Keep track of your financial health this festive season

Beware! Gifts for loved ones, spending on yourself on impulse buying on EMIs and credit cards can leave your financial health completely stressed by the end of the year, says Harshala Chandorkar, Senior Vice President -- Consumer Relations, CIBIL

Here comes the time when the entire country will be busy enjoying the festive celebrations with enthusiasm and devotion. This period, beginning the last week of September till the end of December, will be extremely important for the financial sector given that it is the time for Navratri, Dussehra, Diwali, Eid, Christmas and New Year, all in a span of about three months.

Everyone revels in the festive mood during this period but there is a flip side to it -- the expenses. House decorations, new clothes, gifts for family and friends and similar expenses can strain your monthly budget. For many people, gifting is an integral part of celebrating the festive season. People tend to go on a buying spree with plans to spend on buying cars, houses, home appliances, gadgets and other goods during this period. Among these quite a few are purchased on EMIs through credit cards and loans.

It is therefore critical to have a planned budget in place to enjoy the festivities while staying within your means.

Few tips for shopping this festive season:

• Make a list of all the people you need to buy for, and determine a spending cap for each person to help you stick to your budget
• Choose appropriate gifts that allow you to stay within your spending caps and make a list of your gift ideas
• Have a back-up plan or 'plan B' so that if a particular gift idea isn't available, you've got a back-up plan that's still within your budget
• Do shop around to find which store or online shopping portal is offering a better discount. Take some time to do some research. Pick up the phone, or shop online, and shop around for the best prices
• In the event that you are planning to purchase new home/car/gadgets, it is best to check your Credit Score before applying for a loan.

Home and property purchase

Spending your money cautiously will help you better plan your finances around this time. For example, property industry witnesses a huge spurt in demand as a lot of people go in for buying property in Diwali as it is considered auspicious. Many real estate companies and banks come up with attractive offers for you during Diwali. However, it is advisable to look into your Credit Score before applying for a housing loan. If you find that your Credit Score is low or your CIBIL Report shows discrepancies then, you may want to work on improving your credit score and develop a healthy credit report.

In fact, the higher is your Credit Score, the better your chances of availing the loan on favourable terms. Hence, accessing you credit score before applying for the loan will actually give you better bargaining power with the lending institution for availing the loan at better terms and conditions. So, you get your dream home and get it at a much better deal too!

Car or two-wheeler purchase

Some families may also choose to go in for a car loan. In such a situation, it is important to decide how much you are ready to pay for the down payment, monthly installment and other expenses. Also, try to see that you come up with a sizeable down payment from the total budget. Accessing your Credit Score before actually applying for a loan this festive season will help you avoid any unpleasant surprises like loan rejection or delay in processing of your loan application.

Retail buying

Now finance companies and banks can also check creditworthiness of consumers, who are seeking to buy televisions, computers and other electronic products on EMIs to provide them instant financing at the store itself. With the help various automated decision-making platforms finance companies and banks can check a consumer’s credit score instantly and offer them easy EMIs for purchase of the product on loan. They use this instant decision-making solution to check whether the consumer who desires to avail the credit facility would turn out to be a good re-payer or is s/he likely to default. This helps them make faster decisions at the store sales counter making it a prudent and rewarding choice.

Your CIBIL Score can be beneficial for both consumers and financers. It enables financers to take instant decisions on whether to sell a product on credit or not, which in turn benefits consumers too.

Thus, if you are planning to purchase a car, house or high end products and home appliances this festive season on EMIs, it’s time you check your credit eligibility by availing your CIBIL TransUnion Score before you seek loan. This will enable you to “see yourself as lenders do” and assess your credit standing, thus helping you to make the appropriate buying decision.

Checking your CIBIL Report & CIBIL TransUnion Score on regular basis also gives you a chance to correct errors on your CIBIL Report, if any. Discrepancies on your CIBIL Report may result in reduced chances of a loan approval. Hence, checking these reports regularly will help enable you to understand your credit history and ensure that you are able to avail the loan or credit opportunity without any delay or hassles.  

Hope this festive season brings peace, joy and happiness to you and your family. May the energy that flows through the celebrations brighten your year ahead!

Photograph: Indranil Mukherjee/AFP/Getty Images