4 STEPS TO BUILDING A FINANCIAL TRACK RECORD

Why is it important to maintain your credit profile? As you apply for loans in future, having a solid repayment track record may have benefits with the potential lending institution. For example, you may be able to get your loan faster, you may be eligible for higher loan amounts, or you may even be able to obtain a better price on your loan. A common mistake such as a missed or late payment may impact your credit profile, making it harder for you to obtain loans, credit cards or other financial products. To ensure that you are on the right track, know the following:

1. KNOW YOUR OUTSTANDING BALANCE – DO YOU HAVE DETAILED RECORDS OF EACH EMI?

It is wise to keep track of each payment that you make to wards a loan. This will help you monitor your payments, know your balance and, most of all, assist you with your budgeting. If you have opted for Electronic clearing Service, then your equated monthly installment ( EMI) is automatically deducted from the designated bank account on the specified dated. Make sure you know the date funds are transferred and confirm that each payment transaction is accurate and on time. If you have chosen to provide post-dated cheques, then it helps to request confirmation from your bank each month to ensure that the correct payment is make to the lending institution. If your account is low on funds, replenish it before the due date. You don’t want to risk incurring a later loan payment.


2. KNOW THE CHARGES AND PENALTIES – ARE YOU CAUGHT UP IN THE DEBATE OF REPAYMENT VS. PREPAYMENT?

Just do a quick calculation on the remaining balance to see if it is worthwhile to pay off your loan in advance. One way to evaluate this is to find out if the interest on your outstanding balance due is significantly higher than the penalty for the foreclosure.

3. KNOW HOW TO PLAN FOR YOUR FUTURE – ARE YOUR PLANNING ON TAKING ANOTHER LOAN SOON?

Check your loan options. You may be able to use your existing financial relationships ( insurance policy, car loan, home loan, current account/savings account, etc.) to obtain a loan. Your track record from this financial relationship may help you obtain a no-hassle loan with a lower interest rate with your current provider. You will need to check with your lending representative for the details.

4. KNOW HOW TO MANAGE YOUR FINANCE – DO YOU HAVE DIFFICULTY REMEMBRING PAYMENT DATES?

Don’t put your credit profile at risk by defaulting on any of your monthly payments. If you have multiple loans such as a car loan, a home loan, personal loans or even credit card balances, you may want to consider debt consolidation. This option will allow you to combine some or all of your loans at a lower interest rate while helping you to organize your finances.