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A Personal Loan offers individuals relief from unexpected financial issues and shortcomings. It is a tool that provides applicants instant funds in an emergency or for personal use, such as for home renovation, weddings, or travel expenses. A Personal Loan is unsecured, and the Lender must ensure that the Loan is repaid on time.
To maintain quick processing and target the right customers, banks and NBFCs verify the customer’s profile using the years of data available to the lenders. To study customer behaviour, identify the segment best deserving of an Unsecured Personal Loan, and rule out which applicants will most likely fall behind on their repayments.
To this end, Prominent Banks such as AXIS Bank and IDFC Bank have devised a Scorecard method that is designed statistically. When you Apply for an AXIS Bank Online Personal Loan or by giving hard copies of your documents, your application first goes through the scorecard check. The online program enters all the personal, professional, and financial details and assesses them, finally deciding the score.
If the score exceeds the required benchmark, the request for a Personal Loan from AXIS Bank will be processed further otherwise, it will be treated as a denial. To educate our customers, listed below are the primary profile points of a Personal Loan Applicant that the AXIS Bank scorecard considers vital to judge and score.
CIBIL Score: Credit is issued as a Personal Loan based on an individual’s credit score and history compiled by CIBIL (Credit Bureau of India Ltd). Applicants must have a credit record and a CIBIL Score to Apply for a Personal Loan AXIS Bank. A robust credit score and history contribute much towards a scorecard evaluation, whereas a delayed payment track or settled loan will negate the score. Though there is no fixed AXIS Bank Personal Loan Eligibility CIBIL Score Requirement, an overall assessment of the credit history is done, which contributes towards the Axis Bank Personal Loan Score.
Income: An applicant’s monthly salary is a vital consideration for a scorecard. Applicants with a salary of 30k and above are eligible to Apply for an Axis Bank Personal Loan and activate the scorecard. An increased monthly income signifies the applicant’s capability to borrow higher loan amounts for lifestyle needs and repay them promptly. Axis Bank encourages applicants from the high-income segment, and the scorecard evaluates them favourably.
Approved List of Companies: The applicant’s employer must be featured in the AXIS Bank Company Category List. The scorecard assigns higher value to an applicant working in a Category A or Economic Times-listed company than to an applicant employed with a company listed as Cat C or Cat D in the AXIS Bank Company Category List. An applicant employed with a limited or government organisation that features high in the company category list ensures job stability and income.
Education: A higher education is the basis for a promising future the applicant must be a graduate to Apply for a Personal Loan with Axis Bank. Further, being professionally qualified or holding a degree from a recognised institution ensures good remunerations and job prospects. The Personal Loan scorecard endorses the value of being technically competent and having a degree from a premier institute. It issues a favourable score to well-qualified personal loan applicants.
Self-owned Residence: Living in a self-owned or family-owned residence adds much more value to the scorecard than an applicant residing in a rented house. An unsecured personal loan in AXIS Bank is issued for a tenure of 1 to 7 years, and lenders take comfort from the fact that the applicant is constantly contactable and has the freedom of not paying monthly rent, which also adds to the financial eligibility for the loan amount required.
Stability: A length of employment with an organisation featured in the Approved Company Category List and continuity of residence, living with your family, spouse, children, or parents in the same premises for several years, are signs of steadiness. The AXIS Bank scorecard favours applicants with a stable residence and employment profile compared to applicants who frequently change jobs and residence addresses.
AXIS Bank Relationship: If you are an account holder, hold a Credit Card, or successfully run a loan with AXIS Bank, the relationship adds bonus points to your scorecard. Further credit is offered to applicants as an AXIS Bank Personal Loan Top Up, Personal Loan Balance Transfer to AXIS Bank when required based on an existing relationship or a previous account held with a smooth track of timely repayments effectively.
The evaluation of a request via a scorecard allows the Bank to consider all the aspects of an applicant’s profile, leveraging features that enable the Bank to eliminate risk and make a complete assessment. Therefore, an applicant with a CIBIL of 700 points may be approved if the scorecard gives the go-ahead.
The scoring method adopted by AXIS Bank for processing Personal loans enables quick application processing. The system approves or declines a request in the first instance when the applicant’s details are entered into the scorecard. If the score issued is above the required benchmark, the application is then forwarded for verification and decision.
On the downside, if an application is a scorecard rejected, there is no provision for a reassessment or relook the applicant will have to accept the decision as final.
The details and workings of the AXIS Bank Personal Loan scorecard are system-generated, and the workings are best known to management authorities. They can be tweaked according to policy and the changing market scenario.
The information above is based on years of experience in the financial industry. It is an effort to inform our customers to take the utmost care when filling out the application form and impart complete personal information with the AXIS Bank Personal Loan documents that help them get scorecard approval and fulfil their loan requirements.
Seafarers Employed by the Merchant Navy or cargo vessels transport goods by sea from one port to another globally. It can be enormous tanker ships carrying oil, bulk carriers with grain, or smaller vessels with livestock or local cargo. The officers and crew are employed internationally, man the ships, and brave the high seas to facilitate commerce.
Indian nationals are qualified and well-placed to be employed by companies operating under Indian and International flags. A seafarer is expected to continuously serve a 6 to 8-month contract before signing off the ship to take a break and go home for a rest. The diverse nature of the job makes it challenging to adhere to banks’ and NBFCs’ regular policy features for securing credit in the form of a mortgage or unsecured credit as a Personal Loan.
Therefore, leading Banks such as ICICI Bank, HDFC Bank, and Kotak Bank have made provisions for a unique policy that allows Merchant Navy Officers to secure a Personal Loan to fulfil their personal finance needs. To facilitate your credit journey and avoid roadblocks, the profile points listed below are significant and must be noted for the success of your request.
Employer Details: Entities owning cargo ships can register the vessel under the convenience flag in any country based on the economic advantages of lower operating costs and regulatory authority. Countries with the most maritime registries include Liberia, Panama, Singapore, and Hong Kong.
Therefore, a company based in the United Kingdom can own a merchant navy vessel with a Panama registry and employ a crew from India and Greece.
A Personal Loan is unsecured funding therefore, the lender needs assurance that the applicant’s employer is a reputable company and that the applicant’s employment can be verified. If the employer’s office is in India, physical verification is done if the employer does not have an office in India, a confirmation via phone or email is done. To this end, the Lender will require a valid employment letter with a renewed contract for the next voyage, and an HR confirmation from the employer’s office is needed.
Banking: The applicant’s salary must be transferred to the Bank account on a designated date. If the applicant is working with an Indian company, a last twelve-month bank statement with a salary credit is needed from the salary account.
Suppose a foreign company employs the applicant and gets paid in US dollars or other foreign currency. In that case, an Indian national must operate an NRI account for the salary credits and payment of the EMI and an NRO account to receive the loan amount in Indian rupees. A salary slip or certificate giving the details and breakdown of the salary transferred will be furnished with the bank statement as proof of transfer.
Documentation: With a diverse profile, banks require additional documentation to process a Personal Loan for Seafarers in India. Along with the mandatory KYC and Income documents, additional documents required include:
CDC or the Continuous Discharge Certificate: This document issued to seafarers is stamped and signed each time an officer signs on or signs off a Ship. Thus, it records employment, including the years and voyages the applicant has sailed. The CDC must be updated up to the last contract done.
Passport: A merchant navy officer must carry a valid passport when joining a vessel. This enables the applicant to apply for a visa for the country to travel to the destination port overseas and enter the ship. Additionally, a visa is required for travel to other countries thus, the applicant must submit a valid passport copy as proof for Merchant Navy Personal Loan Eligibility.
Residence Ownership Proof: A merchant navy applicant Applying for a Personal Loan should have a self-owned residence. Documentary evidence, such as a utility bill or registration documents, must be submitted with the application. The Kotak Bank only processes personal loan requests from the residence location, whereas the ICICI Personal Loan for Merchant Navy can be processed anywhere in India.
Co-applicant: The job of a merchant navy officer requires extensive travel and absence from home for long periods at a stretch therefore, Banks require a co-applicant who can be reached easily to process a loan request. The co-applicant can be a spouse or a parent, and the applicant’s KYC Documents must be submitted with the Personal Loan for Seafarers request.
CIBIL: The applicant must prove that the credit taken will be repaid promptly. Therefore, Merchant Navy personnel must have a healthy credit history and a CIBIL Score of 750 points and above to Apply for a Personal Loan. The co-applicants CIBIL Score and credit history are also considered and must meet the required eligibility criteria.
Income: The job of a merchant Navy officer is strenuous, involving braving the high seas and being away from family for long periods at a stretch, which entitles them to take a break. Banks, therefore, consider a 12-month or yearly period for the income criteria. A minimum 6 months’ salary credit is required over a calendar year the average salary must be more than ₹ 1.60 lakhs monthly as required by ICICI Bank. HDFC Bank and Kotak Bank allow a salary of ₹ 80k on average monthly if the company features in the Approved Company Category List of the Bank.
Merchant Navy officers earn handsome salaries and are offered increased Personal Loan amounts starting from ₹ 1 lakh up to ₹ 40 lakhs the funds approved are transferred onetime to the account and can be used as desired. This gives an applicant the flexibility to use the amount to fulfil personal obligations conveniently.
With straightforward communication via satellites, email, and mobile phones, merchant navy personnel can stay in touch from the high seas, enabling them to monitor their finances. Need to renovate your home or take your family on a much-needed vacation with your family? The plans can start taking shape when They are still sailing, so please get in touch with us at customersupport@yourloanadvisors.com with any inquiries. Updating your documents is also easier while you are still employed, and we can help ensure your personal loan experience is smooth. Over the years, we have successfully assisted many clients.
Customer Credit Behaviour has become a mandatory check before further lending for all kinds of Loans and Credit Cards. Every time an individual applies for credit, the financer sends an enquiry to a credit bureau—the primary ones include Equifax, Experian, Transunion CIBIL, or CRIF Highmark—to retrieve an individual’s score and history.
The Transunion CIBIL is considered the prime credit agency and maintains an exhaustive account of all credits. Understanding the CIBIL remarks is crucial as it empowers you to take control of your financial health. Keep regular updates and try to remedy the following observations in your CIBIL history that can lead to a score decline.
Every time an individual applies for credit, the financer sends an enquiry to a credit bureau to check the Credit history and CIBIL Score.
The lender views the credit history to verify the customer’s behaviour with credit. Your previous loans and outstanding Credit Card Dues play a significant role in the lender’s decision to issue further credit. Being aware of this can help you manage your credit wisely and avoid any negative impact on your Transunion CIBIL score.
Based on credit management, the type of credit usage, and repayment tracks, CIBIL issues a numeric score with a maximum of 900 points. The CIBIL Score is a benchmark adopted by most lenders today. A score of 750 points and above is the required CIBIL Score for Personal Loan Approval and the minimum CIBIL score for Credit Card Approval. Maintaining a good CIBIL Score is not just a requirement, but a responsibility that can open doors to better financial opportunities.
A hard enquiry by Banks can lower your Credit Score by 10 to 15 points, but if there are multiple enquiries within a limited period, this may increase to 20 points. Thus, if you apply to 4 Banks simultaneously for loans and Credit Cards, your score can be downgraded by 50 points or more. Besides your score downgrade, numerous requests make lenders cautious that you intend to get multiple forms of funding, which can be challenging to repay.
The Credit Card and loan application details remain on the Credit record for 2 years. However, if relegated by numerous enquiries, the effect on the score recovers within a year as long as the customer restricts the number of further applications.
It is a good idea for an applicant to make a soft enquiry before applying for further credit to ensure that the score is above the required benchmark and there are no surprises in-store, errors, or aberrations. A soft CIBIL enquiry made by oneself is not reflected in the credit history or affects the CIBIL Score. A soft enquiry is a credit check that does not affect your Credit Score, and it can be a useful tool to gauge your creditworthiness before making a formal application.
The EMI for your loan will be presented to the salary account on a pre-designated date if there are insufficient funds, the EMI will be returned unpaid. The lender reports the return of the EMI to CIBIL and other Credit Bureaus, and the time for which the EMI remains unpaid is reported as DPD or Days Past Due.
Similarly, if you miss the payment due date of your Credit Card Bill, the number of days past due will be reflected in your Credit history until the minimum owed or complete bill is paid.
For example, if your Credit Card Bill Payment is due on March 5th, and you cannot pay even the minimum amount owing until March 7th, a 2-day DPD is reported.
If an applicant misses paying a credit bill or has insufficient funds in the account to clear the EMI on the due date, a bounce is recorded. It is the applicant’s responsibility to make good the return as soon as possible.
A delayed payment or a once-in-a-while DPD remark is insignificant; still, a string of delayed payments in the credit accounts portrays that the applicants are not repaying the dues owed timely, which can be due to financial constraints or a careless attitude. This can adversely affect the credit ratings, as no lender will want to give excess credit to an applicant unable to fulfil commitments timely.
If pending payments are not made within a month, the delays are classified as 30, 60, and 90-day buckets.
If repayments are made after 60 or 90 days, an account is downgraded from Standard to Sub-Standard. Consistently delayed payments after due dates suggest that the applicant is under financial stress and unable to honour commitments.
The approaching EMI will further delay paying the pending EMI, making it difficult to get things in hand. The applicant’s intentions could be genuine, and the dues are paid within 12 months, but the applicant cannot maintain the payment schedule.
A healthy account moving towards a Substandard portrays that the applicant is under strain, with a medical emergency or shortage of funds, or has overindulged and cannot manage commitments.
The Credit Bureaus follow all credit tracks, continuously grading them according to the transactions. A substandard account signals financial stress and mismanagement, negatively impacting the credit score.
At this juncture, it is advisable not to apply for further credit, as Banks are apprehensive about giving funds to an applicant in a tight spot financially or who is not keeping up with the repayment schedule.
If your account is leaning towards a substandard category, now is the time to take action and prevent it from moving towards a Doubtful or Loss account, which can hinder your credit score and eligibility.
Credit is essential for acquiring assets and living comfortably today you can take the following steps to ensure your score remains intact. You can avoid the red flags in your credit record by paying attention to credit management. These red flags can include missed payments, high credit card balances, and multiple credit applications within a short period.
Current records suggest that consumerism is rising, with excessive credit usage compared to income and savings. This leads to restricted unsecured funding by Banks and an increase in rejection ratios, making it necessary to maintain on-time payment for all credit and a healthy CIBIL Score.
Are you looking for funds to buy a home, a new vehicle, or expand your business? Banks and NBFCs provide credit to fulfil individuals’ personal and business needs with specific eligibility conditions to eliminate the risk of recovery. To monitor individuals’ credit behaviour, credit agencies compile data on all loans, credit cards, and other credit tools, the most authentic of which is the CIBIL (Credit Bureau of India Ltd).
With the data received, the CIBIL creates an account with a reference number under which all credit-related dealings are accumulated. To grade the creditworthiness scores are allotted as follows:
| Score | Significance |
| Below 300 | Below six months of credit usage |
| 300-550 | Low score |
| 550-620 | Issues with credit |
| 620-700 | Needs improvement. |
| 700-750 | Healthy score |
| 750-900 | Optimum score |
Lenders use the score allotted by CIBIL as a ready reckoner to issue further credit to loan seekers. Banks now need a minimal credit score to process a loan request; the score required varies from lender to lender according to individual norms and the type of credit applied for.
HDFC Bank emphasises the individual’s credit history, not only the credit score. There is no minimal score requirement, and each case is judged on individual merit. There should be no delays or defaults in the repayment tracks and no settled accounts. In contrast, AXIS Bank has a scoring method to confirm eligibility, including the current CIBIL Score.
Other premium Banks, such as ICICI Bank, YES Bank, and NBFCs, such as Aditya Birla, have fixed eligibility norms and will only accept a request if the credit score is at least 730 or 750 points, per the requirement.
Lenders judge customers’ ability to handle credit based on their records and current credit usage, as recorded by the CIBIL. Personal Loans and Credit Cards are issued without any security or collateral based on the customer profile, unlike mortgage and auto loans, for which the lender holds on to the ownership documents until the loan is repaid.
Therefore, repayment records and credit history are a priority in unsecured lending. Before processing a Personal Loan or Credit Card, the lender inquires to CIBIL to retrieve and report the score. An applicant Applying for an ICICI Bank Credit Card needs to have a CIBIL Score of 750 points and above to process the request a similar scorecard is required for an ICICI Bank Personal Loan. The YES Bank requires a mandatory score of 730 points and above to further a YES Bank Personal Loan, Balance Transfer Personal Loan or a Personal Loan Top Up.
Applicants seeking a home loan are also subjected to a CIBIL inquiry. Banks may consider a mortgage request for an applicant with a below-average CIBIL record, but a delinquent history can create issues. The application can be rejected, and the customer may have to apply to an NBFC and pay a higher interest or provide a guarantor. At the same time, a repayment history of timely EMI payments will ensure an enhanced loan amount with a longer tenure.
The CIBIL Score has steadily become a priority for lenders. Banks and NBFCs closely check their averages, and keeping delinquencies and defaults below the acceptable percentage is essential. The RBI (Reserve Bank of India) also monitors the effects of the credit industry on the economy and issues directives.
In the recent past, a CIBIL Score of 720+ was an acceptable score to procure unsecured credit, such as a Credit Card or a Personal Loan. However, due to the increase in defaults and non-payments, this score has now increased to 750+ therefore, be vigilant about your EMI dates and pay your credit card bills timely. A CIBIL Score of 750+ is now the acceptable benchmark to secure easy credit and lower interest.
If you have yet to start using a Credit Card or building a credit history, do not stress. First-time loan seekers are eligible for secure and unsecured credit if the lender’s guidelines are fulfilled. The primary guidelines include:
If, for some reason, your score is below the required norms, you can take steps to work on the same before Applying for a Personal Loan or a Credit Card. If you need funds urgently, apply for a gold loan or a Loan Against Property. Used Car loans are also forwarded with a lower score a loan against a commodity will help you raise funds, and you can regenerate your score with a timely repayment track.
With the digitalisation of Banking systems and government guidelines linking all KYC Documents and Bank accounts, consumer data is being promptly updated. Credit agencies regularly record credit usage, which is readily available for Lenders to check customer credentials. Therefore, understanding the CIBIL ratings and maintaining a healthy CIBIL Score is necessary to procure secured and unsecured credit.
The tenure or repayment term for a Personal Loan is the time allotted to a customer to return the loan amount. The tenure allotted for a Personal Loan is from a minimum of 12 months to a maximum of 72 months, whereas an applicant can repay a mortgage or home loan for up to 30 years.
The importance of tenure in planning repayment should not be underrated. The repayment plan must be worked out before funds are appended to fulfil a need for personal use, buying a home, or business purposes. The applicant can repay the loan via equated instalments or EMI over the allotted tenure or period.
Can an applicant request tenure from the lender to repay the loan? An applicant can put forth the request, but the lender takes the decision keeping in mind the following:
Bank Policy: The lender has the final say regarding the tenure of a Personal Loan allotted to a customer and adheres to the individual policy. Prominent Banks such as HDFC Bank issue a Personal Loan tenure of 18 months up to 84 months in the case of an HDFC Golden Edge Personal Loan. ICICI Bank issues a Personal Loan with a maximum tenure of 72 months. NBFCs such as TATA Capital are conservative in the repayment length and will forward a Personal Loan for a maximum of 60 months.
The Income of the Applicant: The loan amount and loan tenure issued to a customer are primarily calculated based on the customer’s monthly income. The math for calculation is according to the lender’s policy, but the basics are similar. Some banks use a multiplier method, while others issue loans according to a percentage of the income. In either case, an applicant earning a higher income can afford to pay more as an EMI and repay the loan within a shorter tenure.
The Loan Amount Granted: The loan amount awarded to an applicant is based on the customer’s financial eligibility to repay the EMI. An extended tenure is applied for increased loan amounts, considering an applicant’s budgetary restrictions. Applicants earning a higher income are eligible for increased loan amounts, which can be repaid with a suitable EMI, whereas customers with a lower income look for an extended tenure to achieve an affordable EMI.
Age of the Applicant: A salaried applicant can repay a Personal Loan until retirement age, usually 58 to 60. The retirement age depends on the type of employment; if an applicant is employed with a government organisation and provides proof of job extension, HDFC Bank may consider extending
the tenure. Therefore, if an applicant is 56 years old when applying, the Personal Loan Eligibility for the loan amount is calculated, taking into account the repayment tenure of a maximum of 4 years. Retirement benefits and a regular pension are also considered when issuing a mortgage tenure.
Company of the Applicant: The applicant’s employer is given a lot of weight when allotting the terms of a Personal Loan. A customer employed with an organisation featured in the HDFC Bank Company Category List in the premier category is offered exclusive terms for a Personal Loan, such as a discounted interest rate and an increased loan amount repayable over an extended tenure of 84 months. In comparison, a customer employed with a Category C-listed company will be asked to repay the personal loan within 48 months.
The CIBIL Factor: An individual’s CIBIL Score is crucial in appending further credit. An applicant’s previous credit usage and repayment history are the basis for getting additional credit.
A good credit score with a healthy repayment history boosts the customer profile. Lenders are willing to issue increased loan amounts for a maximum tenure to applicants with a CIBIL Score of 750+ as banks are confident of timely repayments and trust that customers will repay unsecured Personal Loans for a longer tenure.
Customers who are first-time loan seekers are allotted a shorter tenure, but a sound repayment track will build confidence for future credit.
Finalising a Tenure:-
The Tenure Remains Fixed:-
The Effects of a Tenure on the Loan Cost
The cost of your loan will also vary according to the tenure, for example:
For a loan amount of ₹ 1 Lakh, interest is charged @ 12% at a reducing balance.
Loan amount repaid with interest over 18 months: 109764.00
Loan amount repaid with interest over 24 months: 1129784.40
Interest is charged annually for the term or tenure of the loan amount taken. You pay interest for how long it takes to repay the loan or the allotted tenure. Therefore, if you can afford to pay a higher EMI, opt for a shorter tenure and spend less as interest.
Option Of a Balance Transfer for a Tenure Change
The repayment tenure for your loan is as significant as the interest rate and the loan amount. Before taking a loan, consider an appropriate tenure per the key points above our EMI Calculator will help you choose a suitable tenure. Ideally, completing your unsecured loan over the allotted tenure works best, as timely repayment of the EMI will give you a healthy CIBIL Score and pave the way for easy further credit.
A Credit Card makes life easy with funds available at your fingertips, you tend to spend without one because you will have to make the payments later. But nothing comes for free, and your Credit Card Bill will be presented to you at the end of the 30-day cycle. A further 15-day grace period is given for the payment of the bill if there is a budgetary constraint, it is mandatory to pay 5% of the total, and the balance is carried forward to the next cycle. The deferred payment costs 36% per annum, which is the interest to be paid on the total bill until the pending amount is cleared.
Extensive Usage: Suppose you have used your Credit Card extensively and need the amount available for repayment. In that case, you can consider postponing the payment over one cycle with the condition that you don’t use your card till the payment is done and will have the funds available to clear the bill. If in doubt, do not wait to Apply for a Balance Transfer.
Limited is Exhausted: Further usage is not advisable if you have used the credit up to 80% of the designated card limit. Also, the interest applied to the unpaid credit is added to the pending dues, increasing the debt further. Rather than wait for the dues to build up, consolidate your debt by applying to transfer your credit card dues to a personal loan.
Budgetary Constraints: If your budget is constrained due to an emergency, take care of your credit outstanding by Applying for a Balance Transfer to a Personal Loan. When you do not have the resources to manage your finances, debts can get out of hand. Take timely action so that your CIBIL Score does not get downgraded.
Bank Policy: Prominent Banks that offer to convert your credit card dues to a Personal Loan via a Balance Transfer include HDFC Bank, Kotak Bank, AXIS Bank, and AXIS Finance. While each Bank has its eligibility criteria, the applicant must meet the basic norms and criteria required, such as:
Status of the Credit Card or Cards: For the dues of a credit card to be eligible for a Balance transfer, the following criteria need to be fulfilled:
Financial Eligibility: The applicant’s income must sufficiently pay for the extra EMI after the monthly expenditures.
The payment of your Credit Card dues via a Personal Loan Balance Transfer is a win-win situation outlined below are the primary benefits:
An excessive debt situation can ruin your peace of mind, so avoid getting into a stressful situation. There is help at hand an external Bank is ready to take over the Credit Card Debt.
The Balance Transfer of Credit Card dues helps you better manage your finances and enables your Credit Card to be used for further use. You can start using your Credit Card again, but most importantly, do remember to use your Credit Card mindfully and spend what you can repay on the date your payment is due to enjoy the many benefits.
Today, holding a credit card is a necessity. Whether salaried or self-employed, earning individuals adorn their wallets with multiple credit cards. Customers are now well-versed in the usage and benefits and are looking for suitable offers besides the regular benefits that are standard to most. Banks also offer special privileges to entice customers, such as free access to Domestic and International lounges provided by ICICI Bank Sapphiro Credit Card.
When marketing a Credit Card, a sales pitch often used is that a customer can enjoy the card’s benefits free for a lifetime. This means that no Joining, Annual, or Renewal fees are to be paid, and the customer is only charged for the actual usage or spending.
What are the economics behind The Lifetime Free Credit Card Offer? Is it a reality or a sales gimmick? Let us examine the rationale.
Joining Fees: Most Credit Cards have a joining or issuing fee, which is not paid in advance but added to the monthly statement. The joining fee varies from lender to lender and depends on the privileges offered.
For example, the joining fee for the ICICI Bank Coral Credit is ₹500/-+ GST, whereas the joining fee for an ICICI Bank Rubyx Credit Card is ₹3000/-+GST. The cost difference is justified by the exclusive features of the ICICI Bank Rubyx Credit Card, such as a higher spending limit and free access to International and Domestic lounges.
The joining fee is waived for customers as a special offer to boost sales for a limited period. Customers who are ICICI Bank account holders and applicants with a high CIBIL Score are eligible for the offer. Some Banks also reverse the joining fee after three months if the customer uses the card and spends the prescribed amount.
High-income customers applying for an elite range of Credit Cards are compensated with welcome vouchers that can be used for travel and shopping. The value of the vouchers is usually more than the joining fee charge. For example, customers who are issued the ICICI Bank Rubyx Credit Card are given welcome vouchers worth ₹ 5000/- whereas the joining fee applicable is ₹3000/-.
Banks also waive the joining fee for customers with solid relationships with the Bank, such as corporate or savings accounts. Check closely for the cash bank, free coupon offers, and minimum spending terms to ensure you recover the joining fee.
Annual Fees: A credit card’s yearly fees are charged at the end of each calendar year since the card activation. When issuing a Credit Card, the bank expects the customer to use it regularly to fill fuel, make online payments for shopping, dine at restaurants, book air tickets, and other personal requirements.
Banks will profit from the card issued only with customer usage if a customer does not use it actively or uses it minimally, the applicant is liable to pay the annual fees. The annual fee charged depends upon the type of card. The yearly fee charges can range from ₹ 500/- as charged for the ICICI Bank Coral Credit Card to ₹12000/- for the high-value Emeralde Credit Card.
Conditions for Annual Fee Waiver: The Bank assesses the customer’s annual Credit Card usage. The annual fee is waived if the customer has used the Credit Card extensively and above the minimum spend as specified.
Banks make an exception and waive the annual fee for customers who do not meet the spending benchmark if they have been swiping their Credit Cards regularly and paying their monthly dues on time.
ICICI Bank account holders who maintain a sufficient balance in the account or have fixed deposit accounts are also eligible for the annual fee waiver.
Renewal Fee: When issued by a Bank, a Credit Card includes an issue date and an expiry date. The expiry date is usually three to four years from the issue date. A renewal fee is typically similar to an annual fee. The renewal fee can also be redeemed against the points earned on behalf of the previous usage.
Customers can request a renewal fee waiver for further card patronage. The bank will check the customers’ CIBIL records and usage, considering the various credit card options available. Banks typically want to retain customers who have enabled profitability with regular usage and payments. At the same time, customers with delayed or pending payments will be asked to clear the same to enjoy the card’s privileges further.
A Word of Caution: The charges for joining, or as yearly or renewal fees reflected in the statement, must be paid as per the monthly cycle. The payment must be honoured even if the applicant does not use the card. The amount will attract interest if not paid according to the applicable finance charges. There have been instances when customers who have been issued a card have refused to pay charges, which have multiplied. As a result, the customer’s CIBIL Score can be affected, and the account will show unpaid dues.
The ‘Lifetime free Credit Card’ cannot be taken at face value; it always has strings attached.
Banks offer free Credit Cards to customers as an added value to a relationship, to further their marketing interest, as a token of appreciation to customers with a long-standing account, or to offer further financial investments. The continuity of the offer will depend on the treatment of the card and its usage. If, for any reason, the Bank feels the offer is not justified, the free tag can be replaced by the charges applicable.
A Credit Card, if used and managed well, is convenient and financially favourable. Use your card extensively to enjoy the benefits of free shopping vouchers, airline miles, discounts at leading hotels and restaurants, and even cash-back offers, provided the payments are made on time, and who knows, you may enjoy the privileges of your Credit Card free of any charge.
Remember, a Personal Loan Rejection from one Bank doesn’t mean a blanket rejection. There’s always a chance for approval from another bank. Staying hopeful and exploring your options is crucial, as this resilience can lead to success.
Have you ever applied for a Personal Loan and been rejected? It’s a shared experience. Many of us have felt the surprise and confusion of rejection, even when everything seems to be in order. You’re not alone in this. It’s a common situation that many people find themselves in.
On the other hand, customers with an aberration in their CIBIL record may feel it is no big deal if they have not paid their Personal Loan EMI on time for a short period but are currently on track. Let us look at situations when one lender rejects your Personal Loan, which an alternate financer can approve. Remember, there’s always a chance for approval from an alternate financer, so don’t lose hope. Keep in mind your financial journey is not over yet.
Before Applying for a Personal Loan, it is crucial to confirm that your company is approved per the bank’s policy. Lenders want to be sure the company is solvent and will pay salaries on time, so they prefer to fund employees of approved concerns. Refer to the HDFC Bank Company Category List of approved companies, which most lenders acknowledge. Most lenders will process your loan if your employer is listed on the list, reducing the risk of rejection.
Don’t limit your options to just one lender. You can check with an alternate lender to see if your employer is featured in their company category list. Some financiers, such as ICICI Bank Personal Loan and YES Bank Personal Loan, process Personal Loans for applicants employed with non-listed companies. By exploring these options, you can increase your chances of getting your Personal Loan Approved.
Your CIBIL Score or history details all credit used and repayment patterns. The bank checks the customer’s credit history to seek assurance that the applicant will repay the loan on time. Some lenders prefer only to fund applicants with a sound credit history and have regulated a minimal CIBIL Score for processing a Personal Loan Application. The acceptable score for most Banks ranges from 700 to 730 points. If your CIBIL Score is below the lender’s required benchmark, the application is rejected after the CIBIL inquiry. Understanding your CIBIL Score and credit history is crucial, as it can help you make informed decisions and improve your chances of loan approval.
If you are a first-time credit seeker and have not used a Credit Card or taken a loan, your CIBIL will reflect as a nil score. Look out for lenders who do not require a CIBIL Score to process a Personal Loan. Apply for an HDFC Bank Personal Loan, as the HDFC Bank processes applicants’ loan requests without a CIBIL Score.
Keeping a Tab on your CIBIL Score is a good routine if you have previously used Credit. Before Applying for a Personal Loan, check your CIBIL Score to see if it is acceptable to the particular Lender. For a YES Bank Personal Loan, 730 points are the minimal basis points that the YES Bank considers when processing a Personal Loan. Check your CIBIL Score before Applying for a Personal Loan to avoid delays and a denial.
Verifying a customer’s residence and office premises is mandatory to Approve a Personal Loan. Most banks and NBFCs outsource the verification process to a third party. The application could be declined due to a verification failure for the following reasons.
The Personal Loan is unsecured and forwarded without any security therefore, it is vital to the Bank that the customer is contactable in case of non-payment of dues. The verification, therefore, is an essential part of the process. To ensure a successful verification, take note of the following:
Banks keep records of all Personal Loan Applications processed, and the result is noted. If your application has been declined due to a discrepancy in the documentation or if the Bank has recorded your documents as suspicious or not genuine, this will show up the next time you apply. Your request will be declined in the primary stage of the process.
When You Reapply, The Bank Will See the Reason for the Decline and Process Your Application Cautiously
Try to clear your previous record with the Bank that denied your application. Ask the Lender to reopen the last delinquency issue, such as when your PAN Card was declared invalid. Be ready to show them your original document and clarify the issue. If funds are needed urgently, apply with an alternate lender with whom you have an excellent previous relationship.
The Personal Loan Application is rejected if the Bank feels that you cannot afford the monthly instalment for the loan amount applied, as per the calculations for financial eligibility. Lenders have a policy for calculating the funds that can be issued as Personal Loans. The basics include:
If the applicant has an excess of EMI being paid or the salary is insufficient to afford an extra EMI after the monthly expense, the Bank will not approve the request.
If a lender rejects your application if the criteria for financial eligibility are unmet or you are declared overleveraged, you can work on creating surplus eligibility. First, check the following:
In Conclusion, prevalent Banks today that issue Personal Loans have similar policies, but they differ on some fundamental policies. Our experience and in-depth knowledge of the policies of prominent Banks and NBFCs can help and guide you, so do not take a Personal Loan Rejection from one Bank as final. You can fulfil your Personal Loan needs by applying to the right lender.
Understanding the world of Credit Cards can be complex, especially when getting a clear picture of payment terms. These crucial points help you know how much you owe when you need to make the payment and what will happen if you miss a timely payment. Also, before applying for any card, it is imperative to check the eligibility criteria. For instance, if you want to Apply for ICICI Bank, check the eligibility criteria for an ICICI Bank Credit Card.
A clear picture of these terms is beneficial in avoiding unnecessary debts and maintaining sound financial health. By understanding the key elements of credit card payments, like minimum payments, interest rates, and payment deadlines, you can manage your credit well and keep your financial health on track. With a better understanding of Credit Cards you can easily Apply ICICI Bank Credit Card.
Your credit limit is the maximum amount of money you can borrow on your ICICI Credit Card. Your card issuer determines it based on your Credit Score and income. Staying within your credit limit is vital to avoid over-limit fees and keep your credit utilization ratio low, which can positively impact your Credit Score.
The minimum payment is 5% of your monthly Credit Card bill. While paying only the minimum may keep your account in good standing, it can lead to prolonged debt and higher interest charges over time as the remaining balance accrues interest.
The statement balance is the total amount you owe on your Credit Card at the end of a billing cycle. It differs from the current balance, which includes all charges up to the present day. Paying off your statement balance in full each month helps you avoid interest charges, as these apply only to unpaid balances after the grace period ends.
The Annual Percentage Rate (APR) is the yearly interest rate charged on your outstanding balance. Different types of APRs apply to other transactions, such as purchases, Balance Transfers, and cash advances. A higher APR means higher interest costs if you carry a balance from month to month, so it’s essential to understand what APR applies to your card and how it affects the cost of borrowing. The APR charged by Banks for the balance amount to be carried over to the next payment cycle is 36%.
A grace period is between the end of your billing cycle and your payment due date. During this period, no interest is charged on your purchases if you pay your balance in full by the due date. Missing this opportunity can result in interest charges on current and future balances.
A late payment fee is charged if you don’t make at least the minimum payment by the due date. Late payments can also negatively affect your Credit Score, making securing favourable interest rates on future loans harder.
The lender may charge an over-limit fee if your spending exceeds your credit limit. While many Credit Card issuers no longer apply this fee, monitoring your spending is essential to avoid exceeding your limit, as it can also negatively impact your Credit Score.
A Balance Transfer allows you to move debt from one Credit Card to another, usually to take advantage of a lower interest rate. While this can be an intelligent way to reduce interest costs, balance transfer fees often apply, and failing to pay off the transferred balance within the promotional period can result in high interest charges.
A cash advance lets you borrow against your Credit Card Limit, often at a higher interest rate than regular purchases. Cash advances typically accrue interest immediately, without a grace period, making them an expensive option.
A foreign transaction fee is charged when you purchase in a currency other than your card’s default currency or through foreign merchants. These fees can add up, so checking your card’s terms before travelling or making international purchases is wise.
Paying on time is one of the most significant factors influencing your Credit Score. Consistently paying at least the minimum due by the due date helps maintain a positive credit history and avoids late fees.
Your credit utilization ratio—the amount of your credit limit that you’re using—affects your credit score. Staying under 30% of your credit limit is generally recommended to maintain a good score. For example, if your credit limit is Rs 100000, keep your balance below Rs3,0000.
Accumulating interest and fees over time can lead to mounting debt, making it harder to pay off your balance and negatively impacting your Credit Score. High balances and missed payments can stay on your Credit Report for years, affecting your ability to secure loans, mortgages, or even specific jobs.
Pay more than the minimum whenever possible to reduce your principal balance and minimize interest charges. Paying in full is the best way to avoid interest altogether.
Setting up automatic payments ensures you never miss a payment, helping you avoid late fees and potential damage to your Credit Score.
Review your Credit Card statements regularly for errors or unauthorized charges. Promptly addressing discrepancies can protect you from fraud and keep your finances in check.
Use budgeting tools or apps to monitor your spending and ensure you stay within your means. To help you avoid overspending and the stress of managing debt.
Promotional offers like 0% APR for a certain period can be enticing but often come with conditions. Ensure you understand the terms and plan to pay off the balance before the promotional period ends to avoid high interest charges. If you are looking for card offers, consider ICICI Bank Credit Card offers.
Many people believe that minimum payment is enough to manage their debt. However, paying only the minimum prolongs debt repayment and increases the total amount paid due to accruing interest.
While it’s possible to avoid interest by paying your entire balance each month, interest charges are inevitable if you carry a balance. Understanding when interest applies can help you make informed decisions about your payments.
Balance Transfers can be helpful, but they’re not always the best option. Fees, high post-promotional interest rates, and the temptation to continue accumulating debt are potential downsides to consider.
it is critical to understand the payment terms of Credit Cards to manage your finances efficiently. From knowing your credit limit to recognizing the impact of interest rates and fees, being informed helps you avoid pitfalls and keep your Credit Score healthy. Remember to regularly review your Credit Card statements and terms, pay more than the minimum when possible, and stay aware of how your Credit Card habits affect your overall financial well-being. Take the time to understand how your card works—your financial future depends on it. So once you know card payments, you can fill out the ICICI Credit Card Application and apply for it.
As we transition to a cashless economy, the convenience of making payments through UPI and bank transfers and the ease of online access to bank accounts have rendered cheques obsolete. The RBI’s regulation of KYC Documents has further enhanced the speed and transparency of lending. Customers’ credit transactions are promptly reported to credit rating agencies, enabling banks to verify the customer profile before extending further credit and providing a sense of security and ease.
CIBIL (Credit Bureau of India Ltd) is a pivotal player in the financial landscape, serving as the primary credit recording agency. It receives customer data from banks, NBFCs, and other lending agencies, meticulously chronicling details such as mobile number, PAN number, Aadhaar number, driving license, and other information lenders provide. This comprehensive and reliable record of your financial history is a critical factor in determining your creditworthiness.
Your CIBIL Score, a numerical representation of your creditworthiness, is a key factor in determining your Personal Loan Eligibility. CIBIL creates a report that details all loans and Credit Cards and their repayments. This report calculates a CIBIL Score ranging from 300 to 900 points. A higher Credit Score increases your chances of securing the funds you need for individual usage.
Maintaining a healthy Credit Score is not just helpful it’s crucial. A score of 720+ is mandatory to Apply for an HDFC Bank Personal Loan or an ICICI Bank Personal Loan. A lower score can limit your borrowing options, making striving for a higher Credit Score essential.
For a secured loan or a mortgage, a lower score of 700+ is acceptable. Are you alarmed that your score has fallen below the required benchmark? The following points could be the culprits.
Is there anything you’ve overlooked related to an old Credit Card or loan account? It’s common to have a pending Credit Card in your name that you don’t remember opening or a Credit Card you’ve declined. Charges for the card can add up over time and be marked as a pending account. Dealing with the issue might seem like a hassle, but ignoring it isn’t the solution because it can affect your credit rating.
Credit Card dues must be paid on the due date. Most Credit Cards, including the ICICI Bank Coral Credit Card, have a payment cycle of 30 days. If unable to pay the due amount, the option of paying a minimum of 5% must be fulfilled. Non-payment or delayed payment of a Credit Card is noted in your credit history, as are the days after payment. Non-payment for 30 days and above is a red flag that inversely affects the Credit Score.
The EMI date of your loan and Credit Card payment needs to be treated as sacred. The impact of delayed or non-payment of EMI is significant, as it can affect your credit history. If insufficient funds are in the account, the EMI will return unpaid. If there is a slip, transfer funds to your account immediately. Banks make a second attempt and present the EMI after 48 hours.
On non-payment, a message is forwarded to the customer for payment. If the instalment remains unpaid, finance charges are levied, and the delay is reported to CIBIL. The CIBIL Reports the days until the EMI is paid. A one-odd delay is acceptable, but if the customer repeatedly delays the EMI, the pattern is indicated in the record, and the score is downgraded.
Are you unable to repay your Loan instalment? Often, customers face trying times due to loss of employment or unprecedented circumstances and can fall behind on payments. The lender will contact you to remind you about the payment due. If the EMI remains unpaid, the delay is reported to CIBIL. The account is further forwarded to recovery agents to try to collect the pending dues. If the customer cannot make good the loan amount with the interest due, an offer will be made to the customer to make a settlement.
When a customer settles a debt, they pay the principal amount but waive the interest. The bank then closes the account and marks it as settled. The customer’s CIBIL Record will show the settled status with the remaining due amount. However, the customer needs to pay the entire amount owed. Settling the debt is not recommended as it can lower the CIBIL Score and impact future credit opportunities.
An unpaid loan, whether a secure loan such as a home loan, Auto Loan, Gold loan, unsecured Personal Loan, or Credit Card, will be reflected as a write-off in the CIBIL record.
Secure loans that remain unpaid for a while will cause the lender to reclaim the property or vehicle for which the mortgage has been taken. For unsecured funding, such as a Personal Loan or a Credit Card, the bank will try to reach the customer for payment if any balance is due. The days past due are regularly reported to CIBIL. Finally, the bank accepts an inability to recover the loan and reports the same as written-off or bad debt.
A Loan account that shows as a write-off in the CIBIL Record will mar the record for some time. If a customer cannot repay the loan for a valid reason, it is in the best interest to make good the amount to the lender when possible.
Choosing the right bank for a Credit Card or a Personal Loan is crucial. Applying to too many Banks is not a good idea, as each lender will send an independent enquiry to CIBIL to check the credit score and history. CIBIL, in turn, deducts 20 points for every Lender inquiry. Therefore, making careful financial decisions and choosing the right bank for your needs is essential.
Applicants with a previous default will like to try their luck with all the lenders. Contrary to expectations, when the number of Lenders is viewed in the CIBIL history, Banks are apprehensive that the customer might be taking credit from multiple Banks and will have a problem with repayment.
When Applying for a Personal Loan, go to the bank with which you have a good credit record and relationship. Or research the lender which will give you the best terms.
Managing credit is essential to maintaining a healthy credit score. Situations arise where repayments are delayed due to an emergency or financial stress if you fall short of funds, it’s a good idea to get a top-up on your existing loan or Apply for a Balance Transfer to reduce the EMI. If your score does come down, getting it back on track with a consistent strategy is possible. We at Yourloanadvisors.com are dedicated to providing our customers with solutions and guiding them to improve their credit profile.