At times we find that the size of our pockets is inversely proportional to our dreams. In simple words, sometimes what we want is way beyond our affordability. At such a time how you wish if you had enough money to buy that thing. If you could, may be, win a lottery.
Though winning a lottery is subject to chance but taking a loan is pretty much within your means. If you have a healthy credit score, your chances of being approved a loan increases multi-fold. So, it is pertinent that you look after and maintain your credit health.
The best way to maintain a healthy credit stance is to be alert of all your credit activities. Those who choose to ignore their credit scores, unfortunately learn the relevance of being credit alert the hard way. Like Chandrashekhar M. Vairale or Shekhar, for friends.
We all have had one fun loving friend in college or office who leaves everyone in splits with his jokes. That is who Shekhar was to his colleagues and friends. He was the jovial, 'life-of-party' sort of person, who was very popular among his friends.
Like everyone else Shekhar wanted to make it big in life but he was in no hurry. To him life was one big party and that one must enjoy it to the fullest. He rarely took things seriously and was prepared to say something funny to everyone.
Shekhar wanted to purchase a car as his office had moved to another location which was far from his residence. And he was done with travelling the local way. So he applied for a loan.
At first, he was denied a personal loan. And then his application for a car loan was rejected. He couldn't guess what was wrong. His best laid plans came unstuck when he realised he had a bad credit score.
Unfortunately, Shekhar learnt the hard way that there is no humour in being careless with financial matters. He had taken things a bit too lightly and often didn't mind paying a late fee on credit card bills. His theory was he didn't want to "stress" himself over "small" matters. Meaning, he couldn't take stress over payments. He was "cool" about paying a late fee. This attitude reflected poorly on his credit report.
When his applications were rejected, he did not once try to find out why they went down. He simply moved on. He kept on applying to other banks but when they all refused, then he realised something was amiss. Frequent applications too led his score to plunge further.
Up until then he never once worried about his credit score or its implications on his future financial position. But now he was concerned.
He had a deplorable score of 586 out of 900. There was no way banks would touch him even with a ten foot barge pole. He understood that he couldn't get a personal loan for low CIBIL score. But for a car loan, where there is an underlying asset, he hoped the banks would be lenient. But that is not how it works.
Some people assume that because there is an underlying security in a secured loan, lenders shouldn't have any problem in giving one because if there is a default the lender can recover the loss by selling the asset. Yes, they can do that but do really want to entail in such a headache? Wouldn't it be easier to not give a loan to a person whose risk of default is high?
The principles of credit management are simple and easy to adopt. Always make timely payments on all your credit accounts. Don't apply for credit mindlessly. Don't overspend on your credit card or over seek credit to meet every little financial obligation.
Most importantly understand that every penny borrowed must be repaid with interest. And if you do that within the allocated timeframe only then you are considered a responsible and conscientious borrower.
Paying late fee doesn't make it okay for you to be late. It is a penalty so that you understand you must not be late.
Shekhar couldn't arrange for funds in time because he had been careless and never paid much attention to important financial matters. This experience has turned him over and he is a new leaf now. He still has his funny bones but that doesn't stop him from being a more responsible and organised person.