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

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.

Here’s How You Need To Use Personal Loan Calculator

Personal loans are a popular means of financing needs these days. Many financial institutions offer personal loans at attractive rates. This helps you fund goals like travel, wedding, or buying assets. With personal loans, you do not need to dip into your savings. But make sure to use a Loan calculator before taking a loan.

Why do you need a Personal Loan Calculator?

Imagine you want a personal loan of Rs.1.5 lakh at an interest of 12% per annum. The lender says that you need to pay an equated monthly instalment (EMI) of Rs.12,000. In such a situation, most people comply. But how do you know whether it is the right amount?

You could always use a paper and pen or an Excel sheet to calculate the interest. But this takes time. With a personal loan calculator, you can get the answer in less than 10 seconds flat!

How can you use a Personal Loan Calculator?

Every month, you pay a certain amount of money as EMI. The amount you pay depends on three factors:

1) Loan amount

2) Loan tenor

3) Interest rate

If you change any of the above three actors, the EMI you pay will change.

For example, imagine that you take a personal loan of Rs.1.5 lakh at the rate of 12% interest for 12 months. In this scenario, the EMI would be Rs.12,883.

Let us change the interest rate to 15%. For the same loan amount and tenor, the EMI would be Rs.13,087. Here, the EMI increases by around Rs.200.

Now, consider a personal loan of Rs.2 lakh at the rate of 12% for 12 months. You would need to pay an EMI of Rs.17,770.

So, you can see how your EMI changes with a change in the three fundamental factors. A personal loan calculator helps you do the permutation and combination. That way, you arrive at the right amount, tenor, and interest rate you can afford.

Online Personal Loan Calculators

If you go online, you can find many personal loan calculators on the Internet. Take Bajaj Finserv, one of the leading non-banking financial companies (NBFCs) in India. Their website has a free personal loan calculator. It is convenient and easy to use.

Eligibility calculations

With this calculator, you can do much more than EMI calculations. For example, you can also assess your eligibility.

The eligibility calculator indicates how much money you can avail as a loan. This amount depends on various factors such as:

1) Age

2) Monthly salary

3) The city you live in

4) Any outstanding loans

You key in all these details to know the amount you can expect as a loan. For instance, say you plan to use a personal loan to renovate your kitchen. You need a loan of Rs.3 lakh. But your eligibility is for only Rs.2 lakh.

Then, it might be a good idea to revise your expectations or seek the loan elsewhere. You can save a lot of time and energy. Nobody wants to go through the whole application process only to find out they are not eligible.

Or, you could find out that you are eligible for Rs.5 lakh. You can always use the money to upgrade your remodelling plans.

Conclusion

Different financial institutions offer personal loans at different interest rates. Do not give in to the confusion.

Try These Apps to Help With Your Family Budget

It’s hard enough to stick to a budget when you’re an individual, let alone when you have a whole family to coordinate! Thanks to the popularity of smartphones and tablets, there are now an amazing range of apps available that can really help you get your finances in top shape. Here are a few of the handiest apps to help with your family budget.

HomeBudget with Synch

The real benefit of the HomeBudget app is the synch feature. This allows you to share your budget information and synch between family members, keeping everyone in the loop and on the same page with the budget. With the ability to track recurring bills, set payment reminders and simple categorising of your budget, it is truly one of the best family budgeting apps on the market. You can attach photos of receipts, as well as create multiple accounts such as credit, savings, cash and cheque to truly keep an eye on where your money is going. With the synch functionality, you can ensure that your family budget stays comprehensively up to date, no matter where you and your family are.

Money Smart Financial

This financial calculator is easy to use and highly efficient in supporting your family budget. One of the stand-out features of this app is the way it seamlessly integrates a home loan calculator, mortgage calculator and super calculator to keep you on top of your finances. This app has a fantastic feature which allows you to calculate exactly how long it will take you to reach certain savings goals, helping to keep you on track and motivated with your family budgeting.

iCompta

The beauty of iCompta is in its simplicity and functionality. It easily lets you keep track of your spending across a whole range of expenses that arise in your family budget. Within the app itself, you can make transfers between accounts, making it a real one-stop financial tracking tool. In addition, this nifty app can reconcile bank account transactions and present you with visual representation of your expense analysis. With clear chart and graphs for income and expenses, it is easy to use and visually effective. Many users will love the tool that gives you a prediction of your finances over a 12 month period.

Still Need Advice?

You might find that no matter how good the app, you still have trouble getting your finances together. This is where is can really help to seek some external professional advice. Choosing a reputable agency such as Fox Symes debt solutions gives you the peace of mind that you are receiving the very best financial advice for your needs. The team are friendly yet professional, and will specifically tailor a range of solutions to give you control over your finances once more.

When you’re looking for a great way to boost your budgeting, make sure you keep these top apps in mind. For a totally comprehensive approach to your family budgeting, combine the usefulness of these apps with some expert advice from the team at Fox Symes. With all bases covered, you are bound to experience long-term success with your family budget in the future.

What is Personal Injury Protection Auto Insurance and is it Required?

Personal Injury Protection is a specific type of auto insurance coverage, designed to pay up to the policy limits, for the cost of medical treatment, lost wages, funeral expenses, and loss of essential services for those involved in a car accident, including passengers. Often abbreviated as PIP, this coverage is currently mandatory in nearly 1/3 of all U.S. states.
Vehicle owners must purchase liability insurance to cover the cost of vehicle damage and injuries sustained by innocent parties when an accident occurs, but PIP insurance can be used to pay for emergency treatment while an accident claim filing is still in process.

Do You Have To Purchase PIP?

Each of the 16 states that require PIP a minimum amount in order for you to legally operate your vehicle. Some states require a minimum of only $5,000 of PIP. If you live in one of the above states and shop for auto insurance online or through a licensed agency, the minimum amount of PIP mandated by state law will automatically be figured into your insurance quote.
You can choose to carry a higher amount of PIP if you desire. It is also important to remember that this type of insurance covers the driver of the vehicle as well as all passengers, but some states require that only passengers be protected by this coverage. The vehicle owner may be entitled to waive the coverage for the driver.

Why Does PIP Exist?

The idea behind PIP, in part, is to reduce the number of fraudulent insurance claims. This insurance takes care of emergency medical expenses regardless of who is at fault in an accident.
If you are involved in an accident that results in injuries to passengers in your vehicle, your insurance company will probably reimburse you for the medical costs suffered by your party. However, this can take days or weeks. Your PIP coverage will pay for the medical treatment, and the insurance company can settle the matter between at-fault and non-fault parties at a later date.

What About Medical Insurance?

If you carry health or medical insurance, and if you live in a state where PIP is not required, purchasing this coverage may not hold as much value. It is important to examine your medical insurance policy carefully and see if this coverage takes care of emergency medical treatment after an automobile accident.
If you live in a state where PIP is required by law, taking out only the minimum amount of coverage may be a good idea if you already carry medical or health insurance. Many drivers choose to add PIP to their policy because it usually does not cost very much to do so. And do not forger that PIP provides many other useful benefits besides medical expenses.

Other Benefits Of PIP

There are additional benefits attached to certain PIP insurance policies including coverage for children riding on a public school bus. The policy often covers all household members who drive the family vehicle. Reimbursement for lost wages and funeral expenses are also covered by PIP insurance.
Drivers may lose their ability to perform if they are injured and unable to operate their vehicle. Your PIP may include a reimbursement for essential services such as mowing the lawn if injuries prevent the injured insured from performing such tasks.
Talk to your insurance provider or check online to get all pertinent information regarding PIP if it is required in the state where you live. It is always a good idea to see how adding this additional layer of protection affects the overall monthly cost of your auto insurance policy.

DiscountCarInsuranceQuotes.net provided this article. On their site, you can learn more about PIP coverage and compare free quotes from top insurers in your state.

Get the cheapest insurance you can

If you are looking for a great way to save money on your auto insurance, you are not alone. By following a few key tips today, you can get the cheapest car insurance policy. Consider these points

1. Reduce Theft Cover

Many people who shop for car insurance have the desire to buy the most cover they can for the least amount of money people. However, with some types of coverage, such as theft cover, there is an upper limit to the benefits you can enjoy. For example, many car insurance companies will only pay out on theft cover up to certain dollar amount, but this is often only after your deductible is met. Consider your car insurance deductible as well as the value of the items you may leave in your car. After reviewing this information, many people will see that theft cover is simply not worth paying for.

2. Make Your Excess High, But Affordable

A common misconception about car insurance excess is that you don't have to pay it if the accident is not your fault. Safer drivers therefore often opt for a higher excess than is affordable for them to pay out-of-pocket. However, your excess may be due in some cases even when the accident is not your fault. Higher excess can make your premium lower, but make sure the excess is not so high that your insurance is unaffordable to use.

3. Drive Safely At All Times

Car insurance will become more expensive as you get more traffic citations and have more accidents. Your inclination may be to slow down when you see a police officer up ahead. However, there are now more traffic cameras than ever before that can record you cruising at high speeds. Driving safely at all times is your best option for lower car insurance.

4. Talk to Your Agent Before Filing a Claim

Car insurance rates can increase when you file a claim. This can include claims based on accidents that are not your fault, weather-related damage claims and more. When in doubt, it is best to talk to your agent before filing a claim. Your agent can help you to better determine if your insurance rates will be affected by filing a claim and if it's best to pay for minor claims out-of-pocket.

5. Consolidate Insurance Policies

Many insurance companies will offer you a discount if you purchase homeowner's insurance, life insurance or another type of policy along with your car insurance from the same company. This discount can make your car insurance more affordable.

Keep these tips in mind to purchase the most affordable car insurance policy.

Patrick is guest blogging for his no deposit car insurance blog.

Don`t Get Your Fingers Burnt When Taking Out Car Finance

Anyone wanting to buy a used car will no doubt do some online comparison shopping for auto loans before taking the dealer's finance option at face value. At least, that's what you should do if it's something you haven't considered yet.
Obtaining the best car financing is important because a better loan will help you save money on interest over the entire life of the loan. Comparison websites exist for this specific purpose. They allow you to compare auto loan rates instantly and at a glance. Some websites will require you to enter in data prior to getting a comparison listing. This is because auto loan rates can vary by location and according to the make, model and year of the car you will be purchasing. Because of this, you will most likely need to enter your zip code and the car information.
If you don't have a particular car in mind, choose something similar to what you are looking for, such as a small sedan, an SUV, minivan, or pickup. It's best if you have already chosen the car you want to buy because the car loan quotes will be more accurate during the preliminary comparison shopping. Certain websites even have the option to compare cars according to your budget. This can help you decide which vehicles you can make the monthly payments on.
Be aware that some dealerships offer financing that could be considered scams. Yo-yo financing is one of them. This happens when the dealer says that you are approved at a certain interest rate. You sign all of the documents at the dealership and drive away, thinking that you're free and clear. Soon after, the dealership calls to inform you that financing was denied and you have no choice but to accept the car loan at a higher interest rate. If you don't, your car will be repossessed.
To avoid this, ask to see the loan authorization number to make sure that you are approved and do this before signing anything. If any phrases like "spot delivery" or "temporary conditional" appear in the loan documents, do not sign them.
Dealers also make money from their financing department, sometimes even more than they make from selling cars and they make this money by offering extended warranties and other add-ons. This doesn't mean that you shouldn't consider the extended warranty because it may come in handy, but what is that going to mean for your monthly payment?
Stay on the lookout for other hidden fees like dealer markup fees. Otherwise known as "dealer reserve," this simply refers to when a dealer marks up the loan interest rate a couple of percentages. This means that a rate of 6% could be hit with a dealer markup of 2%, bringing your total to 8%. There is nothing in the loan documents that indicates this markup, but you can potentially negotiate your interest rate if you ask. The dealer will not be able to give you a rate below the base rate, which is based on your credit score, so knowing your credit score and your pre-approved interest rate comes in handy. It certainly gives you more negotiating power.

This article has been contributed by Louis Rix, finance expert at CarFinance247.co.uk

Pros, Cons, and Reasons for Leasing versus Purchasing a Car

Consumers looking to have a vehicle must know about the leasing and buying features. Leasing is an alternative to buying that must be considered. Leasing has become very popular as reports indicate that over half of all luxury cars are leased. Getting a car on a lease costs less since consumers usually only pay for the car's estimated depreciation over the course of the lease period instead of the car's total value. However, there is no car ownership involved since leasing only allows customers to use the vehicle. Here is a list of pros, cons, and reasons for leasing and purchasing of vehicles.
Pros of Leasing

1. Lower costs. Leasers are only charged for the car's depreciation instead of the full value. Leasing provides lower monthly payments in comparison with a purchase finance options.
   
2. Low or no down payment. Leasing requires lower or even no down payments. It is a viable option for consumers that do not have enough cash to purchase a vehicle.
   
3. Simple turn over. There is no selling hassle after the lease term is over. Consumers only need to turn the car in and lease a new car if desired.

Cons of Leasing

1. No equity. Consumers that lease cars get no equity value from the money spent to use the car. The car will never be owned, unless the lease contract allows for a purchase opt-in after the lease term is over.
   
2. Extra insurance costs. Lease insurance doesn't usually include full coverage on stolen or totaled cars. Extra insurance, called gap coverage, can be purchased to cover for these events at higher prices.
   
3. No flexibility. Lease car companies charge big fines to consumers who want to withdraw early from a lease term. Depending on the lease contract, fees can cover up to six months of lease payments.
   
4. Extra charges. Miles are a major factor to consider on lease vehicles. Most lease contracts allow up to 15,000 miles per year at no extra charge. Heavy car users would incur charges of 15 cents per extra mile. This can amount to hundreds of dollars more per year for heavy drivers.

Reasons to Buy a Car

1. Consumers should buy a car for the long-term ownership benefit, which would eventually require no monthly payments. The main aspect to consider would be the final amount spent versus the car's yearly or mileage depreciation.
   
2. Car buyers can drive their cars without any mileage restrictions. Drive without having to check on the odometer on a constant basis like lease drivers.
   
3. Car owners can customize their rides as they see fit. Add any features or details to the car as preferred.

There are many factors to consider on whether to lease or buy a car like available money, usage, and resale value. Check all options to know which one fits your finances and tastes. Experts suggest leasing as an option to financially capable consumers that like to drive new cars every couple of years that otherwise could not afford this alternative.

This article is provided courtesy of Auto Loan Experts, a consumer finance website providing information and tools on auto loans for people with bad credit.

Tips to Calculate Rate

One of the most common and well-known algebraic equations is calculating distance, time or rate, and if you are one of the many persons worldwide that dread algebra, it can be one of the scariest things to encounter on an examination paper or in your daily activities. Calculating distance, time and rate is one of the simplest algebraic problems however, once you know the formula for working it out. First you should know that all three are related and you cannot find one without information about the other two, so you cannot separate them. With that said, let's look at how you go about solving each problem.

Required Tools

• Calculator

Required Materials

• Pen
• Paper

Instructions

1. The first thing to learn and remember is the basic formula which is that:
2. Distance = Rate x Time
3. Once you know the basic formula then just grab your calculator, punch in the figures and write everything down so you don't forget the answers. If you need to find the distance between two points, you need to know how fast the vehicle will travel between each point (rate) and how long it will take to get from point A to point B traveling at that rate (time). So for example:
4. A car travels at 80mph and drives for 3 hours. Calculate the distance the car traveled.
5. Remember the formula:
   Distance = Rate x Time
   So Distance = 80mph (rate) x 3 hours (time)
   Distance = 240 miles.
6. To calculate rate or time the formula has to be rearranged a bit; to determine how long it will take to get from point A to point B (time) the formula is:
7. Time = Distance/Rate
8. So if you are given the distance (let's say 220 miles) and you know the speed the vehicle will be traveling at (50mph) then you can find how long it will take to travel the given distance at a given rate.
9. Time = Distance/Rate
   So Time = 220miles/50mph
   Time = 4.4 hours
10. The last one is Rate which follows the same pattern as Time, meaning that you divide to calculate both Time and Rate. So if you know the distance between Point A and B (let's use 220 miles again) and you know the vehicle will get to its destination in 4.4 hours, then it is easy to calculate the rate the vehicle will be traveling at to travel that distance in that number of hours:
11. Rate = Distance/Time
    Rate = 220 miles/4.4 hours
    Rate = 50mph

Tips and Warnings

• To make things easier, remember that when calculating Distance you multiply the other two, to calculate Rate or Time the formula is reversed and you divide instead of multiply.
• Always start the formula with Distance to prevent confusion. For instance:
  Distance = Rate x Time
  Rate = Distance/Time
  Time = Distance/Rate
• If you are taking an exam, write down the formula for calculating each thing before you begin the exam so you have something to refer to if you forget the formula.

For more information on performing calculations, read How to Use a Calculator.