Debt Counselling: Sanjay Agarwal

Last Updated: Mon, Apr 15, 2013 05:37 hrs
A man walks past a bank advertisement for four wheeler vehicle loans in Mumbai

I earn Rs 1.5 lakh a month and have a Credit Information Bureau (India) Limited (Cibil) credit score of 600. Still, a public sector bank refused me a home loan. What could be the reasons and how do I go about negotiating the same?
Credit score is just one among the many criteria that banks consider before approving a loan application. However, banks are duty-bound to provide the reason for rejection of a loan application. You should ask the bank and then try to convince them about the apprehensions that they may have. You may also apply to other banks or housing finance companies.

I am 28 and planning to take a personal loan. I learn that maintaining a good credit history is important. What are the key elements of a good credit history report? Which of my financial activities will the credit bureau keep a check on?
The key elements for a good credit history report are - payment history such as late payments, write-offs, repossessions, settlements, credit utilisation in terms of credit used against the limit sanctioned (in credit cards etc.), mix of secured and unsecured loans and duration of your credit history. Credit bureaus capture all financial activities related to loans in the credit history including credit card payments. While insurance and telecom companies can access the data, they need not provide the customer data as of now, but may be mandated to do so in future.

Along with a car loan, I have three personal loans taken for different reasons. I don't have enough to retire all these at the earliest. I don't want to liquidate my investments, as those are goal-linked. I also have two land pieces in my native village. Which is a better option - requesting bank to lower the interest rate on personal loan and extend the term or selling land and repaying the loan?
Selling land or property to pay off your consumption expenditure is generally not a good idea. If you have a fixed deposit with a bank as an investment, the best alternative is to take a loan against that and liquidate as much of your personal loans as possible because this is the cheapest loan available with a repayment period, which is concurrent with your deposit. Otherwise, you may take a fresh personal loan with longer repayment period, with easy EMIs, to retire existing loans or get existing loan tenures extended.

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