Scams are plentiful and we keep hearing about one or the other frequently. One of the latest scams has been at PNB and the quantum of money involved in the fraud has shaken every citizen of our nation. Not only the amount but the involvement of the bank staff is what has made the scam more sensational. The questions that cross one’s mind are as to how this scam will impact banking in India? Will it have an impact on the individual’s hard-earned money lying with the bank? Will such scams have an impact on the credit score of the company? Will it affect the borrowing or lending capability of individuals of the bank respectively?
Let us understand there is no definite answer to most of the questions but one question that can definitely be answered is the effect that this scam will have on your credit score. The simple answer to this is NO. The PNB scam or any other fraud/ scam will not have any impact on the credit profile of any individual. Let us understand how credit scores work. 5 factors that form one’s credit profile
- Payment history ; 35%
- Accounts owned ; 30%
- Length of credit history ; 15%
- Credit mix ; 10%
- New credit ; 10%
The score in India ranges from a minimum of 300 to a maximum of 900. Higher the score, the better it is. All of the above factors impact the score and the final three-digit numerical expression is the outcome of all these weights. One important thing that needs to be understood is that the score reflecting on the bureau report is related to a particular individual and it does not get impacted in any way by any external factor. And PNB scam is definitely an external factor that would not have any bearing on your credit score.
So you can continue to apply for a personal loan or any other credit facility without any inhibitions. How to ensure good credit health? While the above-mentioned factors give a good insight into how scores get firmed up, it is important to follow the following thumb rules to be able to manage it well.
Credit card utilization Most individuals start their credit life with a credit card. While it is a good instrument that gives freedom to buy now and pay later, it becomes apply important to manage the cards properly. This is one instrument that has the capability to drive one into a debt trap. The rule to be followed is that not more than 30% to 40% of the limits should be utilized. One should try to utilize the plastic only up to the amount that one can afford to pay in one go.
Keeping an eye on EMI dates EMI dates are critical and one should not let any engagement take off the focus on timely re-payment of the equated monthly installments. Any delay in payment of obligations can lead to impacting the credibility severely. To the extent that one may find the name in the loan defaulters list.
Funding the account The account from where the EMI is to be served must be checked and adequately funded so that the ECS does not get bounced. Given the ease of banking these days, it has become quite effortless to check and manage accounts, you can work on this at any point time of the day or night.
Conclusion While PNB or any other scam will not impact your credit life and scores, there could be slip-ups at your own end that can adversely impact the profile and lead to a situation where the loans become inaccessible.