I want to improve my credit score... what should I do?
—Anand Sharma First get a copy of your credit record. Study all the entries that show overdues and settle them fully by negotiating with the concerned lenders/banks. If possible get in writing from the lender that any concession given by the lender is reported as waived and not as written off in the report sent to the credit informa- tion bureau like CIBIL. Open small credit cards against fixed deposits and make sure you pay them fully and on time. You can also consider taking small gold loans or any secured loan against security of tangible assets like units of mutual funds, insurance policies with the major part from private sector banks and paying it off fully and on time. To improve your credit score, you will also need to follow these steps: Always pay your dues on credit cards or loan EMIs on time as late payments are perceived negatively by the prospective lender and affect your score. Use your credit cards smartly. Do not over-stretch yourself on your credit card limit. Keep it under control. Do not portray yourself as a credit hungry customer by applying for too many credit cards or personal loans in a short duration. Using too many credit cards can be seen negatively but limited number of unused credit cards actually works in your favour. It portrays you as a financially secure person. So, think twice before discontinuing your unused credit cards if you have only a couple of them. Get a copy of your credit report on annual basis to find out any discrepancies reported in your account. Any discrepancies if noticed should be followed up persistently and resolved with the concerned lender immediately. I currently have a home loan and consumer loan whose total EMI is R7,000 per month. I am interested in taking another home loan. I am 50 years old and my monthly income is R54,000. What is the loan amount that I can take?
—Naresh Mittal Different banks consider a certain portion of your income as available for payment of EMI for loans. It varies from bank to bank and there is no standard norm/formula. Usually banks will assume around 40% to 45% of your net salary as available for payment of EMI to service the loans.
Hence, your existing loans will also have an impact on your loan eligibility and the lender will calculate the eligibility based on the existing outstanding amount and the EMI being paid now.
So in your case (assuming that R54,000 is your net monthly salary), the EMI available to service the second home loan will be R24,300 less than the cur- rent home loan and consumer loan EMI.
Most banks have a maximum age limit of 60 years for salaried individuals since that is the retirement age. The maximum tenure is restricted by the age of the borrower at the end of the tenure.
Assuming your retirement age is 60, the maximum loan tenure will be 10 years and you will be eligible for a home loan of approximately R13 lakh at an interest rate of 10% to 10.25% per annum. The agreement value of the flat will need to be at least R15 lakh.