Thursday 20 October 2016

Pending Bills or Taxes can Lower Credit Score?

Non-Payment of Bills can also Lower Credit Score? 

India is fast moving towards digitalization and transparency. So far your credit score was adversely affected only because of default in payment of bank loans but now the concept is being stretched further to payment of bills, income tax, sales tax and other dues either towards the government or even towards private players. Even default as small as Rs.100 may lower your credit rating in the future.

Pay your electricity and phone bills before Due Date:

By paying the electricity bills before due dates, you not only get heavy discounts but in the times to come it may help you to build your credit history is such a way that you will be the preferred customer in the banks for getting easy loans. In the times to come the defaulters of electricity , phone bills will get uploaded with databases of credit agencies like CIBIL, Experian, Equifax and CRF High Rank and you may even lose access to your existing credit facilities or due to lower credit score your banker may revise your lending rate upwards eating away your margins.
As such keep access to all your bills and never allow these bills to go under default category: Some of the bills and utilities is given below:
  • Electric Bills
  • Landline Phone Bills
  • Mobile Phone Bills
  • Internet Bills
  • Water and Sewerage Bills
  • LPG Gas Bills
  • Other Utility Bills
Pay your Income Tax and other Tax Dues in time:

In case you have not paid your taxes in time or you have not filed your income tax return despite the fact that it is mandatory for you to file the IT return, then the day is not far away when such defaults may find mention in your credit rating or CIBIL report compelling the lending banker to conclude that your financial position can deteriorate in case heavy penalties are imposed by the income tax or other tax authorities. Similar is the case with other taxes like Service Tax, VAT, GST etc.

Recovery Suits may also be part of Credit Report:

Credit Report of any individuals tells us about his or her indebtedness as a principal borrower or as a guarantor but other contingent liabilities of the individual which can substantially affect the credit worthiness of any individual are never reflected. With technology taking the front seat, it may become a reality to know your hidden or contingent liabilities like:
  • You have divorced your wife and court might have burdened you with maintenance allowance to be paid to the divorced wife as such monthly outgo of funds can tell upon your repaying capacity.
  • 3rd party decree against you as judgement debtor can also deteriorate your financial health and in the near future such decrees may be finding mention in your credit rating or credit score.

In nutshell the idea of this post is just to forewarn the audiences that soon all your financial activities find a place in CIBIL or DIBIL.

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