, weak immune system, blood pressure fluctuations, cardiovascular disease, etc. Also, sleep deprivation results in weight gain and causes drowsiness during work hours. So, make your nap goals and try to accomplish 8 hours of sleep to start your day fresh.

2. Enjoy a sip of green tea: If you are not fond of green tea and hate to have it for breakfast, then start having it during work hours. The regular masala tea might be irresistible for most Indian women; however, you can always take the first step by reducing the number of cups you have in a day. For instance, if you are in the habit of drinking three cups of tea a day, then try to cut it down to two and eventually you will come down to one. Gradually, start replacing the masala tea breaks with green tea. Green tea plays an integral role in weight loss.

3. Start your day with a healthy breakfast: Begin your day with a light breakfast consisting of all the required nutrients. Oats, muesli, eggs, upma, brown bread sandwich, etc. are good choices. Don't skip breakfast - it may increase your body fat rather than burning calories.

4. Go for a walk/dance/yoga: If you don't have time for doing any activity in the morning, then do it in the evening time returning from office. Just a thirty minutes walk or dance or yoga is enough to rejuvenate your mind and keep your body active.

5. Have a healthy diet: Even if you can't maintain a strict diet, such as Keto and Paleo, start following the basic mantras of dieting. Avoid junk food and replace it with a healthy snack such as dry fruits, fruits, boiled peanuts, etc. Also, start reducing your rice and sugar intake gradually since you can't avoid them entirely in the first step. Maintaining a healthy diet will save you an innumerable amount of money - not only does it reduce your splurging tendency on junk food but also helps you save some bucks by cutting down your trips to the doctor.

6. Remind yourself to take a stroll between busy work hours: If your job demands you to sit for long hours, then don't succumb to it; start taking breaks after every hour and go for a walk. Also, keep stretching your hands and back at short intervals while sitting.

7. Drink water at regular intervals: If you are amongst those who need to set a reminder for drinking water, then begin it now and keep your body hydrated. If you can't drink four bottles of water in a day, that's okay; but integrate this activity in your habit and stay healthy. Drinking water at regular intervals can help burn calories faster.

8. Eat less at night: Don't consume heavy meals at night, especially if there is less gap between your dinner and sleep time. In case you have the habit of taking a heavy meal for dinner, then don't forget to go for a slow walk after it.

9. Sit alone for ten minutes and listen to some soothing music: The ultimate aim of meditation is to rejuvenate your mind and body. However, if you can't meditate, then take out ten minutes in the evening from your busy schedule, sit alone and listen to your favorite songs. It will surely refresh your mind and make you feel relaxed. 

Credit Card or Cash - What is Best while Travelling?

 Get to the Basics

Rather than stating the obvious, we would like you to introspect and answer these questions in your mind:

    Do you tend to overspend when you have access to a lot of money?
    Do you often forget to pay your bills on time?
    Do you go wild and surge into a shopping spree while traveling?

If you have answered these questions with a strong and bold "no," then we believe that you are a responsible spender who knows how to keep expenses within limits. You should consider using your credit cards while traveling. Skeptical, right? Read on to understand its dynamics.
Disadvantages of Cash

Cash payments barely promise perks or benefits. If you flash money, you could attract unwanted attention. An outsider with cash is an easy target for thieves. If you lose cash, your money is gone. Need I say more?
Using Credit Cards during Travel - Advantages

What's in a credit card apart from some numbers and letters on plastic! It is safer to use credit cards during travel. If you lose it, you can simply block it and get a replacement; you aren't technically losing your hard-earned money. It keeps that tension out of your head. It also brings along several benefits.

Reward points : If you happen to have a Rewards credit card, it can sweep you off your feet with the amazing benefits. Most travel rewards cards offer bonus points for booking flights and hotels. Many of these cards have tie-ups with hotels and you can avail a discount while booking. Apart from that, the more you spend, the more reward points you earn - you can reap their benefits by redeeming them later.

Facilities : Most credit cards offer perks to members. You can't avail a 'book-now-pay-later' hotel booking or those sassy self-drive rental cars without a credit card. Some credit cards provide protection for lost luggage and insurance for your travel. A lot of credit cards give you free airport lounge access to wait for your flight in luxury. A handful of travel credit cards slacken the rules for you when you cancel a booking or change the dates.

Convenience : A sleek and tiny card fits snugly into your wallet than a thick wad of cash. Moreover, what if you are just strolling on the beach and feel an impulse to frolic in the blue ocean? What if you are going to the pool bar? Cash could get soggy, lost or stolen. Credit cards are extremely convenient and safe as you need not bear liabilities if they are stolen.
Using Credit Cards During Travel - Disadvantages

Remember those three questions that you had answered in your mind? If you had a "yes" for an answer to any of those, you might need to be extra cautious while using credit cards during travel. Remember that these magic cards can be dangerous when misused.

How badly do we want to purchase those much-coveted souvenirs while traveling! Credit cards give access to oodles of available money. Spendthrifts would lose their minds and splurge on shopping. Irresponsible spenders might not only cross their budget limit but also fail to repay the money on time. Payment issues can pull down your credit scores; they can and will bring you a hefty APR, and you could get caught in the notorious debt trap.

However, let's assume that you have planned well and saved up enough for your trip. You will hopefully spend sensibly and have the required money when the due dates arrive.

Oh, there is one more thing that isn't related to your spending habits. In spite of carrying multiple credit cards, you might run into unexpected exigencies. You might visit remote locations where cards aren't accepted. In case you are traveling abroad, you must check whether your card network functions in the destination country. Visa and MasterCards are more or less accepted universally, but there are quite a few other card networks like Discover, Amex, RuPay, etc. that do not work in all countries. Moreover, credit card fraud is in vogue these days. You need to be on your guard while you travel.

Best Credit Cards for Overseas Travel

 Your Credit Card Should Be Suitable for Overseas Travel

You might have a great card with innumerable benefits, but it doesn't mean that it is fit for traveling abroad. Before setting off, make sure that your credit card has EMV compatibility and doesn't charge you for foreign transactions.

If your credit card has a small embedded golden square, be sure that it is EMV-enabled. These chip-enabled cards are more secure than the erstwhile popular magnetic stripe cards. The EMV chip cards work on a superior technology than the erstwhile magstripe cards and it is more difficult to hack into your account information through chip transactions than the ones through the magnetic ones. Travelers are prone to becoming victims of fraudsters. With the advent of these chip cards, the world has breathed a sigh of relief as it promises more security from credit card frauds.

Most Indian credit cards typically charge a fee on every foreign transaction. It could be as expensive as 5% of your total purchase per transaction. You would end up paying a lot of money for purchases. Instead, look for a credit card that doesn't levy the foreign transaction fee. You could actually save a lot this way. Consider getting a forex card as well.

You Should Carry Multiple Cards

Now that you have a credit card with EMV chip as well as no foreign transaction fee, do you think you are completely prepared to fly off? I don't think so. You need at least another card for backup. Are you wondering why? Well, be prepared for emergencies. Think of the worst - what if your card is lost or stolen? Expecting a replacement card immediately would be impractical. You would be inevitably stranded at a foreign location without any access to funds. It is better to be safe than sorry. Get yourself that backup card asap.

You Must Understand Your Card Network

Visa and MasterCards are more or less accepted universally, but there are quite a few other card networks like Discover, Amex, RuPay, etc. that do not work in all countries. Check whether your card network works in the destination country.

Inform The Card Issuer about the Trip

Credit card issuers lookout for fraudulent transactions. Overseas transactions generally come off as potential red flags. Your card could get blocked. Don't let it roll so far. Inform your card issuing company about your upcoming trip - convey the location and duration of travel. You could do this by calling up their customer service department. Some companies provide this facility on their websites.

Carry Some Cash

In spite of carrying multiple credit cards, you might run into unexpected exigencies. Your itinerary might include an obscure location where cards aren't accepted. You should carry some cash for such emergencies. It need not be your primary mode of payment, but it might come to use just in case.

How Often Do Companies Report to Credit Bureaus?

 Credit Scores Come from Credit Reports

The very first thing to understand is that credit score comes from credit reports. Yes, credit reports are the only place where you can find the scores. You get the report once a year from special bureaus like Equifax, Experian, and TransUnion. Just apply to them, and you should be getting the report within a few weeks.

However, do remember that these get updated weekly and even several times daily. This is why it is essential to know how long it takes for a credit report to be updated.
When Do the Lenders Report to the Credit Bureaus?

This is one confusing question that bothers everyone. And most annoyingly, this question does not have an answer. There is no such rule or law that insists upon a particular date for the lenders to submit their records to the credit bureaus. However, there are patterns that one could observe to understand the trend of a lender’s reporting habits.

Typically, the card-issuing companies report to the credit bureaus on your statement closing date. The credit bureaus can take up to a week to update this information. The three main bureaus - Equifax, Experian, and TransUnion, follow different timelines. They update your information at different times, speeds, and frequencies.

On the other hand, there isn't a hard-and-fast rule that your financial activities would be reported to the bureaus positively at the end of your billing cycle. It's mostly at the discretion of your card-issuing company. The company could report your information daily, weekly, monthly, or even quarterly. However, the popular trend is that the lenders report it at least once a month.

The credit bureaus do not insist that all lenders submit the information within a particular date every month. Each lender adheres to its schedule. Hence, your credit score is in constant flux. It can change at any moment - within days, or even within hours — as and when various lenders supply information about your credit activity.

How Often Are Credit Reports Updated?

It would be interesting for you to know that Experian, one of the most significant credit bureaus, takes care of more than 220 million credit reports. That’s a lot, right?! Now, once the score or transaction is reported, updates to the credit report happen quite fast.

However, this update is not in real-time. This is because Experian has processes in place dedicated to making sense of the information, correcting errors, following up, etc. It is essential to know how often your credit scores and credit reports change.

Equifax, another major credit bureau, takes care of 210 million credit reports a year. When new financial information is received, the report is updated within three days. Well, now you know how long it takes for a credit report to be updated.
Lenders Don't Need to Report to Credit Bureaus

In case you are striving to boost your credit scores and improve your credit health before making a large purchase, you would need to ensure that a positive credit history is reported.

But here’s the catch: All lenders do not report your activity to the credit bureaus. Even if they do, they don't need to report to all the credit bureaus. Credit reporting is entirely a voluntary practice. Credit card companies do it so that they can gauge the consumers’ creditworthiness, and they don’t necessarily reveal which credit bureaus they report to. Therefore, it is ideal for you to keep your credit score in good standing at all times.

When the credit bureaus receive your information, they typically amend your credit report right away. They recalculate your credit score immediately. If you've been maintaining a favorable status quo, then one untimely payment won't make much difference in your credit score. However, in case you miss a payment or cause a delay for more than 30 days, you will find a considerable drop in your credit score.

How Is Credit Card Interest Calculated? - Calculate Your APR

 Unsecured Credit Cards

The very common unsecured or regular credit card is a form of plastic money issued by a bank, or any other card-issuing company. Unlike with debit/ATM cards, where you use your own money, the amount used by the customer is loaned by the financial institution. This amount has to be repaid  - completely or in part - on a due date set at the end of a monthly billing cycle, as specified by the issuer.

Moreover, there is a limit on the amount that can be availed, and an interest is charged on the amount that is to be repaid. The customer’s credit score is heavily dependent on his/her credit card activity, and being regular in making payments is best to maintain your credit health. Otherwise, owning a credit card brings along with it the risk of landing in significant debt.
Secured Credit Cards: A Brief Introduction

A secured credit card is issued against a cash deposit. You deposit a sum of money with the lender, which acts as collateral. It is called 'secured' because the collateral serves as a security for the lenders. If you don't manage to repay the loaned amount, the lender can claim the amount to make up for the loss.

These cards are designed for people who are trying to build credit but do not have access to a regular (unsecured) credit cards since they haven't yet established enough credit score. It could be a supportive start for you if you are currently without any credit history or if you are striving to rebuild your damaged credit history.
How Do Secured Credit Cards Work?

In case you are searching for an opportunity to build or rebuild your credit score, a secured credit card could be a fitting option for you. All you need to do is to approach the bank and apply for one. Well, there isn't a guarantee of getting a secured card as soon as you pay the deposit. The issuer will scrutinize your documents and approve the application only if you qualify for the card.

Once your application for a secured card is approved, you have to pay the security deposit and get your card. The issuer sets a credit limit for you, which is secured with the cash deposit. After you make the initial deposit, secured cards work exactly like the unsecured ones. You can use the card wherever credit cards are accepted. As you make purchases, your credit utilization rate rises.

Just like regular unsecured credit cards, the card issuers report your monthly activities to the credit bureau - your credit score fluctuates accordingly. You must not assume that you don't have to pay monthly credit card bills since you have already paid a deposit.

The deposit is for security reasons, so that lenders don't run at a loss if you ever fail to repay your dues. Just like regular credit cards, you have to pay your credit card bill every month within the due date; or else an APR is imposed on your outstanding balance.

Secured vs Unsecured Credit Cards - What Is the Difference Between Unsecured and Secured Credit Cards?

 Unsecured Credit Cards

The very common unsecured or regular credit card is a form of plastic money issued by a bank, or any other card-issuing company. Unlike with debit/ATM cards, where you use your own money, the amount used by the customer is loaned by the financial institution. This amount has to be repaid  - completely or in part - on a due date set at the end of a monthly billing cycle, as specified by the issuer.

Moreover, there is a limit on the amount that can be availed, and an interest is charged on the amount that is to be repaid. The customer’s credit score is heavily dependent on his/her credit card activity, and being regular in making payments is best to maintain your credit health. Otherwise, owning a credit card brings along with it the risk of landing in significant debt.
Secured Credit Cards: A Brief Introduction

A secured credit card is issued against a cash deposit. You deposit a sum of money with the lender, which acts as collateral. It is called 'secured' because the collateral serves as a security for the lenders. If you don't manage to repay the loaned amount, the lender can claim the amount to make up for the loss.

These cards are designed for people who are trying to build credit but do not have access to a regular (unsecured) credit cards since they haven't yet established enough credit score. It could be a supportive start for you if you are currently without any credit history or if you are striving to rebuild your damaged credit history.
How Do Secured Credit Cards Work?

In case you are searching for an opportunity to build or rebuild your credit score, a secured credit card could be a fitting option for you. All you need to do is to approach the bank and apply for one. Well, there isn't a guarantee of getting a secured card as soon as you pay the deposit. The issuer will scrutinize your documents and approve the application only if you qualify for the card.

Once your application for a secured card is approved, you have to pay the security deposit and get your card. The issuer sets a credit limit for you, which is secured with the cash deposit. After you make the initial deposit, secured cards work exactly like the unsecured ones. You can use the card wherever credit cards are accepted. As you make purchases, your credit utilization rate rises.

Just like regular unsecured credit cards, the card issuers report your monthly activities to the credit bureau - your credit score fluctuates accordingly. You must not assume that you don't have to pay monthly credit card bills since you have already paid a deposit.

The deposit is for security reasons, so that lenders don't run at a loss if you ever fail to repay your dues. Just like regular credit cards, you have to pay your credit card bill every month within the due date; or else an APR is imposed on your outstanding balance.

How to Find the Perfect Credit Card - Apply for Credit Card

Choosing a credit card can be very confusing. There are countless credit cards available on the market, offering different tempting schemes. It is natural for you to get baffled.

Well, there is no "best" credit card. Each person has different needs and preferences, and you must carefully evaluate yours to determine which card would work well for you. Financial experts at mymoneykarma can guide you on this journey.
Check Your Credit Report

The first and foremost job on your to-do list would be to check your credit score. By doing so, you will know which cards you are eligible for and accordingly eliminate the rest from your list of consideration. If you have an exceptional credit score, you will probably be eligible for almost all available credit cards, especially the ones with amazing perks. If you have a comparatively low credit score, your options would be less.
Generally, all the credit bureaus give you a free copy of your credit report once a year. You could also check your latest credit score for free with mymoneykarma's credit score tracker, or you could approach the credit bureaus and buy a copy of your credit report. If your scores aren't that bright and shiny, you should postpone your plans of getting a new credit card and instead focus upon improving your score in the meantime.
Identify Your Preference

You must narrow down on the exact reason for getting a credit card.
Are you trying to build your credit?
Are you planning to save some money on interest?
Are you looking for attractive rewards?
The card you choose must have features to meet your specific requirements. If you don't fly much, a card offering airlines privileges will hardly benefit you. Similarly, if you already have a stellar credit history, a secured credit card might not fit your purpose.
If you are a fresher in the credit world, you would want to build credit. Regular credit cards would be inaccessible to people with low credit scores. A student card or a secured credit card would be ideal for you. These are issued against some collateral (such as a fixed or a cash deposit), which you can get back once you have built enough credit to switch over to a regular credit card. Secured cards could be of use even when you are trying to rebuild a damaged credit history.
If your objective is to save on interest, you should opt for a low-interest card or a balance transfer card. Some people prefer using a credit card only during emergencies; a low-interest or 0% APR card would suit their purpose.

Some might have irregular income and thus carry a credit balance at times; this situation can be handled by a balance transfer card which can help settle high-interest debt easily and at lower interest rates. However, these cards might be inaccessible to those with a poor credit score.

If you are a smart user and know how to use credit cards responsibly, you should go for a rewards credit card. These cards typically have higher APRs, but you will never incur interest if you pay off your credit balance in full every month. These cards offer myriad rewards and benefits on every purchase you make.
Narrow It Down

Our website has an amazing section where you can look for the perfect card for you. Click here to access our flourishing list of available credit cards. Here are a few things that you must consider as you browse through the credit cards available for you.

What Is a Good Level of Credit Utilization? - Credit Utilization

You give in to the lure and land in trouble. If this hasn't been the story of your life, then I salute your discipline and self-control. However, if you feel that you could fall prey to similar temptations, read this article for some essential tips to manage your finance well.

Many credit card users fail to understand the concept of credit utilization. Let's quickly acquaint ourselves to it.

What is Credit Utilization?

Let's say that you have a credit card with a credit limit of Rs.1,00,000. You have made a purchase worth Rs.30,000 using the same credit card. The ratio between these two values is your Credit Utilization. To put it lucidly, it refers to the amount or percentage of your credit limit that you have used. In this case, it is 30%. Here is how you can calculate your credit utilization:

( 30,000 / 1,00,000 ) * 100 = 30%

If you have multiple credit cards, you can add the balances in each card to get your total credit balance. Similarly, add the credit limit on each card to get the total credit limit. Now apply the formula to these new numbers to find your overall credit utilization rate.
How Does My Credit Utilization Affect My Credit Score?

Low credit utilization is the best way of maintaining a high credit score. It shows that you are keeping your expenses within limits by using a small amount of credit. A low utilization rate, not exceeding 30%, is considered best for your credit score.

The credit utilization ratio in each of your credit cards is taken into account by the credit bureaus to determine your credit score - individually as well as collectively.

Negative Impacts of High Utilization Rates

A high rate of credit utilization will bring down your credit score. It indicates that you are overspending and might not be able to pay your bills on time. If you don't manage to repay on time, a high rate of interest applies to the principal borrowed amount. So you would end up paying more than what you have actually borrowed, and your funds will gradually deplete, leaving you with less money in your pocket in the long run.
Tips for Maintaining the Right Percentage of Utilization

Now that you know that you should cap your expenses within a 30% credit utilization rate, you might as well go through these quick tips to help you with it.

Multiple Credit Cards:
Let's say your monthly credit card expense is Rs.50,000. You have a single credit card with a credit limit of Rs.1,00,000. It means that your credit utilization rate is 50%, which might be harmful to your credit score. Solution? Take another credit card; spend from both, ensuring that you don't cross your monthly quota of Rs.50,000. Your credit utilization rate drops to 25%, which would not be detrimental to your credit score.

Pay Bills More Frequently:
If your credit card bill tends to shoot up by the end of your billing cycle, you should make payments more than once per month. This will balance out the excess credit utilization.

Increase Your Credit Limit:
Ask your card issuing company to increase your credit limit. If you have used your credit card responsibly and if your credit score meets their requirements, you might be eligible for a higher credit limit. Once done, your average credit utilization will drop. It could be a more suitable option than taking a new card, as a new credit card might bring along an extra subscription fee. However, you need to keep two things in mind: don't increase your expenses; also remember that an application for a new line of credit calls for a hard inquiry, which negatively impacts your credit score.

Keep Your Utilization Above Zero Percent:
You might freak out by the complications and decide not to use your credit card at all. Sounds sensible, right? Well, absolutely not! Banks are here for business. The banks don't profit if you keep your credit card locked up in a safe. They want you to use your credit card responsibly, not avoid it altogether. You must use your credit card to be creditworthy, but at the same time, you must not overuse it.

How to Remove Delinquencies From Your Credit Report

 What Is a Delinquent Account?

If you have a credit account and you fail to make payments after the due date, your account is considered to be delinquent. Ideally, a delay by one day results in delinquency. However, in practice, the prevailing trend among lenders is to wait for two missed payments to declare an account as delinquent.

Delinquent accounts hurt your credit score significantly. They also spoil your credit history, as they appear on your credit report and stay on it for seven years. Delinquent accounts won’t help you when you want to remove the records either.
Consequences of Delinquency

Delinquent accounts can have short-term as well as long-term repercussions. These are the possible troubles that you may face if you drive one of your accounts into delinquency.

    A single delinquent account can cause an immediate drop in your credit score.

    Multiple delayed or missed payments can result in a 100 point drop in your credit score.

    Lenders will not trust you, and you will not be able to get credit in the future.

    Your credit report will be tainted for the next seven years, as the delinquency will be recorded on your credit report. Even after you settle the debt, the record will remain and serve as a warning to potential lenders that you might not be reliable with credit.

    The record might not be auto-removed after seven years, and you might have to spare a lot of time and effort to get the error rectified.

How to Remove a Delinquent Account

Credit bureaus strive to remove the negative information before the completion of seven years - roughly around six years nine months. However, they often make errors and fail to remove the records. In such a situation, the onus lies upon you to act quickly and get the matter resolved. Experts from mymoneykarma are here to guide you.

    Verify and Confirm the Age of the Debt: If you suspect that negative information is on your credit report for longer than it should be, the first step for you would be to pull out your credit report and scrutinize it to verify the exact age of the delinquency. It doesn't matter if your account was written off or sold off to an external collection agency. The date considered is the date on which you had initially missed or failed to make a payment to the original creditor. If your delinquency date was 1st January 2010, the information must not stay on your credit report for a single day after 1st January 2017. Keep your old credit reports handy - you might have to fish out the date on which the creditor reported your delinquency.

    Check with Each Bureau: Each credit bureau need not make identical credit reports. The creditors might not report to all the bureaus, and thus, your credit report from each bureau will differ. The delinquency may not be there in all the reports. Therefore, it is ideal that you get hold of a copy of your credit report from all three bureaus and inspect them.

    You are entitled to get a free copy of your credit report once a year from each bureau. However, you can access your credit report at any time by paying a nominal amount to the concerned credit bureau. You must find out which bureaus are still listing the outdated old debt and contact them to get the record removed. For regular updates, you can check your credit report with mymoneykarma.

    File a Dispute: Once you have zeroed in on the credit bureaus that haven't removed outdated or inaccurate information from your credit report, you need to contact them and file a dispute to remove delinquent accounts. The three main credit bureaus -  TransUnion, Equifax, and Experian - have their own dispute management system. You could fill up and submit the dispute form online or download the form and send it to the bureau via post. When you register a dispute, you should attach copies of all the documents needed to support your claim. You must make your plea convincing and foolproof so that the credit bureaus take it seriously. The credit bureau will contact the reporting creditor to verify your claim and settle the dispute accordingly. The issue should ideally be resolved in 45 days. Additionally, you could also consider approaching the reporting creditor with the issue to ensure quick redressal of the problem. In either case, try to obtain an acknowledgment of receipt of the complaint to keep proof of the date on which you had filed the dispute.

Why Late Payments Matter

Most money lenders charge a late payment fee nowadays. These penalty fees can vary according to how late you paid, the type of loan, and more. Some money-lending organizations even increase the yearly APR as the penalty, even if you make a single late payment.

Paying debts late can have severe financial consequences, as it can negatively affect your credit report. If the score drops significantly, you won’t get any new loans. Since the repayment history makes up for 35% of your credit score, you don’t want to be making late payments at all.

A single late payment may not do much harm, but several of those in quick succession may do a lot of damage, making it hard for you to get new loans at all. Even if you do manage to get a new loan, the terms would be strict, and the interest rate would be much higher.

If you fall far behind on your payments, and if the bank deems so, your debt account could be transferred to a debt collection agency. When this happens, the impact on your already bad credit score shall be more significant still. It will be tough to then improve a bad credit score.
Check Your Updated Credit Score

Delinquent accounts are something that you don’t want to have on your plate. Thus, you should regularly check your credit score report at least once a year. If there are debts to be paid or delinquent accounts to take care of, deal with them first.

Good Credit Score - How To Build a Good Credit Score

 Building a positive credit history is a time-consuming process. There isn't any quick solution or an easy way out. It takes patience and dedication, and several factors determine your credit score outstanding balance. The age of your credit history, your payment history, credit utilization rate, etc. are all taken into account by credit bureaus while calculating your credit score.

Each of these factors works uniquely, and it might be somewhat tricky for an amateur to understand the dynamics of credit. Read this article to discover effective ways of building your credit score.
Factors Affecting Credit Score

Here is a list of the factors that affect your credit score:
Timely Payments

Always repay the owed amount on time. Try your best to pay the amount in full. Your creditor might ask you to repay a portion of the total owed amount within the due date, but you must know that an APR will be imposed on the remaining amount. Credit card interests are quite high, and if you keep your payments pending, you might end up paying a lot more than you had initially borrowed. Pay on time, and your credit score is bound to rise.
Outstanding Debts

If you have an outstanding balance, pay it off as soon as you can. Stalling will make it a considerable burden, as outstanding amounts attract a high APR. Settling these pending balances will ensure a slow but gradual increase in your credit score.
Age of Credit History

This is the record of how long you have been managing credit - the longer, the better. You will be considered more worthy of getting a loan if you can prove that you have been maintaining your credits responsibly for an extended period. Hence, avoid closing your oldest credit card account; doing so could drastically bring down your credit score.
Credit Mix

A variety of accounts is always preferable, as it shows that you have been trusted with credit by other lenders. It presents you as a responsible borrower who has been considered creditworthy. This in turn boosts your credit score.

Credit Card Utilization

You shouldn't exceed 30% of your available credit limit. A low credit utilization rate indicates that you spend responsibly. It also suggests that you are more likely to repay the loan on time as you limit your expenses to your affordability. A low credit utilization rate assures a high credit score.
Building Credit

Now that you know about the various determinants of credit score, let me tell you how to improve it. You might be a beginner in need of credit score or an experienced spender with a messed up credit history. Don’t fret. Don’t get all worked up. There’s a solution to every problem; you can conquer your challenges with patience and a little help. Here you go:
Building Credit for the First Time

Let's start with the obvious: you must have at least one credit account if you are planning on building a credit history. If it is your first credit account, here are the options you've got:

    Secured credit card - it is a credit account whose credit limit is attached to your savings account. It serves as a security measure for the bank in case you are unable to repay the balance.

    Loan - You could take a small loan. If you aren’t eligible for it, get it cosigned by an acquaintance with a good credit score. However, the cosigner would be entering a serious obligation by doing so.

    Authorized user – If an acquaintance with a good credit history is willing to add you as an authorized user on their credit card, your credit score could largely benefit from him.

Once you establish a credit history for yourself, you would be eligible for starting your line of credit. Henceforth you need to be extremely careful so that you pay your dues on time always. If you have a credit card, you must keep your credit balance as low as possible, not exceeding 30% of the credit limit. Repay the balance in full every month. It is essential that you establish a pattern of responsible borrowing habits.

It might take three to six months of activity to calculate a credit score. Make small purchases every month and repay it in full within the due date. Show responsible credit habits, and it will help you build a good credit score.
Rebuilding a Damaged Credit Score

Damaged credit history can be hard to repair; however, it isn't impossible. The time and ways of improving a troubled credit history largely depend upon the severity of your situation. One can recover from the damage of a couple of missed or late payments in a few months, but the crisis of a substantial debt might take years to emerge from. The steps mentioned below can help you deal with both:

    Clear all debts: The very first thing that you need to do for rebuilding a damaged credit is to clear all your debts. As long as you have debt, your credit cannot be repaired. Check out what debts you already have and pay those back as soon as possible within the stipulated time.

    Catch up on late payments: In case you have any late fees, pay them as soon as possible. Late payments are never good for your credit score.

    Pay on time: This one is significant. Lenders forward your money because they expect and trust you to pay them back on time. When you are unable to do that, it reflects poorly on your credit report. As a result, lenders in the future may not want to give you any loans. Thus, you need to pay interest on time.

    Reduce your expenses: keep a low credit balance - It is essential to reduce your expenses as much as possible until your debts are paid back. It makes no sense to buy expensive things when you have debts.

    Reduce your credit utilization rate: The credit utilization rate is equal to how much money you owe divided by your credit limit. The lesser money you owe, the better it will reflect on your credit report. In time, you shall be able to take care of your damaged credit.

Collection Accounts - Unpaid Debts and Accounts in Collection

What is a Collection Account?

When you fail to repay a loan for a really long time, your creditor turns your account over to a third-party debt collection agency. The collection agency takes over the responsibility of collecting the debt from you on behalf of the original creditor. In such circumstances, your account gets listed as a 'collection account.' The credit bureaus collect the payment report and compile them into your credit report.

A debt generally becomes a collection account after it becomes considerably delinquent. If you have stopped paying a medical bill or a credit card bill, the original company might write off the debt as a loss and sell it to a collection agency, and henceforth, the collection agency will make attempts to recover the amount.

The original creditor doesn't need to notify you if your account is being sent out to collections. However, you can gain access to this information whenever you check your credit report. You can view the full report on the 'collections' page or section.
How to Find Out if You Have Accounts in Collections?

For instance, say you took a home loan last year from a bank. This year, you find you have no money to keep paying the EMIs. If the bank is unable to get its returns, it writes off the account as a bad debt and loss to the company. It also gives this account to a collection agency.

A collection agency does all that it legally can to take the remaining money from you, and even take you to court for failing to do so.

The bank is not under any obligation to tell you when your account is given over to a collections agency. It is your responsibility to know when it happens and which agency you owe your money to. Thus, it begs the question: how can one find out if you have any debt or accounts in collections?

    Access Your Credit Report: The very first thing you need to do while searching for any debt accounts in collections is to check out your credit report. Three major credit bureaus, namely Equifax, TransUnion, and Experian, can provide you a credit report for free every 12 months. In case you have any debts in collections, they will show up in the report.

    Check If a Credit Agency Contacted You: Collection agencies specialize in collecting back the money owed by you to the bank, or any other lender for that matter. However, collection agencies don’t get paid if they don’t get the money back. This means that they will try to contact you. If you recently changed your address or phone number, they won’t be able to reach you. However, you can get their details from your credit report.

    Ask the Original Lenders: If you are fairly sure that you may have debt in collections, but do not know which agency to contact, ask your original lender. As they stand to gain the money from you, they would be more willing to tell you. However, there shall be no grounds for negotiation with the original lender if the debt account is already sold to the collection agency.

    Check the Credit Report Again for Contact Info: If you want to know how to pay the designated collection agency, you need to check your credit report. It should have all the necessary information which allows you to contact the collection agency.

How Do Collections Affect Your Credit Score?

If you have a high credit score at the time when the collection agency reports the debt to the credit bureaus, you are likely to lose a lot of points.

The amount of your debt also plays a role in deciding the amount of damage that your credit score will receive. If your debt amount is considerably less, it might show up on your credit report, but it won't hurt your credit score much.

Different credit scoring models have different ways of dealing with your debt. Some models consider the type of mortgage; some models even disregard collection accounts once the debt is paid off and settled.

However, a credit score drop due to a collection account can severely impact your future financial plans. If you have a recent collection account or an old unpaid one, creditors can easily deny you credit cards and loans.
Tips to Manage a Collections Account

The way you handle your accounts in collection largely depends upon your situation. If all the information in the collection account is accurate, you could try to negotiate with the collection company and settle it. Simultaneously, make sure that you have kept your other accounts and debts updated.

With time, the damaging effect of the collection account on your credit score will recede. If you pay all other bills on time and project a responsible borrowing habit, your credit score should revive quickly.
Disputing an Erroneous Collections Account

Just like other reporting errors, your collection account might also contain a mistake. The record might be outdated, or the report might provide incorrect information. If you can identify an error, you must seize the opportunity and file a dispute with the concerned credit bureau.

If you notice that your credit report contains records of a delinquent collection account that is more than seven years old, you can request the bureau to remove the information.

Why Build a Good Credit History? - How to Build Credit Score for Students

 For students, while figuring out how to survive on a meager salary or allowance is of immediate importance, strengthening their credit history takes a backseat. Needless to say, the youth grossly underestimates the importance of a good credit history.

So, if you are someone who has landed on this page looking for ways to build a good credit history for yourself, you should definitely read on.
Why Build a Good Credit History?

One of the primary reasons why students don’t work towards building a credit score is low exposure to matters regarding credit. Young students are generally unaware that a massive student loan could destroy their credit score, which could take years to recover from.

Increasing credit usage among college-going students has led to a situation where they are walking out of their universities with not only a diploma but also a bad credit history. Students tend to believe that they’ll need a good credit score only to buy a house or take any other form of a loan, and this could seem like an eternity away while in college. As they say, however, time flies.

With this in mind, let’s look at the different aspects of building your credit score.
How to Build a Credit Score History as a College Student

The foundation of building a good credit score lies in understanding your credit report. Did you know that you can get your credit report for free through the credit bureaus? Check your credit score history and familiarize yourself with the terminologies and data shown on the report. If you see anything unusual in it, such as unidentified debts, dormant accounts still active, or any other error, it could very well be a case of identity theft, and you must inform the bureau about it immediately.

Most of the instruments used to prepare your credit score are double-edged swords. It is a widely held belief that ‘to build credit, you need to take some form of credit,’ which makes it a vicious loop. But making all the bill payments on time, managing a budget, and avoiding splurging could help you in building an excellent credit history after you have taken any form of credit. Thus, you can improve your credit history easily.

Consider Buying a Credit Card

Using a credit card wisely could help you in building a good credit score. The only condition is that you must pay your credit card bills on time. The higher the frequency of defaults, the greater will your credit score be affected negatively. The only way you can efficiently use your credit card to build a perfect credit score history is by remembering these three golden rules:

    Only use the amount of credit that you’ll be able to repay

    Always maintain a low credit utilization ratio

    Never default on credit card bill payments. You must choose to pay the monthly credit dues via AutoPay if that facility is made available by your credit institution.

Go for a Secured Credit Card

If you’re someone who loves treating yourself to expensive products every once in a while, but you are also scared of wrecking your credit score by defaulting on a payment, your prayers have been heard! Most of the banks now offer secured credit cards that require you to pay collateral against the issue of the card, so that you don’t have to worry about defaulting on your bill payments. A secured credit card can be a fantastic way of building a credit history for a newbie for these two reasons:

1) It acts as a cushion if you default on your payments

2) It helps you in analyzing your credit utilization behavior

Become an Authorized User of Your Parent’s Credit Cards
If you do not wish to get a credit card but wish to build a credit score history, then you can reap the benefits from your parent’s positive credit score history by becoming an authorized user on their credit cards.
Pay off Your EMIs on Time to Improve Your Credit History

The power of EMIs in building a good score is often underestimated. Paying off monthly installments is a make-or-break point for a credit holder. You must make the payment for all installments on time to prevent your credit score history from hitting a low.

Keep a Tab on Your Credit Score, Always

Even though credit bureaus always offer to provide a free credit report annually, people (especially students) rarely check their credit report. There are many websites, such as mymoneykarma, that offer credit score to people for free! So go ahead make sure that you check your credit score promptly.

Avoid Co-Signing Any Debt-Related Documents with Your Friends
If you co-sign a debt-linked document for someone, then every time they miss payments, it’ll pull down your credit score as well. So, before co-signing any document, you must ensure that your friend is financially stable enough to pay off the debt. If you’re unsure about your friend’s debt-repaying capacity, then you should entirely avoid co-signing.

Avoid Using Public WiFi Networks to Make Any Payments
Using unsecured public WiFi networks to make any purchases could lead to identity theft. To avoid this, you must refrain from providing your bank account details while using an unsecured network. Sometimes, simply connecting to an open WiFi could make you vulnerable to data and identity theft.

This is possible because multiple applications are running on everyone’s cell phones at any point in time. Since all the data that we send through our networks aren’t necessarily encrypted, when you connect to a public WiFi, someone can easily access the unencrypted data.

Make Sure to Keep Your Contact Details up to Date
We tend to avoid updating our contact details, considering it to be a string of hassles. However, if you fail to inform your bank regarding a change in address, notices and intimations from the bank may reach your previous address, thereby keeping you uninformed.
College Students Can Also Get a Free Credit Report in India

In September 2016, RBI had mandated that every individual in this country is entitled to get a free credit report annually from any of the credit information companies (CICs).

These credit information companies are popularly known as credit bureaus. The major credit bureaus in India are Equifax, Experian, CIBIL, and Highmark. Alternatively, you can check your credit score from any of the trusted FinTech portals.

Refinancing - How Does Refinancing Affect Your Credit Score?

 Refinancing can be a viable option for you in such a case. Refinancing allows you to make the debt easier to repay and improve the terms of your loan. It can reduce your interest rates and lower monthly payments as well.

What is Refinancing?

Refinancing is a process that conveniently allows you to replace an existing loan with a new one. This new loan would have better terms and should help you improve your finances. You can pay off your current debt with the new loan. Let me elaborate on the steps of refinancing to give you a better picture:

   You have an existing loan that you wish to improve

   Find a lender offering better loan terms

   Apply for the new loan

   Pay off the existing debt using the new loan

   Make payments on the new loan till it is settled

   Save money on the interest paid

Most loans, such as home loans, auto loans, student loans, and personal loans, have refinancing options.

Refinancing: Its Effects on Your Credit Score

Can refinancing affect your credit score? Maybe. Maybe not. Read on to know more.

Balance Inquiry

When you apply for a new line of credit, including a refinance loan, lenders will run a check on your credit report, which results in a hard inquiry. Hard inquiries reduce your credit score by a few points. The influence of a hard inquiry on your credit score decreases over time.

You can regularly monitor your credit report to gauge the impact of hard inquiries on your credit score. Use mymoneykarma’s Intelligent Finance Tool of to keep track of your credit report.

Account Closure

As you refinance a loan, your initial loan account will be closed, as you will be starting over with a new loan. This loan has a new opening date and no payment history. Some credit bureaus will consider your closed loan while calculating your average credit age, whereas some bureaus won't.

Similarly, some credit bureaus might even consider your payment history of the closed loan while making your credit report. However, it will receive much lesser importance than an active account. If you are planning on closing very old accounts, refinancing could be a sudden blow to your credit score.

Credit Mix

In case you are planning on refinancing to settle multiple lines of credit, you may want to stop and reconsider. The moment you choose to refinance an open line of credit, the older account is scraped and a fresh line of credit is initiated. Not only will this reduce your average credit age, but it will also mar the diversity of credit accounts that you maintained earlier.

The variety in the types of accounts you have can help you secure a better credit score. Refinancing might not be a great idea with respect to this aspect.

How to Fix an Error on Your Credit Report - Credit Score

 My credit report has always been admirable; it has never received a single derogatory remark. A few years ago, I had applied for an auto loan, with high hopes of purchasing my dream car.

I was appalled to discover that I wasn't eligible for an auto loan. What’s worse - I had no clue as to why it was rejected!

Upon further probe into my credit report (which I hadn't bothered to check earlier), I was shocked to discover that I had an unknown delinquent loan account! Of course, it was a reporting error. However, the loan was rejected, my car purchase plans were postponed, and I had to wait for quite a long time to get the matter sorted out.

How Do Mistakes in Credit Reports Cost You Financially?

Mistakes in credit reports are very common as well as blunderous. If they go unnoticed, these mistakes can fatally damage your credit health for no fault of yours at all. A reporting error can occur for multiple reasons and on multiple aspects of your financial life.

   It could bring down your credit score and also put you in difficult situations.

   It could spoil your credit health with a disparaging remark.

   Lenders can refuse to lend money to you due to these credit report errors.

Read on to understand how serious these mistakes can be and how you can keep yourself safe from their consequences.

What Kind of Errors Could Turn Up on Your Credit Report?

Your credit report could contain simple mundane credit report errors such as incorrect name, address, gender, and erroneous identity numbers like PAN, Aadhaar, or date of birth. These credit report errors do not affect your credit score. You do need to get them rectified nonetheless.

There could also be mistakes in the payment dates, account status, date of loan closure, etc. Such mistakes are severe and will affect your credit score. Your loan application could get rejected or you could be blacklisted by banks due to these errors on your credit report. If you find one of these mistakes, you need to act immediately.

However, this is not exactly the limit. Errors on credit reports could be way worse. Someone else's loan could appear on your credit report, or there could be a mistake in the amount overdue. These errors have serious implications and can harm your credit report considerably.

If you wish to keep your credit report clean, you must keep tracking your credit score from time to time. You can use mymoneykarma's Intelligent Finance Tool to stay on top of your credit reports. Whenever you spot a mistake, act immediately and get it rectified.

Who Makes These Errors?

Compiling a credit report is a multi-layered process. The banks and financial institutions make data entries and submit them to the credit bureaus; the credit bureaus aggregate your data from different sources and formulate a report. The credit report errors could occur at either or both of these stages.

There are a plethora of possible errors at the submission stage. The data submitted by the financial lenders is compiled and entered by many people. Human errors are natural. Manually entered data could have typographical mistakes.

There could be other mistakes pertaining to your credit behavior as well, such as payment or settlement status, latest balance, outstanding amount, etc. Credit report errors could also originate from the time lag between collecting the data and submitting it. Here’s an example-

Let's assume that your payment date is on the 5th of every month and the lender submits its reports on the 8th - your payment submission might not reflect in the report and your account status might not get updated.

Sometimes banks outsource the task of loan collection to third-party agencies, who might collect the amount from you but make a slight delay in depositing the same and informing the bank about it. Cheques might also take time to be processed and hence your submission dates might be erroneously recorded.

At the aggregation stage, there could be manual as well as machine errors. Bureaus generally use complex algorithms to assess your data. There could be computational errors due to unavailability or similarity in personal details. For example, your name could be the same as another person's and his or her loan could appear on your credit report by mistake.

Priority Pass - What Are the Benefits of a Priority Pass?

 Priority Pass™ can offer solace from stressful traveling with several free perks. Now, the real question is how much do you know about it? How much does it cost? Is the cost worth the price?

Hang on. We are here to answer all your questions, and by the end, you can decide if it's worth taking one or not.

Let's start with the Priority Pass™ basics.
What's a Priority Pass™?

Airport lounges are nothing new. A few airlines and credit card issuers operate their own airport lounges, such as the American Express Global Lounge Collection. Although you can purchase a one-time pass to such lounges, you won't be able to use it effectively if you are a frequent flyer.

That's why Priority Pass™ is so special. With a Priority Pass™ membership, you can access more than 1300+ lounges in more than 500 cities across 130 countries. The membership card lets you use their affiliated airport lounges regardless of the airline or the class you are flying in. After all, at the end of a long day of traveling, you would like to sit down, stretch out, and rejuvenate yourself.

Some airport lounges offer bare minimums, while some lounges step up their game. Premium lounges are known to provide cocktails with gourmet munchies, and some are even known to offer free massages.
What Are the Benefits of a Priority Pass?

With a priority pass, you gain access to connected spaces to relax or work in, thereby escaping crowded airport areas. However, before you subscribe for one, let's delve deep into how they help ease your travel woes!

    Global Spread of Lounges - Priority Pass boasts to partner with over 1300+ lounges in over 500 cities to enhance your traveling experience.

    Comfort at Its Best - With a priority pass access, you can sit down, stroll around, take a nap, or enjoy a pre-flight bite at most lounges. Most importantly, you can have comfort at your finger-tips.

    Stay Connected While Traveling - The free Wi-Fi facility gives you the liberty to work at your comfort and ensures connectivity with the rest of the world. Also, the abundance of electrical sockets lets you charge your devices before boarding.

    800+ Offers Worldwide - Make use of a variety of services; such as dining, spa discounts, and retail; made available to you exclusively through a Priority Pass membership.



    24*7 Service and Support - Priority Pass members receive premium service and support round the clock.

    Lounge Class - Be it traveling with family, friends, or just for work, Priority Pass offers you a space to relax before a flight.

How to Get Access to a Priority Pass™ Lounge

The Priority Pass comes with a choice of three membership plans to suit your traveling needs - Standard, Standard plus, Prestige. You can sign up for one of them through their website.

If you are looking for a long-time benefit, the Priority Pass™ Prestige plan gives you better returns. For the Prestige plan, you pay the annual membership, and therefore do not need to pay an entry fee every time you wish to use airport lounges in between your traveling schedule.

Other than availing it from the website, there is yet another way to get Priority Pass™ access. There are several credit cards that offer complimentary Priority Pass™ Select membership.

Do-It-Yourself - DIY Credit Repair

 Poor Credit Score

A credit score is a three-digit numeric that banks and other financial institutions consider determining the credit-worthiness of an individual.

On a numerical scale, a good credit score lies somewhere between the range of 700-800. On the other hand, if you have a credit score below 600, it’s high time that you ask yourself why you are within the ambit of poor credit.
How Does One Land in Bad Credit?

    A large number of missed payments - You may have missed some credit card or EMI payments in the past, due to which your credit score has decreased.

    High credit utilization rate - Credit utilization ratio = Credit card spending/credit card limit.
    If you spend more than 30% of the credit utilization limit, it reflects that you are credit hungry, and this can be the reason for a slump in your credit score.

    Multiple credit accounts - In case you have various credit cards and loan accounts, then it indicates that your debt to income ratio (DTI= Individual's monthly debt payments to monthly gross income) isn't maintained and you fulfill your obligations by borrowing money from several sources.

    Errors in the credit report - A credit report is a detailed document that comprises a consolidated record of your finances, such as credit card bill payments, EMIs, etc. which the banks provide to the credit bureaus. Thus, if you haven't checked your credit report for a long time, there is a possibility that at least some errors have gone unchecked in your credit report.

What Happens When You Have Bad Credit?

Disapproval of loan/credit card applications

Based on the credit score, lenders decide whether to take the risk of providing you with a credit or not. Thus, if you have a poor credit score, there are higher chances of rejection from credit card issuers, banks, and NBFCs.

High interest rates

Even if some lenders approve you for credit, they would compensate for the risk by charging a high-interest rate, which could put you in a huge debt trap.
DIY Credit Repair Tips

Credit repair is a process through which one’s credit score can be improved. It can either be done on your own or with the help of an expert, be it a qualified individual or an organization.

However, remember that it's not a one-day process and will take at least 6-12 months to show improvement. Now, if you choose to DIY, the following are the tips that you need to consider:

Monitor your credit report

With the significance of a credit report explained above, it is evident that you have to make sure that you check your credit report regularly. If you are thinking about where to get this report from, mymoneykarma is the answer. Check your credit report for FREE through our intelligent finance tool.

Once you check the report, if you come to notice errors, rectify them immediately by reporting to the credit bureau or the lender, depending on the severity of the mistake.

Clear your missed payments

In case you missed a few payments because of non-receipt of statements or forgetting the due date, don't think that clearing them will go in vain. Maybe your credit score will slump in one quarter, but as you pay the due amount, it will show a rise in the next quarter. Also, be diligent in paying the rest of the bills or EMIs, as that will maintain the lender's trust in you.

Beware of a hard inquiry

A hard inquiry is generated when you apply for a new line of credit. Thus, until your credit score improves, it is advisable to not apply for a new one, be it a credit card or loan. Even if you have a good credit score, too many hard inquiries can definitely affect it.

Resolve a dispute with the bank or other lenders

If you have missed or delayed payments due to a dispute with the credit card issuer regarding APR (Annual Percentage Rate) or any hidden costs, then resolve it to save your credit report from further negative remarks.

Buy a secured credit card

A secured credit card is designed for people who are looking to build their credit score. It is issued against a security deposit that you have to make for gaining access to the offered credit card limit.

The activities on this card are reported to credit bureaus, and the credit score fluctuates accordingly. However, remember that you still have to pay your credit card bills on time for the card to be of any benefit.

How Is Your Credit Score Calculated? - Calculate Your Credit Score

 A credit score is one of the essential components that banks and other financial institutions consider before approving any form of credit. It may be surprising for you to know that credit scores can vary when furnished from different credit bureaus, because every card issuer may not provide data to all the bureaus. The three main credit bureaus that offer credit scores are Equifax, Experian, and TransUnion.

A credit score is determined based on several aspects, which we are going to discuss further.
Factors Accountable for Credit Score Calculations

    Types of accounts

    Used credit vs. available credit

    Payment history

    Hard inquiries

    Length of credit history

Let’s now break down these factors for a better understanding.
Credit Account Mix

While calculating the credit score, the credit bureaus check the type of credit accounts, such as multiple credit cards (travel, dining, shopping) or loans( education, auto, home), that you currently have. This is to determine your ability to manage multiple accounts.  Opening new accounts may affect other aspects of credit score like the length of credit history, the number of credit accounts, amounts owed, etc.
Used Credit Vs. Available Credit

Your used credit balance vs. available limit determines the credit utilization ratio, which helps banks assess your level of responsibility towards credit usage. If your credit utilization remains below 30%, your credit score is likely to stay high. However, if all of your credit cards are maxed out, rest assured that your credit score will slump by a few hundred.
Payment History

Your payment history includes that of credit cards, EMIs, and delinquent accounts (if any). If you have frequently been a defaulter of payments, no lender will trust you, and it will impact your credit score considerably. But, if you have been a disciplined credit payer, and repay either more than the minimum due or the entire amount on time, then you have nothing to worry about.
Hard Inquiries

Hard inquiries occur when lenders check your credit score in response to a loan or credit card application. A large number of hard inquiries at once can drastically impact your credit score. However, if you are seeking a new car loan and personal loan at the same time, the multiple inquiries can generally be counted as one for a given period. That period may vary depending on the credit scoring model, but typically it is from 14 to 45 days.

Note: Credit score calculations don’t consider requests that a lender makes for a preapproved loan offer or an existing credit account. Checking your credit report also doesn’t affect credit scores, as it comes under soft inquiries.
Length of Credit History

If you have been maintaining a positive credit history for a long time, your chances of getting a new loan or credit card become higher. The credit report is a compilation of your credit history and must contain at least one account that is active from the last six months to generate a credit score. Don’t close your oldest credit card/account, as doing so can harm your credit score by bringing down the average credit age.

6 Fixed Income Investments Under Section 80C to Save Tax in 2020 - Section 80C

Fixed income investments are specialized for risk-averse investors who want the safety of their money with assured returns. Along with these two aspects, schemes such as Public Provident Fund (PPF), National Savings Certificate (NSC), and Sukanya Samriddhi Yojana (SSY), also offer tax-saving benefits under section 80C of the Income Tax Act since the returns from these schemes are entirely tax-exempt. Fixed-income instruments should be an integral part of every investor's portfolio to ensure security, mainly during times of economic volatility. So, let's take a look at some of the best fixed-income investments under the ambit of section 80C, where you can safely park your money.

Public Provident Fund (PPF)

PPF is a favorite mode of investment among the Indian middle-class. It’s considered to be a safe investment that offers an interest rate of 8%.

You may choose to invest a lump sum or make periodic contributions to your PPF account. You can claim a tax deduction for investments of up to Rs 1.5 lakh in a fiscal year under section 80C of the Income Tax Act. PPF is a safe investment avenue as the government reviews it. Currently, the investment, interest and maturity proceeds in PPF are entirely tax-free. New investors can buy this scheme either at a post office or any designated branch of a public sector bank that provides this facility. Also, there are a few private banks that offer the facility to invest in PPF.

Sukanya Samriddhi Yojana (SSY)

The current interest rate offered in SSY is 8.5 percent. You can make a contribution of up to Rs 1.5 lakh per account in a financial year under section 80C. However, there’s a catch. Sukanya Samriddhi Yojana is applicable only to the parents of a girl child. This scheme can be availed for a maximum of two daughters who are not more than ten years of age during the time of opening the account. In this scheme, you can claim a deduction for investments up to Rs 1.5 lakh only in a fiscal year according to section 80C of the Income Tax Act. There are no restrictions on the number of deposits that you can make either in a month or a financial year. The interest rate of SSY is linked with government bond yield and is subject to change every quarter as per the discretion of the government. You can utilize the maturity proceeds of this program for the education and wedding expenses of your daughter.

Voluntary Provident Fund (VPF)

The current interest rate offered by VPF schemes is 8.65%. You can contribute your entire basic salary and DA (dearness allowance) to this fund. However, you can only claim a standard tax deduction for investments up to Rs 1.5 lakh in a fiscal year under section 80C of the Income Tax Act. Hence, if you have already crossed your 80C limit through other investments or expenditures, such as EPF, PPF, ELSS, FDs, etc., then you won't be able to use the additional VPF contribution to save more tax amount.

If you’re wondering how VPF and EPF are different, then let’s help you understand. Unlike EPF, VPF facilitates the employees to voluntarily deposit beyond a fixed contribution limit in their PF accounts. However, in VPF, it is not necessary for the employer to make a matching contribution as it is mandatory in EPF. VPF also has lock-in conditions until retirement or resignation, whichever is earlier.

VPF is an excellent investment tool for saving tax under section 80C as it gives a tax-free return. Further, the gains are risk-free since the government guarantees them. VPF offers you the dual benefit of a tax saving scheme and a retirement planning scheme, and salaried employees should allocate a higher proportion of their salary to VPF for substantial tax-saving.

Senior Citizens' Saving Scheme (SCSS)

The current interest rate offered by SCSS is 8.7%. A maximum contribution of Rs 15 lakh is allowed in this scheme. As a senior citizen, you can claim a deduction for investments up to Rs 1.5 lakh in a fiscal year under section 80C. SCSS is a tax-saving instrument for people who are above the age of 60. However, if you have opted for voluntary retirement, you can start investing in SCSS even at the age of 58. On October 3, 2017, the Ministry of Finance announced that the minimum age limit for retired defense personnel is reduced to 50 years for investing in SCSS. This scheme has a lock-in period of five years. And, if you want to extend the tenure further, you can continue it for another three years. No partial withdrawal is allowed before the expiry of the lock-in period. However, in case of an emergency, you can prematurely close the account with a penalty levied on the withdrawal.

Tax-Saving Bank Fixed Deposits

The current interest rate offered in tax-saving bank Fixed Deposits (FD) is around 7-8.25%. The maximum amount that you can invest in this scheme is Rs 1.5 lakh, for which you can claim a deduction in a fiscal year under section 80C. The tax saving bank fixed deposits have a lock-in period of 5 years. This scheme is highly preferred for investments due to the assurance of capital preservation and returns as compared to equity investments in terms of tax-saving. It is convenient for the last minute tax savers, and the interest rates on this scheme are reviewed and changed periodically by the banks.

National Saving Certificate (NSC)

The current interest rate offered in NSC is 8%. There is no cap on the amount of investment that you can make in NSCs. However, you can only claim a deduction of Rs 1.5 lakh during investment declaration. Currently, National Savings Certificate is available for five-year subscriptions only. The interest rate is reviewed every quarter by the government and modified accordingly. Although interest earned from National Saving Certificate is taxable, the interest amount is considered re-invested (except in the last year of tenure) as it is not paid back to the investor until the maturity of the instrument. Hence, the re-invested interest component also qualifies for deduction under Section 80C of the income tax act. The interest earned in the final year of the tenure is not considered re-invested and is paid back to the investor for that year along with the principal and accrued interest in the previous years.