Monitoring your credit score has become important now
Planning on taking a loan?
Want to make sure it is approved and processed quickly?
Looking for a loan at a lower interest rate?
Then make sure your CIBIL score is good.
What is this new animal – CIBIL? We’ll attempt to explain it to you.
CIBIL score explained
The Credit Information Bureau (India) Limited (CIBIL) is the most popular of the four credit information companies licensed by Reserve Bank of India to promulgate a credit rating. CIBIL Score is a 3-digit numeric summary of your credit history, rating and report, and ranges from 300 to 900. The closer your score is to 900, the better your credit rating is. As a ballpark, 700+ is good and 800+ is excellent score.
What does credit history and credit report mean in CIBIL?
A credit history is a record of a borrower’s repayment of debts. A credit report is a record of the borrower’s credit history from a number of sources, including banks, credit card companies, collection agencies, and governments. A borrower’s credit score is the result of a mathematical algorithm applied to credit information to predict how credit worthy you are and whether the creditors and loaning agencies are safe in giving a loan to you.
A CIBIL credit score takes time to build up – usually it takes between 18 and 36 months, or sometimes even more, of credit usage to obtain a satisfactory credit score. Mind you, it is ‘credit usage’…if you don’t use any form of credit, you may have no score!!
How to improve your CIBIL score?
You can improve your score by practicing financial prudence – repay your Credit Card bills on time, don’t miss your loan EMIs, never default on debts, and use credit wisely.
(Contributed by Nidhi Dogra, Associate Financial Planner, Team Arjun, Hum Fauji Initiatives)
Saving for your child’s education
Good education helps us become a good human being, makes us self-sufficient and prepares us for the challenges of life. Hence, it becomes a top responsibility as also the priority of the parents the world over to impart the best available education to their children.
Considering the high inflation of around 10% per year in the cost of education, the only way to meet ever-spiraling education costs is to plan in advance and save wisely.
If your child’s education goal is 7-10 years away, you would be best placed if you invest in high risk, high return kind of investment products like Equity and hybrid products. Not taking any risk will see you fall very short of your target or you will have to invest much more amounts to reach the same goal. You can stay invested in such products initially and then slowly transfer them to safer investment products like Debt Mutual Funds, Bank FDs, Corporate FDs etc as you inch closer to your education goal about 2-3 years short of your target dates.
Sukanya Samridhi Yojana: If you have a girl child below 10 years of age, this scheme is also good to invest but the yearly investment is limited to Rs 1.5 lac p.a, and there are many restrictions on its withdrawal. In case you still wish to root for safety, you can combine it with a good children’s mutual fund and try to meet your target amount.
If the goal is 5-7 years away, you can opt for moderate risk, moderate return kind of products like Hybrid Equity Mutual Funds and you should be fairly on to your target.
Disciplined monthly investments along with investment of available surplus, whenever available, will help you achieve your children’s education goal more easily in a tax efficient manner.
If the goal is due earlier than 5 years, you must diversify between safer investment products ie Debt Mutual Funds, Bank FDs, Corporate Bonds, PSU Bonds etc. If time-frame is more than 3 years, some moderate risk kind of product can be factored in if your risk profile allows it. You must not strive for high or inflation beating returns in this case since the risk may not be worth it.
(Contributed by Priya Goel, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)
MF Central: Making the operational tasks easy for MF investors
Have you recently entered the mutual fund industry and are struggling with different procedures involved? If yes, help is there now.
Undoubtedly, investing in mutual funds has become easier than before due to various technological advancement. However, it can be tricky to do changes to your non-financial information or register complaints and get them resolved as different fund houses follow different procedures. Therefore, the mutual fund industry has come together to launch a new platform called ‘MF Central’ to deliver an elevated experience to the investors.
Let’s dive deeper to learn more about this new platform.
MF Central is a collaborative initiative by KFin Technologies (of Karvy) and Computer Age Management Services (CAMS) to enhance MF investors’ service experience. This one-of-a-kind digital platform is a mutual fund transaction portal that can fetch all your investments in a consolidated manner. Simply put, it brings the entire mutual fund industry under one roof for the investor.
Here are a few important aspects of MF Central:
- Unlike a regular online portal, MF Central doesn’t require you to open an account or fill up forms and perform KYC formalities.
- All you have to do is enter your Permanent Account Number (PAN) and mobile number to get your investment details.
- You can update your email address or phone number in any existing MF folio.
- You can change bank details, update nominee details.
- You can correct erroneous data captured in Folios and also consolidate folios.
- You can initiate a transmission request for mutual fund units in case of death of a family member.
- You can change IDCW option from ‘Payout to reinvest’ to ‘Reinvest to Payout’ or vice-versa and many more such things.
- MF Central will be gradually launched in 3 different phases.
- Currently, two phases have been launched that will allow you to make non-financial transactions and provide a single view of your investment portfolio, a consolidated account statement (CAS), and unclaimed dividends.
- Phase 3 will allow you to buy and sell mutual fund units.
- Later, the financial advisors will also be able to log in and execute transactions for you.
An Investor can easily register on MF Central at:https://www.mfcentral.com/
MF Central will eventually facilitate all transactions and service requests through a single window which will significantly reduce the turnaround time. It would significantly reduce the investors’ time, effort, and paperwork.
(Contributed by Manish Kumar, Associate Financial Planner, Team Sukhoi, Hum Fauji Initiatives)