NISHANT CHAUHAN

Financial Fitness Report

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HOW INDIAN BUREAUS BUILD CREDIT REPORTS

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A record of an individual's or company's past borrowing and repaying, including information about late payments and defaults

4 leading bureaus in the Over 2400 Financial Institutions Database strength of 500
country: CIBIL, Experian, submit data to bureaus million customers and 100,000
Equifax, Highmark businesses

Examples of Loans listed on your Credit Report

Personal Loan Home Loan Car Loan Credit Card Loan Against
Property

What goes inside the Credit report

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CREDIT SCORE AND ITS COMPONENTS

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What is a Credit Score ?

A credit score is a generic credit rating which represents relative credit worthiness of an individual. Lenders use credit scores to
determine who qualifies for a loan, at what interest rate, and what credit limits.

It can take the following values -

"-1" - Indicating no credit history is available

"0" - Indicating that customer information is not available for a long enough period to give him a score

"300-900" - Score indicating credit worthiness. Higher the better.

How is a Credit Score generated ?

There are 5 major factors which affect your credit score -

Credit Repayment History ( Impact - 35 % )

The repayment history has the highest impact ( 35% ) on one’s credit score. Missing monthly credit card payments or EMIs on
loans on significant no. of occasions could thereby devastate your credit score. The effects of missing payments can also increase
the longer a bill goes unpaid. So a 30-day late payment might have a lesser effect than 90-day late payment. Thus, one should
ensure timely loan and Credit card repayments to maintain a good credit score.

Credit Utilization ( Impact - 30 % )

Credit Utilization refers to how much of your available credit you use on a monthly basis. It contributes to about 30% to one’s
credit score. It is defined as your total credit card balances divided by your total credit card limits. Generally speaking the higher
your credit utilization, the lower is your credit score. When you do decide to get a card, keep your utilization less than 10% to
continue earning the most points in this category.

Credit Age ( Impact - 15 % )

Several factors related to your credit history such as the age of your oldest account, newest account and the average age of all
your accounts have an impact on your credit score. Having an "older" credit age is better for your credit score because it shows
that you have a lot of experience handling credit. Opening new accounts or closing existing accounts can lower your average
credit age. Lenders usually prefer individuals with long credit histories. Hence, it is advisable to keep good old credit accounts
open so that they add to the length to your credit history.

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CREDIT SCORE AND ITS COMPONENTS

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Credit Mix ( Impact - 10 % )

Credit Mix implies the percentage share of secured to unsecured loans in your credit portfolio. A strong exposure to secured
products is always an advantage, but having a proper account mix is key to success in this category. A secured loan is a loan in
which the borrower pledges some asset (e.g. car/ home/ property) as collateral for the loan whereas the unsecured debt has no
collateral backing.

Credit Enquiries ( Impact – 10 % )

Whenever we apply for a loan, a credit enquiry is made by the lender to fetch your credit report. Soft inquiries, like those that
come from checking your own scores don’t hurt your scores. Hard inquiries, when a lender checks your credit before making a
lending decision, can hurt your scores even if you don’t get approved for the credit card or loan. Having a couple of enquiries on
your credit report is understandable, but never go overboard looking for a loan.

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DIFFERENT TYPES OF CREDIT PRODUCTS

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Credit Cards: Many people enjoy the convenience and protection credit card offers, such as the ability to
defer payments and ability to keep record of purchases. However, credit cards can either help you improve
your lifestyle by offering convenient payment and helping you build credit, or they can leave you with a
pile of debt - it all depends on how you use them. To use credit cards to your best advantage - select an
appropriate card, spend wisely and make payments on-time.

Auto Loan: Car depreciation is an unavoidable fact, and in most instances, as soon as you take delivery
of your vehicle, it is worth less than what you paid for it. Because of the interest that accrues on a
conventional auto loan, the principal balance on the auto loan usually decreases very slowly and thus your
car might very well depreciate much faster than the principal balance on your loan. To avoid this situation,
you can foreclose the outstanding or don't sell off your vehicle till you have paid off the loan.

Home Loan: For many of us, buying a home or a property is one of the most strategic investments of
our lifetime. To catch up in the race to buy a house, many a time, borrowers neglect small but big facts
about the credit they avail and repaying the same. Remember there are multiple top-up options available
on your home or a property - possibly one of the cheapest option available in market.

Personal Loan: Personal loans are unsecured loans which means that it doesn't require you to use an
asset as a collateral. The usage of personal loan can vary from buying that new gadget, to furnishing a
home or going on that vacation. Disbursal of personal loan is fast and easy with minimal documentation.
Personal loan is probably the best remedy for short term expenditure as they are much cheaper option
compared to credit cards.

Consumer Durable Loan: The small luxuries of life bring us the great happiness - like a new LCD TV
for the family, a computer for the child, or even an air conditioner for your room. You can now enjoy these
small luxuries with Bajaj Finance Limited India’s Durable Loans. Easy EMI payment options with added
benefits of a low down payment and 0% interest financing, Bajaj Finance Limited India brings happiness to
you and your loved ones.

Business Loan: Choosing the right kind of business financing can be difficult. Business Loans can be
used for a variety of requirements such as starting new ventures, expansions, new purchase, working
capital requirement, vendor and dealer financing, bill discounting etc. At Bajaj Finance Limited India, we
provide you with guidance and support so that you take the right financing decision and take your business
to the next level.

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BENEFITS OF GOOD CREDIT SCORE

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Credit Card Auto Loan Home Loan Personal Loan Consumer Durable Business Loan
Loan

Rating 350 – 650: This rings an alarm as it is considered as a very bad score by banks and financial institutions. This means
you are defaulting payments and the probabilities of getting new loans or even new credit cards are very minimal.

Rating 650 – 750: This is considered as an acceptable rating and just good enough for less risky unsecured loan products such
as credit cards. For other loan types, the chances of getting a very attractive interest rates are very low.

Rating 700 – 750: This is considered as a fair score as it indicates that the individual is pretty regular with their payments on
loans and credit cards. There will be no need to face any problems with regard to Consumer Durable loans, credit cards and also
Auto Loans. You should stick to your current financial habits; you could reach the best CIBIL scores sooner and obtain other loan
products at good interest rates.

Rating 750 – 800: People is this score range are pretty close to the ideal CIBIL scores. This also implies that there might have
been hardly any cases of missed payments or over utilization of available credit. Except for very high ticket size Personal loans, all
loan products would be available at attractive interest rates.

Rating 800+: This is considered as the best range to be in CIBIL score. This also means that you are a financial expert. An
individual who is very regular with their credit payments will have a really good payment history and thus the credit scoring will
also pick up.

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HOW TO MAINTAIN A GOOD CREDIT SCORE

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Do's and Don'ts of Credit

DO's DON'Ts

Do know the power of credit. By using credit wisely, you Don't spend more than you can afford. Period! It is your
can build a good credit history - making it easier to get responsibility to manage your debts and keep your
loans with lower interest rates, higher limits on your credit commitment with lenders. Avoid reaching your credit limit
cards, purchase a car or home, and may even help you get or "maxing out" your cards.
a job.
Don't share your credit card number. Never give out credit
Do ask questions. You are a customer and the lending card or personal information if you have not initiated a
institution is providing a service. If you don't understand transaction. Be alert to identity thieves and scam artists.
something, ask.
Don't close old credit card accounts. Older credit is better
Do make sure that you pay all your bills on time. Credit credit. Lenders prefer individuals who have had history of
Repayment history contributes to 35% of your credit score managing debt responsibly. You should use your old cards
and even one single missed payment can hurt your credit periodically and pay them off.
score.
Don't ignore the warning signs of credit trouble. If you pay
Do pay off highest interest debt first. Paying off the debt only minimum, pay late or use cash advances for living
that has the highest interest first can save your money on expenses, you're living in the credit "danger zone".
your overall interest payments.

Contact Information This report is powered by:

Our customer support executives are happy to help you. For questions or concerns,
Visit our website at:
please do reach out to us at:
www.creditvidya.com
Email: fitnessreport@bajajfinserv.in

For more details on Financial Literacy, you can also visit RBI at :
http://www.rbi.org.in/financialeducation

All information contained in this report has been collated basis of your Credit Information Report powered and prepared by Credit Information Companies (CIC) and the information provided by you during our personal discussion
with you or otherwise. Consequently, Bajaj Finance Limited India does not in any manner guarantee, represent and/or warrant the totality, accuracy, adequacy and/or completeness of this report and/or any information and/or
material contained therein and expressly disclaim any liability for any errors and/or omissions in this report and/or any information and/or material herein. While the aim is to provide information that will help consumers to
manage their credit and debt, this information should not be considered as an advice or opinion, whether legal, financial or otherwise. Such advice must be specific to the various circumstances of each person's situation, and the
general information provided on these pages should not be used as a substitute for the advice of competent advisor including any legal and/or financial advisor/counsel. Bajaj Finance Limited India shall not be liable for any loss,
cost, damage and/or consequence as a result of reliance by you/customer/consumer/any other person on the report or any information and/or material contained herein.

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