Thursday, October 4, 2018

Credit reports versus credit scores: What’s the difference?

score in credit
Remember the day in school, when teachers declared the results. The class teacher would come with a file containing our performance in the recent exam. In that file would, there would be that one piece paper that depicted our performance in the last exam. Each subject would be graded by a specific teacher and in the end, we would have a grade or a score.

You must be wondering why are we reminiscing about our school days and those dreaded report cards? Well, back in the day we knew the difference between a report card and the marks scored in a subject as well as the total.

However, in the world of loans, many borrowers become confused about credit report and credit score.

Before you feel aghast about this, you should know that not knowing the difference between the two can hamper your chances of availing a business loan.

Now, don't worry we will tell you the difference between a credit report and a credit score. So, that all-important loan for a business is never too far for you. Read on.

What is a credit report?

A credit report is a report, simple. Each credit report lists loan/credit-related information for a particular individual.

In India, there are 4 major credit bureaus– TransUnion CIBIL, Equifax, Experian and CRIF Highmark. If you are a credit taker, then it is quite likely that there will be a separate report produced by each of those companies. Think of a credit report as a detailed report of an individual's, in this case, your credit history.

What is inside a credit report?

Like your report card in school/college, your credit report will contain all the relevant information pertaining to credit history.

Listed items fall into the following categories: personal information (name and address, PAN card details, known business address, and phone number), open and closed credit accounts, credit inquiries, and others.

In most Indian credit reports, there is a credit account summary, a current credit balance amount summary and a credit enquiry summary that lists all the enquiries that have been for new credit such as business loans.

The information contained may pertain to credit card payments, and various loans such as automotive loans, business loans, home loans, and student loans. A credit report also contains the status of those loans such as doubtful, settled, closed, days past due, etc.

A credit report uses records reported by financial institutions to show how you as a borrower has kept up with payment agreements with various current and previous creditors. All this information helps creditors, like Tata Capital, form a credit picture of you. Simply put, they tell a story of the way you use your money especially credit/loans. So, the credit report gives lenders a total view of your credit journey.

What is a credit score?

As you can understand that a credit report is a compilation of your credit information. If there are 100 million borrowers, everybody will have tons of information. This is where a credit score comes in. A credit score is usually a 3-digit number that falls on a scale from bad to good. Usually, the maximum score is 900, while the minimum score that somebody can score is 300. Any credit score above 750 is usually taken as a good by all lenders.

How a credit score is calculated?

The exact formula for calculating credit score is proprietary knowledge. However, it is enough to know that a credit score is calculated based on information listed in a particular credit report or reports.

There is a possibility that one individual may have a different credit score. This is because the credit scoring formula is slightly different for different companies. However, your credit score will not greatly vary. For example, while applying for a loan for business, you may find that your Equifax credit score is 800, and 730 in Experian. But there is little chance that your credit score in one credit bureau will be 800 and becoming 500 in another credit bureau.

It is very unlikely that a good borrower in the eyes of one bureau will become a bad borrower in another bureau's assessment. While you may have several different credit scores, at the core of the idea is something simple: to provide a quick snapshot on how good or bad you are as a credit taker.

Credit score importance

A credit score has become so important because it helps financial lenders use the three-digit score to decide personal or business loan approvals, interest rates offered and other credit-related decisions. If they need greater detail, they can go through the credit report.

Do remember that a credit score as a number and a credit report as information are historical in nature. They only show what you have done in the past.

Focus on having good credit habits i.e. not over-borrowing, paying your bills on time, and keeping your word when it comes to credit agreements. These habits will help you in getting the best interest rates and deals for business loans when you someday need funds to set up or scale up your dream enterprise.

Tuesday, October 2, 2018

How a Business Loan Helps in Balancing Your Expenses and Incomes

business needs loan
It’s often tough for a businessman to strike a balance between all the expenses and incomes even when things are running smoothly. Again, you may perceive an uphill task to cope with the piling debt that affects your financial situation. Under both of these circumstances, you’ll face the challenge of taking major decisions that shape the future prospects of your business. A fair share of your income gets claimed by the regular cost of running a business, thus leaving only a small portion of it to be invested in growth and to cover unforeseen expenses.

A business loan can be of real help when you’re attempting to invest in avoiding risks and improving the future course of your business. You may compare some of these loans by visiting any loanable website and narrow down your choices. However, you must first acquire more knowledge on the benefits of small business loans before signing up.

The following scenarios hold good for considering a small business loan:

  • A dry financial season may create fresh opportunities. The pinch can be felt by even the most successful businesses, especially when the industry is trudging through a downturn. Till the revenue picks up again, a business can achieve adequate funds by way of a loan.
  • A seasonal business needs to be restocked. Few businesses don’t achieve returns throughout the year. Their activities may be restricted through different phases. The seasonal boom can be met with more funds when you apply for a loan.
  • Hiring new staff may be another instance. You might consider expanding the employee base for enhancing profits and productivity, especially when the trend is high. Covering all extra costs becomes easier once you obtain a loan. Such costs may include paying for their salary and training.
  • Procuring fresh equipment is also an important reason. Your business can reach out to more buyers once you improve efficiency by deploying advanced equipment.
  • Apart from opening a new branch, you may even expand your business operations. While experiencing success with your business, you may explore a new opportunity for business expansion and achieve a new reason for obtaining a loan.
  • Initiating a few marketing events. A small business loan will certainly help in exploring fresh marketing attempts regardless of whether you’re introducing a grand opening or an annual sales event. Alongside enhancing your ROI, it will also draw in more buyers.
Things That Demand Special Consideration While Applying for a Loan

You must create a list of all your requirements prior to applying for your loan. A concrete business plan needs to be drawn before you even think of it. You must keep a detailed note of the amount that you ought to borrow and know the direction in which your funds will flow. Knowing the loan amount that you need to allocate towards addressing various financial areas will help you maintain a certain buffer for achieving the desired ROI. This, in turn, will even help you in determining all loan options that keep your business up and running.

Thursday, September 20, 2018

The mindset of a hedge fund trader

fund trading
There are many types of traders trading in Forex and hedge fund trader is one of them. The only difference between them and the normal trader is, they manage billions of dollars. From the name, you must have known that they are skilled at what they do and they manage their client’s money when placing trades. When we place a trade of 10 dollars, they place a trade of thousands of dollars. Traders always want to improve themselves and knowing what goes in the mind of the professionals and hedge fund traders is a good way to increase their knowledge. As they manage more investment than us and their trades are also risky, they follow some tricks that help to remain controlled in high risks. This article will try to tell you what the common things are that most hedge fund trader thinks and goes in their mind. If you can think and trade like them, it is only a matter of time before your performance gets increased.

If you read this article very carefully your life might get changed forever. The professional Singaporean businessman always considers the worst case scenario first. Even though they have all the manpower and right resource, they never ignore the possible worst-case scenario. Due to this simple practice, they are able to make tons of money at the end of the year even after having some bad months. You need to develop this unique quality deep inside you to become a profitable trader.

Before you start to invest money, you need to ask yourself a very important question. Are you ready to lose your investment in the Forex market? If the answer is NO, trading is not a suitable source of income for you. You have to fund your online trading account with the money that you can afford to lose. This will significantly reduce the stress and eventually help you to make a better decision in trading.

They comb data to find the diamond in rough

The most significant difference in their mindset is how they see the market information and data. When normal traders are lost in this information, they keep on combing the data and information until they form a meaning. They are like miners in the jungle who are mining without any rest. Their eyes are searching for the diamond. The hedge fund people also combs the information and sews them together to find the right information for them. The next time you are placing your trades, do not focus on every information you get. Only analyze the information that you think is important and find out a meaning out of them.

They look for a high-probability trade

It is another quality that is different from the normal traders. These big traders know that only high-probability trades are worthy of their money. As they are placing trades with billions of dollars, they need to be precise on their trades. A small mistake can cost a billion and that is why they look for trends that have high chances of rewarding their trades. Do not over trade and only invest your money in trends that are worthy of your capital.

They do not overthink

They are very straight in their strategy and they do not over complicate things by overthinking. If you think this trend is not good, do not place your trades. If you keep on thinking if you will take this trend or not, it will only waste your valuable time.

Success is something that you need to pursue with heart. If you lack in skills or devotions, you will never become a successful person. Just like this, trading requires hard work, patience, and devotion. You can’t change your life unless you know the proper technique of trading. Learn about the Forex industry from the experienced people and try to come up with a balanced system.

Friday, September 14, 2018

How a Current Account Helps in Transacting Business in a Secure Manner

business finance
A business owner should be able to distinguish between his personal finance and business capital under all circumstances. You may open a business current account just to keep track of your business incomes and expenses separately from that of your personal finance.

Apart from improving your financial planning on the business front, a current account will help project your entire financial situation in details. Ascertaining a true and fair view of your business will help you to keep your personal finance segregated from that of your business finance.

Know how a current account helps a business owner:

• Helps in proving creditworthiness

Your creditworthiness may be checked by lenders prior to offering a credit-line. This process gets facilitated once you open a current account. The fact that you hold a current account can be proven very easily when you produce a bank letter stating the same. Creditworthiness can even be checked with the help of inter bank connections. You must continue to pay your bills on time even when you’re seeking a new personal loan. You may calculate the amount that you can afford to repay each month with the help of a personal loan EMI calculator. Your current account will even come to your rescue when you need to show a guarantee to a foreign counterpart, especially when you’re into import or export business. Maintaining your current account with a reputable banking concern will help in simplifying the entire process while proving your creditworthiness.

• Promotes a professional image

Maintaining professionalism is truly important while running a business. It helps in developing your business network, promoting your image, and expanding your business. You can prove your point by using a current account for your business dealings. All cheques that are received and issued by you while transacting business will mention your current account. The seriousness and responsibility with which you conduct business get symbolized by your current account.

• Simplifies banking transactions

Compared to a savings account of an individual, a few extra benefits are offered under a current account. Few effective value-added services are now offered by banks as the competition is becoming stiffer with each passing day. All current account holders are now eligible for these offers as they come at no additional charge.

Current accounts are considered as favorites by all banking concerns as these accounts don’t yield any interest for the account holder. However, most of the current account kits come with benefits like cell-phone alerts, online banking, and doorstep services.

Apart from this, a good number of free demand drafts and pay orders are offered to the account holders. He can even utilize NEFT/RTGs for availing the instant fund transfer facility. Although you don’t need to maintain a certain balance, few banks tend to support you with a zero balance account.

In order to ensure a personalized service for each of these current account holders, a bank provides them with benefits like that of multi-location funds transfer, multi-location withdrawals, monthly statements, free deposits, relationship managers, and free remittances. However, you might need to ensure a minimum balance although each of these services comes in handy with your savings bank account.

The primary objective of opening a current account is to transact business in a simplified manner. This, in turn, helps in running a business more smoothly and accurately.

Wednesday, September 12, 2018

Endowment or Money Back – Which of These Plans Will Protect Your Interests?

money returns
There are times when you may feel confused about the types of investment plans you should buy. This article is intended to clarify your doubts while attempting to compare and pick money back and endowment plans. It takes a lot of researching for you to determine which insurance plan matches your long-term investment goals.

Initially, you may feel confused due to the presence of so many investment products launched by insurance providers at a time. Intermediaries can make certain features seem more confusing while offering a savings plan there by causing more of miss-selling.

Need to Choose the Right Insurance Plan

Most investors tend to choose orthodox plans for acquiring good returns on savings from time to time. This, in turn, will help them achieve savings that can meet both their long-term and short-term financial goals. Money back and endowment plans are among all traditional plans that have grown popular of late. You might get confused about choosing the right investment option when you have certain shaded areas on your policy benefits and returns. An endowment ora money back policy has a certain blend of insurance and investment component. The period of time that lapses between the releases of sum assured proves to be the basic difference of these plans.

Benefits Receipt Term

Money Back Plans:

A certain percentage of the sum assured is paid to the policyholder periodically and the remaining bonuses and sum assured are met on the maturity of the policy term.

Endowment Plans:

Once the policy term is survived by the policyholder then upon maturity all applicable bonuses and agreed sum assured are paid to him.

Buying Criteria

You may accumulate considerable savings by investing in endowment plans if your primary objective is to look for long-term savings goals. It will help you create a fund for managing your retirement years, child’s marriage and other financial obligations. A money back plan is ideal for you when your regular income suffices your short-term requirements only.

Death Benefits

In the event of a policyholder’s death during the terms of his endowment and money back policy, both policies will pay him his applicable bonuses and sum assured. Money back plans will yield income regularly after a specified period. You’ll need to go through the policy paper very carefully while signing up.

At the end of the initial 5 years, you’ll be entitled to receive a survival benefit worth 20% based on your basic sum assured. Likewise, at the end of the 10th policy year and the 15th policy year, you’ll receive survival benefits worth 20%. But at the end of the 20th policy year, you’ll receive 60% of survival benefits alongside the vested bonus. So, that yields a benefit worth 120% for you in total.

Final Words:

You’ll need to be sure of your investment goals prior to choosing your money back or endowment plans and then pick them accordingly. While narrowing down on your chosen plans, you must check out the riders and policy benefits very carefully. In the end, both plans chosen by you are good; in order to achieve a fruitful investment, you must base your decisions on the nature of your investment goals.

Monday, September 10, 2018

Car Insurance - An Insurance Plan For All Road emergencies

coverage on car
Personal vehicle is a necessity in our daily routine. Public transport is easy on the pocket but at times it cannot rely on punctuality and safety of an individual. In case, you have a meeting for your presentation on which you invested your endless day and night. On presentation day you left from home before time to catch bus for your office. But, due to rush or late schedule bus, you miss it. You look for alternate transport option but, it all make your work hard instead of easy and you get late for your office. But if you have your own vehicle, you can reach your destination on time and with full comfort. Car saves you from all odd transport odd conditions, so you should also give your input to save and secure your vehicle.

Car insurance is the best possible way to take care of your expenses that arise during an unfortunate event like the accident, third party liability during accident or theft. Car insurance assists policyholder during financial emergencies that occur because of mishaps. Any bodily injuries that are caused to the driver and co-passenger and reimbursement for the damage or loss that is caused to the third party during an accident. There are various insurance policies and many insurance companies. One should be far-sighted while choosing one insurance plan as it is the only thing that will matter in your time of need. You should be aware of your need and requirements from an insurance plan to avoid any glitch in the hour of need.

Key benefits of car insurance –

Car insurance offers various benefits to the policyholder, but benefits again the same depend on the type of insurance policy that one choose. We can list some of the key benefits of car insurance as following –

• Car insurance offer covers against loss or damage to the insured car.

• It offers cover and reimbursement for various unavoidable risks like damage caused to the vehicle by accident, theft, fire, explosion, strikes or natural calamities.

• It offers coverage against various financial ups and downs that an individual face due to third-party damage or loss.

• One can get personal accident cover by car insurance for a security cover during any car accident. 

Car Insurance is a very vast field and offers various good coverage. There are ‘n' number of car insurance and broadly car insurance can be divided into two types as discussed below –

Third party car insurance policy

This insurance policy is especially for the third person liability security. It is normally not between the insurer and the insured but for a third party who can be anyone affected during the accident of an insured car like fare paying or non-fare paying passenger or any pedestrians. Under this plan, passengers of private vehicles and pillion riders are also covered considerably. In case of death or injury, liability cover is unlimited. As this plan do not offer a wide cover so this insurance plan is affordable. You can take help of PolicyX to choose the best car insurance plan according to your needs.

Comprehensive Car Insurance Policy - This is the umbrella cover against all loss and damage that result due to an accident of an insured vehicle. It protects the insured vehicle against any loss or damage that is caused due to man-made calamities like theft, riot, strike or rt., or natural calamities such as fire, lighting, flood, storm etc. This plan also offers a personal accident cover for the owner and passengers of the insured vehicle. Above all, it also offers third person liability cover so one does not need to buy it separately. But, the premium amount of the plan is also high as compared to other car insurance plan because this plan offers an overall protection cover during the car accident. One can also enjoy various add-on covers at an extra premium amount.

There are many options but only a car owner know what kind of protective cover he/she is looking from and what are the requirements for the same. One should compare various factors like premium amount and claim ratio of various car insurance policy before settling. Third party car insurance cover or a comprehensive car insurance policy, one should opt any based on their need.