Display These Credit Responsive Actions to Stay on Top of Your Financial Game

The space you get to meet your current needs and future aspirations determines how financially strong you’re. Having an income that is more than sufficient to live comfortably despite inflation makes you financially strong. But many may be earning less and paying loans too, reducing their savings drastically to meet their current needs, let alone the aspirations. So one has to be watchful and intelligent when servicing loan obligations. In the absence of the same, you can get yourself thrown out of gear. Let’s display credit responsive actions as shown below to stay on top of our financial game. 

What Credit Responsive Actions Should You Take?

Firstly, what do credit responsive actions imply? This means – you should be aware of your financial condition while taking a loan or credit card. Financial conditions would further imply your asset & liability position; assets mean your income, investments, property (if any), whereas liabilities include your monthly expenses and any existing debt you have. So, the credit choices you make should factor in the same for your financial stability. Let’s discuss the effect of credit responsive actions.

Be Rational When Taking a Loan

Don’t commit to a loan simply because it can help meet your financial needs instantly. See the debt burden that you’ve to carry on for years. Trust us, paying more does not help! So, look to reduce the loan amount by using some of your savings intelligently.

Compare the Loan Interest Rates

How much you will pay to the lender depends greatly on the interest rate it charges on your loan. A lot of us take the ‘Best Interest Rate’ claims made by the bank executives too seriously and end up paying more. Check the interest rate yourself online and see which bank offers you the best deal. Remember, even a difference of 1-2% can bring a huge difference to the overall payout. In a home loan, for instance, a difference of 0.25-0.50% can make a difference of INR 2-4 lakh. Of course, grabbing the best interest rate would require healthy income, a credit score of more than 750, high repayment potential, etc. If you have these, get ready for a happy loan payment experience!

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Use Your Credit Card Responsively

Credit cards give people enormous purchasing power. But with that comes the splurge too, resulting in debt piling at an alarming rate of 30-40% should you not pay your entire dues. Banks give you the lure of minimum due accounting for 5% of the outstanding balance. Paying so on or before the due date will help you avoid late payment charges. But doing so month after month will grow your credit card debt to dangerous levels with an annual interest rate of 30-40%. So, shop intelligently and within a limit to keep your credit card bills under control. Ideally, one should not shop for more than 5-10% of their income. Those with high income can shop beyond the range though. Pay the bills on time to avoid late payment charges as well as boost your credit record. 

Ensure a Proper Credit Mix

Having multiple credits is usual these days with increasing user requirements. But what could pep up your credit score more is the mix you have. Too many unsecured loans could drop your score drastically in case you default on any of them later. So, having a few secured credit alternatives would only help boost your CIBIL score.

Check Your Credit Score Before Applying

Checking the credit score before applying can help prevent a potential loan rejection and a slide in the score. Credit scores, which range from 300 to 900, are a result of your repayment behaviour. Those who manage their loan or credit card obligations efficiently usually find their scores above 750. Those who don’t get bad scores, making them ineligible for credits. In case you find your score below 650, you can avoid applying for unsecured credits such as personal loans as you will most likely get rejected by most lenders. Besides, you can prevent your score from dropping further. Pull out the credit report to see where you’ve gone wrong while repaying and make those quick fixes to get your score past 750 over time.

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Personal Loan Interest Rates October 2023
Fullerton India12.00% - 24.00%
HDFC Bank10.75% - 14.50%
ICICI Bank10.75% - 19.00%
IndusInd Bank10.25% - 26.00%
Kotak Bank10.99%
RBL14.00% - 23.00%
Standard Chartered Bank11.49%
Tata Capital10.50% - 24.00%
Home Loan Interest Rates October 2023
Axis Bank8.75% - 9.15%
Bank of Baroda8.50% - 10.60%
Citibank8.75% - 9.15%
HDFC8.50% - 9.40%
ICICI Bank9.00% - 9.85%
Indiabulls Housing Finance Limited8.65%
Kotak Bank8.85% - 9.40%
LIC Housing8.50% - 10.50%
Piramal Capital & Housing Finance10.50%
PNB Housing Finance8.50% - 10.95%
Reliance Home Finance8.75% - 14.00%
State Bank of India/SBI9.10% - 9.65%
Tata Capital8.95% - 12.00%