Thursday, February 14, 2013

Good Banking Record, Credit History or Bank History & its Effects

Good Banking Record, Credit History or Bank History & its Effects
This article is helpful for those, who want to raise any type of loan like Personal Loan, Business Loan, Loan Against Property(LAP), Education Loan, House Loan, Agriculture Loan, Credit Card or to offer any type of guarantee or to have a good track record for future borrowing from bank, NBFC ( Non-Banking Finance Company) or other financial institution.

Anyone would like to have good record in every field whether it is personal or non-personal. The reason for this is to build good relationship and enjoy the benefit in future. Any negative feedback in track record will have adverse effect on future relationship. Similar is the case with financial institutions, banks or NBFCs.
The relationships with these institutions are of two types i.e. for credit/ loan purpose or for deposit purpose. Banks generally welcome the deposit without any hassle or even reward with different kinds of benefits or privileges but in case of credit these banks and other institutions are very cautious. This is necessary because bank advance the depositors money to earn interest on it for payment of interest to depositor and to earn profit.
Credit is an important need to a person or businessmen to meet the personal and business requirement. But if the loan case declined, it has a very depressing impact on personal and business front and force the needy to borrow funds at high rate of interest which disturb the financial position.
The decline of loan case may be of different reasons, but the most common is the unsatisfactory bank record or credit history. This might be in the knowledge of applicant of loan or not. A small mistake or negligence cost dear.
Now almost all the banks or financial institutions are well connected through networking and data can be accessed from anywhere. There are specialized hubs which stores the data of every individual and banks can easily access the data from there hubs. If there is any discrepancy in saving account like non maintenance of minimum balance in account, bouncing of checks, unpaid installments of loans, penal interest applied on earlier or other loan account, delay in payment of credit card bills or any other utility payments it shows bad match when query is raised. This ultimately results in decline of loan case.
These negative match are sometime intentional and sometime non intentional. In India this data is stored in CIBIL or in banks internal de-dupe. When the applicant is aware of his credit rating or banking track record, then he/ she should forward the application for loan. In case it comes to the knowledge of applicant regarding bad credit history, it should be rectified first. To update the record in CIBIL, application should be filed to update the credit record and after ensuring its correctness, case should be forwarded to bank for further processing.
It is also advised that one should maintain his/her banking history well. Timely repayment of loans, credit card bills and other utility bills should be ensured. The saving bank account statement or passbook should be checked regularly and any discrepancy should be rectified within time. Financial literacy should be ensured in this connected world, who knows when the need for finances arises at the once. A small mistake will affect the future of child if educational loan is declined or will shatter the dreams of own home if home loan is not approved.

This practice will help the applicant to get sanction the loan in hassle free manner and will help to prevent from unnecessary bothering. 

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