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Borrowing money from banks would require you to fulfill certain eligibility criteria laid by them. The major criteria are your income, credit score and employment. When you are unemployed, it could be difficult for you to get approved for a loan. However, if you have regular monthly income through some source like receiving rent, you are likely to qualify for an unsecured loan.
Although the chances of bagging a loan with bad credit and without a guarantor are slim, there are still options. You can use your existing collateral to get a loan with bad credit. Following are some of the popular options.
Consolidating all your debt into one loan can be helpful for you to pay off all your debt slowly in one EMI plan. But this can also decrease your credit score as taking up credit will raise a hard inquiry, which will bring down your score by a few points. Having a new credit account is considered as a new risk, and this causes a temporary dip in your credit score.
There is a possibility of errors arising in your credit report. The errors can be a wrong name, address, identity number like your PAN or Aadhar card number, gender or even your date of birth. But these errors won’t affect your credit score. The errors that could actually affect your credit score are:
Your credit score will define your creditworthiness to lenders. With your credit score, lenders will be able to discern whether you will be able to handle new credit, that is, whether you will be able to pay back your loan or pay your credit card bills regularly.
Equifax is a credit bureau where they accumulate information on a consumer’s credit history to calculate a credit score. Equifax collects information from trusted sources and they prepare a credit report
There is no fixed amount that is set for a credit repair. The cost will vary from case to case. Besides the amount to be paid back to the bank to clear the unpaid dues, the number of negative accounts determine the cost of credit repair.
Hard inquiries are made when you apply for a new credit and the lenders check your credit report to make sure you are creditworthy. So, a hard inquiry will imply that you have applied for a new credit. If there are many hard enquiries that means that you have applied for a lot of credit which will look bad to the lenders. And in turn they would be reluctant to lend you the credit you need. If there is an inquiry from a lender, then your credit score will go down by 3-4 points, which will not affect your credit score that much.
When a lender wants to know your credit worthiness, they check whether you are eligible for a particular credit product by checking your credit report. A soft enquiry is made when a lender wants to determine if you are eligible for any pre-approved deals.
Each credit bureau has their own way of computing a credit score. The algorithm of how the credit score is calculated will differ and thus the credit score that all three bureaus calculate will not be the same. Banks report your credit activities to the credit bureaus who have different mechanism to arrive at the credit score.
A credit score is a three digit number that ranges between 300 – 900 and reflects your credit worthiness. Lenders look at your credit score before making any lending decision. A credit score of above 750 is considered as a good score.
Bad credit can be burdensome especially when you need a fresh credit from a bank, and you are denied. It can be stressful to have bad credit in such pressing situations. To be honest there are no shortcuts to improving your bad credit score. But there is certainly a way to get relief if you follow responsible credit behaviour.
The purpose of consolidation loans is to repair your credit score. It is considered as one of the best ways to improve your credit score. When you have multiple credits and are unable to repay them on time, you can take out a debt consolidation loan and repay all of them. By repaying all the other loans, your multiple credits are closed positively with 100% repayment record. You will now have a single loan i.e. debt consolidation loan
Boosting credit score overnight is impossible as there are a lot of procedures followed in updating your credit activities. After finding that you have a poor credit score, you try to find out what has impacted your credit score. You may have outstanding dues to be paid to the lender, you may have incorrect data on your credit report, or you may have a settled or written off account, etc. Any one of these factors may have affected your credit standing.
A loan consists of two factors – Principal amount and Interest amount. The Principal amount remains the same for all the applicant irrespective of what their credit score is, but depends on their income. But what matter is or makes a difference is the interest rate, which majorly depends on your credit score. If you have a good credit score, the banks can trust your credit worthiness and your repayment capacity.
Lenders see individuals with bad credit as risky borrowers. Upon that, an unsecured loan contains more risk to the lender as there is no collateral involved. Due to this reason, the interest rate on unsecured loans are generally higher. To be honest, the chances are lower with banks who might reject your application.
There are online lenders who provide quick loans exclusively for individuals who have bad credit history. All you need to do is to just fill out an application form and submit it online. The lender may have listed out the required documents and minimum credit score required to become eligible for the loan with bad credit.
Generally, for a score between 300 – 900, any score above 700 is considered as a good credit score. And if you have a score of 800, then it is definitely a good credit score. Having a score of 800 shows that you are consistent and doing it the right way with managing credit. Having said this, there is still room to improve and reach a perfect score of 850.
Your credit score is calculated and generated by credit bureaus who receive your credit information from the lenders. The computation of credit score varies from bureau to bureau due to the difference in the weightage given to the parameters. However, the variations may not be hugely different. Following is the range of weightage given to each parameter in credit score calculation.
A secured credit card can be easily availed against your fixed deposit, and it’s one of the best tools to increase your credit score if used smartly. Following are some of the good credit card habits that can help you get magnificent credit score.
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