Learning 5: How to maintain good credit conduct?
Few important things about the account conduct as lenders are turning their eyes on this later when they look at your home loan application.
Why does an account conduct matter
As much as Banks appreciate your good pay slips and saving pattern, good account conduct is also equally an important aspect to get the finance approval these days.
Some of you might be wondering “why does an account conduct matter to me?” My answer to you is that banks are bounded by responsible lending criteria and are obliged to make sure they are lending to someone who is good at taking care of the money that goes out of their account as much as it comes into our account.
By reading your account conduct, Banks would know your attitude towards financial discipline and find out how much hardship you are facing at the time of application.
From my experience, I have seen banks checking your below transactions to understand your account conduct and find out how good you are.
Late payment fees, dishonor fees, overdraw on your credit card, overdrafts, and personal loans: If you have any late fees, then this is not considered good.
Your credit card limit and the amount you have used: If you have used all the money of your credit card limit, then this suggests that you are financially desperate.
Disclosed Financial Commitments
Regular cash outflows around the same amount: This suggests that you have some ongoing liabilities or commitments that have not been disclosed on the application.
Regular cash withdrawal from RSL and other entertainment venues, or payment towards betting sites: This might suggest that you are a regular visitor to such activities.
Multiple credit enquires
Making too many credit inquiries: Too many credit inquiries, especially for the unsecured loan such as credit cards, etc., is not taken positively. If you really don’t need it, then please don’t make any inquiry for credit card transfer, personal loans, etc. Even an online form submission can result in the record being kept on your credit file.
Credit inquiries by debt collectors etc.: As soon as your loan application is submitted, the bank system connects this with the credit reporting agency and downloads your credit reports. Any inquiries such as that by the debt collector are not considered desirable, no matter whether you have credit default or not.
Obviously, many people would have their account conduct in order. However, just in case if you have not been careful towards such activity, this is the time to do so. Banks generally look for 3-6 months’ worth of transaction to study your behavior. If you have been through one or more undesirable transactions listed above, please stop this immediately.