How to improve your CIBIL or Credit score

 

How to improve your CIBIL or Credit score

Business and personal needs drive a person to reach out for a loan. But getting loan is not an easy task as it seems. You need to have a good credit rating for getting a loan apart from your financial stability. The biggest fact about this lending industry, which I have learned in all these years of my experience. Is that loan is not provided to the needy, it is provided to the greedy. One who has the capability to repay it. Apart from your financial papers, net worth calculation, income proof, CMA and income source, the think which plays a crucial role in the sanction and approval of your loan is your “CREDIT SCORE”.

You must have seen or evident many occasions where you come across the testing of your Credit Score like, “Get your Credit Score” or “Test your Credit Score”. Many of you must have got your loan application rejected or declined due to poor credit score. Now the biggest question which is right now popping in your mind is, “what is the Credit Score”, “Why is it so important for loan approval” and “how to improve it” etc.

Credit Score or CIBIL

Credit Score is the rating provided by a credit bureau which denoted your credit worthiness and potential to repay the loan or debt. It provides the estimate to the bank or financial institution about your capability to repay their loans. It’s a three digit score. It ranges from 300 to 900. The higher your score is, the better your rating and chances to get the loan sanctioned. In India mostly credit score is been addressed as CIBIL or CIBIL Score which is not official correct but due to daily practices it’s apparently considered correct. In India there are four concerns or in correct words, bureaus authorized by RBI (Reserve Bank of India) to provide credit score. Credit Information Bureau (India) Limited [CIBIL] is one of the most preferred credit bureau that is the reason why credit score in India is referred as CIBIL Score or CIBIL.

Credit score is only for individuals or persons. For others like company, firm, business entity and even including individuals the credit analysis is called as credit rating.

Anybody can check their credit score from various websites available.

Importance & Benefits of Credit Score

A good Credit Score provides many privileges and benefits to an individual. Every finance seeker desires to have a high Credit Score. A credit score above 700-750 is considered good score. The importance and benefits of high credit score are :-

1. Easy loan sanction – the people with good credit score gets the loan sanctioned easily. The loan sanction process starts with the checking of credit score. A person with good credit score has the higher chances of getting the loan application approved and loan sanctioned. A bad credit scope gets the loan application rejected right at the face.

2. Get low interest rates – the person with good credit rating may get competitively low interest rate as the banks and financial institutions try to capture the prospective client. A person with good credit rating has a high negotiating power to negotiate and lower their interest charging rates.

3. Charges waiver or decrease – the person with good credit rating may get financial charges and other charges waiver or decrease which results in financial cost saving in complete life cycle of loan. Even such category of persons may also negotiate with the bank or financial institution to waive their charges.

4. Lower processing Fee – the person with good credit rating may lower or decrease the processing fee over their loan after negotiation.

5. Higher and more rewards – In case of credit card, the person with better credit rating gets more rewards likes cashback, discount, coupons etc.

Credit Rating Issuers

In India, credit rating is provided by four Bureaus authorised by RBI (Reserve Bank of India). We will not go in detail about these Bureaus.

1.    Credit Information Bureau (India) Limited (CIBIL)

2.    Equifax

3.    Experian

4.    CRIF High Mark

How to improve Credit Rating

This is the most crucial part to discuss. With the help of this knowledge anybody can improve their credit rating. The following will help to improve your credit rating:-

1. Use credit card regularly – If you have credit card use it regularly. If credit card is not used properly then the credit rating is affected as it shows low financial needs and utilisation.

Here is a trick to show your credit card limit usage. If you are not using credit card for shopping or other lucrative purchases, pay your routine bills by your credit cards and get its usage reflection in records.

2. Pay you loans and credits before due date – Pay your loans and credit cards dues a little before their due dates. It reflects the healthy money flow. And holding the payment till the last date degrades your credit track record.

3. Don’t check score frequently – Mostly it is recommended to check your credit score frequently but I have seen in the past that individuals with poor credit score use to frequently check there credit score and it resulted in further decreasing their credit score. So if your credit rating is low don’t check it very frequently. First build a little sound investment record and then check at least after 6-8 months. For better results try to file a good income tax return in the mean while time (between this 6-8 months gap).

4. Diversify your investment portfolio – As now a day’s your investments accounts are linked with Aadhar, your investment details are available at a common pool for access to authorised authorities like credit bureaus. People with diversify investment portfolio have better credit scores always. So just won’t keep your investments in fixed deposits or saving accounts but diversify. Purchase shares, securities, bonds, mutual funds other than just solid assets like real estate. 

Here is a way to easily improve your credit score. This is from my personal experience, I have tried this on my clients and it does provide a positive result. If are very conservative towards your investment plans, just go for this plan to improve your credit score. Create few FDs’ (Fixed Deposits) with a maturity period of 2 years or more and few RDs’ (Recurring Deposits) with a maturity period of 1 year more. These investments should show a composition of 20%-30% of your annual earning at least.  Wait for 6-8 months and then check credit score. The reason behind this is that your asset base or in other words your net worth reflects your good financial health and credit worthiness. So the credit score improves. 

5. Regular Income Tax Return filing – Income Tax Return is the source of financial record for every authority like  Income Tax and credit rating bureaus. The financial records are traced by these bureaus from the income tax returns filed by you. People with no income tax return filing record mostly have poor credit rating.

6. Longevity of Credit life – People with sound and long credit life record like running term loans in the past and timely payments, have better credit score. Take your credit usage and repayment seriously. And if you are not getting long term loan funds then try to get short term small credits for your various usages which will start building your credit usage track record.

7. Avoid defaults – Bank and financial institutions stay away from defaulters. Yes it is obvious that no one knowingly does any default but many times our ill-planned financial cycle or calendar invites payment default. Always run with cover transaction to ensure fund availability for loan payment on due date.

8. Get a credit card – Yes it is correct. Your credit card can help you to get a good credit score. So if you won’t have a credit card get one soon. As it is evident that people with credit card and its good track record have good credit worthiness.

9. Balanced Credit Mix – It is important to even diversify and maintain your credit portfolio. Have a balanced loan structure which reflect an appropriate usage and finance cost maintenance (interest and charges). Use long term funds for long term usage and short term for short term usage. Use specialized fund for specific purpose, like home loan for housing finance etc. All this builds a good credit score.

 

Do’s and Don’ts

In case of building an attractive Credit score. You should :-

Do’s

- Have a credit card.

- File income tax return regularly.

- Diversify your Investment and loan (Credit) profile.

- Keep Loan defaults at bay.

- Check your credit score atleast once in every Six Month.

Don’ts

- Avoid late payment of loan installments.

- In case of default, negotiate with your lender to have an out of court settlement & avoid to be listed in defaulters list.

- Don’ts associate yourself in joint loans with financially unsound individuals and entities.

- Avoid providing guarantee for financially unsound individuals and entities.

- Avoid getting to many loans.

Here is my best try to provide you the information about credit score and ways to improve it from my experience and knowledge. Friends I‘am putting my strongest efforts to provide you all the details in simplest language, please show your support and follow my blog. Do share with your friends and family to spread the knowledge.

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.  

How to Get Form 16 Yourself in 3 Mins

Today, I’am going to write a very useful blog for you all. I've often encountered situation, where people come to me saying that their employer has not provided them Form 16 or the Employer is not able to provide Form 16 on time etc. This issue is putting them in trouble to file their income tax return or to meet their other obligations. In order to solve this problem I have come out with this blog that how you can get Provisional Form 16 by yourself without going to your employer. But one most important point to this is that firstly, the employer must have paid your tax deducted to the government and secondly must have filed the return for the same. Conclusively if the employer has fulfilled his obligations then the provisional Form 16 will show the exact same details as the original Form 16. With this method you can download your form 16 on provisional basis which will be concise. I have personally done this for many of my clients and it does work. 

What is Form 16 ? 

Form 16 is the TDS Certificate for Salaried Person with complete salary and other details bifurcation. It is provide by Employer. 

Without wasting any more time let’s start learning and download your Provisional Form 16 in just 2-3 minutes.

Prerequisite :

·        Income Tax Login & Password

·        TAN of Deductor

If you want to see the visual process of the above, please click to the Youtube Link : https://youtu.be/-JGp0aiKS6U

Step 1 : Search for www.incometaxindiaefiling.gov.in over your internet browser.

Step 2 : Click on the website link and go to its home page.

Step 3 : Login to your Income Tax Id :-

1.   You will first find an information Screen. Close the Screen. And Click over the “Login here” Button showing at the upper left side of the screen.

2.  Login window will appear.

3.   Fill in your User Id and Password. Your PAN number will be your User Id.

4.   Fill in the captcha code and click on “login”

Step 4 : View “26 AS” :-

1.   Go to the menu bar of your Income Tax Id Home Page.

2.   Click on “My Account”

3.   Select “View Form 26 AS”.

4.   In the Confirmation Window, Click on “Confirm” button.

Step 5 : Navigate to “Traces” website :-

1. Now you will be navigated to an external website “Traces” i.e. www.tdscpc.gov.in

2.   From the dialogue box appearing on the homepage of “Traces” website. Tick the checkbox and click proceed.

Step 6 : View Provisional Form 16 :-

1.   From the menu bar Click “view / verify tax credit”.

2. From the drop-down menu select “Provisional TDS Certificate form 16/16A/27D”

3.  In the new screen appearing, Fill in the TAN of the deductor and select the financial year and assessment year will be automatically filled.

4.   From the Provisional certificate type option, select “Form 16”

5.   Click on “View”

6.   Provisional Form 16 will be displayed on the Screen.

Step 7 : Save Provisional Form 16 :-

1.   Right Click on the Provisional Form 16 appearing over the screen.

2.   Click “Save As” from the drop down option.

3.   Save As Dialogue Box Appears.

4.   Enter the name of the file (if want to change the default name).

5.   Default format is HTML.

6.   Click on “Save”.

Step 8 : Open Provisional Form 16

The Provisional Form 16 is saved in HTML format so you can open  it in any internet browser without the internet connection.  So open it in any Internet Browser.

 

This is the simplest way to get your Form 16 in just three minutes without troubling yourself too much.

Thank you for giving your valuable time. I tried my best to give the simplest way to do your work. Hope you all like it. Please leave your comments and opinions in the comment box below.

  

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. It has no connection with the websites mentioned in its contents. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.

How to do Income Tax Return Filing for Salaried Persons by Own

Today I'am going to share with you all, how to file your Income Tax Return if you are salaried person. As we all are well aware that the last date for Income Tax Return filling for the financial year 2018-2019 is 31 August 2019. Many of us are still in hassle for filing there income tax return for F.Y. 2018-2019. I'am going to share simple and easy way to file your income tax return by your own-self without hiring a Chartered Accountant or Income Tax Consultant. But before starting this, you should have a clear idea about the different sources of Income you are earning.

As the title says very clearly, its "for salaried person". But if in addition to your salary you have, income from one house property & income from other sources and Agricultural Income upto Rs.5 thousand; and your total income is  upto Rs. 50 Lakhs then this blog is still useful for you. 

There are many website which provide you facility for filing income tax return for free like www.cleartax.in etc. but I personally use, prefer and recommend our government website for the same. So we will be talking about Income Return filling from our government website https://www.incometaxindiaefiling.gov.in/home.

I will be dividing the discussion in three segment :-
1) Salaried Employees having Form 16 (TDS Deducted by Employer)
2) Salaried Employees not having Form 16 (TDS Deducted by Employer)
3) Salaried Employees with Income under Exemption limit (Rs. 2,50,000 having age less than 60 years, Rs. 3,00,000 for age 60-79 years, Rs. 5,00,000 for age 80 years or more, on the last day of the relevant previous year, etc.)

Segment 1 - Having Form 16

You are in the most comfortable segment. As the details which you had provided to your employer regarding income and deduction must have been considered duly. And automatically filled (auto generated) in the Form while online filing. On the other hand if you missed any details of income and deduction then you can show the same in your return and claim TDS refund. You can use Form 16 for filing the details of your income in respective places. As Form 16 is in a standard format which shows all details like Gross Salary, HRA (House rent allowance) Deduction, Professional Tax deducted, Other perquisites provided, deductions under Sec. 80C-80D etc. To increase your ease ask for "Form 16" from Employer. For filling the return keep reading.

Segment 2- Not having Form 16

If you are not having "Form 16" then also. "do not worry". Just go with your income details and idea about investments and deductions. Remember key details to file the return i.e. gross salary, HRA (House rent allowance), Travelling allowance and other allowances & perquisites provided by employer and there deductions & exemptions. Remember about standard deduction provided from salary under Section 16(ia) of Rs. 50,000 (F.Y. 2022-23, now limit amended) to be claimed. Fill in your deductions under Sec. 80C-80D etc. Now most important get your TDS details from 26 AS available in account registered with website https://www.incometaxindiaefiling.gov.in/home.

Segment 3- Income under Exemption limit

Under this, the persons having total income under exemption limit after all deduction and rebate will come. The have to fill there gross salary, HRA (House rent allowance), Travelling allowance and other allowances & perquisites provided by employer and there deductions & exemptions. Remember about standard deduction provided from salary under Section 16(ia) of Rs. 50,000 (F.Y. 2022-23, now limit amended) to be claimed. Fill in your deductions under Sec. 80C-80D etc.

Filing of Income Tax Return will be in ITR 1 for all the above segments. I will be telling you the most easiest and simplest process. All the process which is completely working online over screen. You have to fill ITR form online, Submit it and E-Verify. And your Income Tax Return is uploaded. There are three methods for E-verification of Income Tax Return, but the one I'am telling is the simplest and quiet. For E-verifying the return we should generate OTP (ONE TIME PASSWORD) from the mobile no linked with aadhar. The process is explained below : 

Now sit back and relax for an year.

Please leave your valuable comments. And if you want me to write on a particular topic, do let me know.

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Disclaimer :

The above blog is purely for educational and  guidance purpose. It's just the reflection of the author's personal experience and judgment. The author has just provided the general information & understanding and its not at all an alternative of any legal advice or practitioner. It has no connection with the websites mentioned in its contents. The content stated in the blog should be used by the reader at his own discretion and sole responsibility. The content of the blog can be only used for any other document, write-up, article, blog and any written or printed material whether on paper or digitally in any form, with the prior permission of the author.