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Tag: lenders

  • Turn Over a New Financial Leaf this Fall: Strategies for Credit Score Success

    As the days grow shorter and autumn settles in, it’s a good time to shine a light on a topic that can feel mysterious: your credit score. For many, credit can feel confusing or even intimidating, but understanding how it works and why it matters can be an important step toward strengthening your financial health journey.

    How Your Credit Score Impacts Your Financial Journey

    Your credit score is a three-digit number used by lenders, landlords, insurance companies, mobile phone providers, and financial institutions to assess your reliability. A higher score can help you qualify for lower interest rates and better loan terms, saving you money in interest and making it easier to achieve major financial goals such as buying a home or car.

    Establishing good credit means building a record of responsible usage. Using your credit card and paying your bill on time demonstrates financial responsibility to lenders. On the other hand, missing payment deadlines or not meeting the minimum amount due can negatively impact your score.

    Understanding the Factors Behind Your Credit Score

    Credit scores typically range from 300 to 850. The better your score, the more options you may have with lenders. Here’s what usually influences your score:

    • Payment History: Consistently paying bills on time has a positive impact, while late or missed payments can lower your score.
    • Credit Utilization: Using a smaller portion of your total available credit is better for your score; high balances relative to your total credit limits can be a negative factor.
    • Total Debt: Lower overall debt is viewed more favorably, while carrying high debt can reduce your score.
    • Types of Credit Accounts: Having a mix of credit accounts, such as credit cards, auto loans, and mortgages, can strengthen your score.
    • Length of Credit History: A longer track record of responsible credit use contributes positively to your score.
    • Recent Credit Applications: Applying for new credit  can temporarily lower your score.
    • Credit Inquiries. Soft inquiries, like checking your own credit or receiving pre-approved offers, don’t affect your score. Hard inquiries, such as applying for a loan or credit card, may lower your score slightly, but the impact fades over time and drops off your report after two years.

    If your credit score is on the lower end, don’t worry—there are steps you can take to help improve it.

    Credit Smart Habits 

    • Pay your bills on time. Payment history is an important factor when it comes to calculating your credit score. If you struggle with meeting payment deadlines, consider setting reminders or enrolling in autopay.
    • Pay down your debt. Your credit utilization—meaning the size of your card balance—is the second biggest factor in most credit scoring models. Create a plan to pay down high-interest debt first.
    • Monitor your credit with Chase Credit Journey®. Regularly checking your credit report can help you spot areas of improvement and fix errors. Chase Credit Journey is a free tool that lets you monitor your score without impacting it, and provides alerts if your personal information is exposed in a data breach. It’s free for everyone, no Chase account required.

    Turning Credit Concerns into Financial Wins

    Building credit doesn’t have to be spooky and mysterious. With patience and smart financial habits, you can improve your score and unlock financial opportunities. This fall, take steps to understand and strengthen your credit.

    Sponsored by JPMorganChase

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  • A Regional Bank Crisis Might Loom Due To Unstable Loans

    A Regional Bank Crisis Might Loom Due To Unstable Loans


    Economy

    Jonaka Flickr/Creative Commons

    Hopefully the 2008 mortgage crisis does not come again, but there are reasons to worry.

    This time, the worry isn’t so much about residential real estate, but the growing amount of empty commercial real estate.

    RELATED: GOP Rep Claudia Tenney Formally Requests AG Garland Pursue 25th Amendment Against Biden, Senator Josh Hawley Calls On Democrats To Do The ‘Patriotic’ Thing

    Investors ‘Once Again Bracing for Turmoil Among Regional Lenders’

    The New York Community Bank, as just one example, has been given its third credit downgrade in just a week.

    Commercial real estate is getting hit with a triple-edged sword.

    First, high interest rates make already-expensive units that much more costly. Second, and maybe worse, too many office buildings and commercial buildings are empty – thanks to remote work. And remote work is also on the rise in places like Oakland because it’s just simply too dangerous to go to work.

    Yahoo Finance reports, “Almost a year after the failure of three midsized U.S. banks sparked an industry crisis, investors and regulators are once again bracing for turmoil among regional lenders, this time due to rising defaults in commercial mortgages.”

    The story continues:

    NYCB was initially a benefactor of those failures, scooping up Signature Bank last year after it was shut down by regulators following a run on deposits.

    The culprit now is commercial real-estate debt, which is souring quickly as landlords face higher interest rates than they can afford and tenants, after nearly four years of half-full offices, are cutting their leases.

    And while the U.S. banking system is increasingly dominated by a handful of national giants, commercial mortgages are still the province of regional lenders.”

     

    REPORT: After Visit With Trump, RNC Chair Ronna McDaniel Will Resign: Report

    What’s Next?

    “Commercial mortgages account for, on average, 3% of the assets at the 10 biggest banks in the country. At the next 150 banks, it’s almost 20%. Local banks routinely have half of their customers’ deposits tied up in mortgages for office buildings, hotels, and malls,” Yahoo notes.

    How this plays out is anyone’s guess but analysts are right to be concerned. It wasn’t too long ago that regional banks in California collapsed completely, which sparked similar concerns.

    As if inflation isn’t bad enough, is another mortgage crisis on the horizon too?

    Now is the time to support and share the sources you trust.
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    is a professional writer and editor with over 15 years of experience in conservative media and Republican politics. He… More about John Hanson





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  • Lenders flag rising delinquencies in small ticket unsecured retail loans post RBI caution

    Lenders flag rising delinquencies in small ticket unsecured retail loans post RBI caution

    A fortnight after RBI cautioned banks against unprecedented growth in unsecured retail loans and asked them to grow “sensibly”, large banks and NBFCs have flagged increased risks and delinquencies in some small-ticket segments.

    As a part of Q2 earnings, ICICI Bank highlighted that market trends and research indicate risk build up and higher defaults in lower ticket loans, especially below ₹50,000 where affordability and repayment ability are constraints.

    Kotak Bank too acknowledged headwinds and higher delinquencies in certain unsecured segments, especially smaller ticket loans, but interim MD Dipak Gupta said the risk-adjusted returns are still “okay”.

    Lenders are continuously monitoring these portfolios and haven’t reached a point of putting the brakes or panicking, he said, adding that while the rate of default is higher than last year, it continues to be below pre-Covid levels.

    Bajaj Finance, the largest retail NBFC, said leverage levels have worsened for the below ₹50,000 ticket portfolio and the company has cut exposure to borrowers with multiple lines of credit of less than ₹50,000 as it reflects imprudence.

    Personal loans up

    Personal loans, including credit cards, grew to 10.7 crore in FY23 from 7 crore in FY22 and 4.5 crore in FY20, led by the less than ₹50,000 and above ₹8 lakh segments, as per an internal analysis by Bajaj Finance. Industry AUM for the segment rose to ₹13.5-lakh crore in FY23 from ₹7.5-lakh crore in FY20.

    Unsecured retail loans accounted for a significant portion of lenders’ fresh slippages in Q2 FY24, however most lenders dismissed any marked concerns given the smaller share of these loans in the total book and the steady rate of collections and recoveries.

    A recent SBI report said unsecured retail loans comprise one-tenth of banks total loans, indicating contained risk at the time. Small-ticket personal loans of below ₹50,000 comprised 2 per cent of banks’ overall personal loans and 0.3 per cent of retail loans as of FY23, according to CIBIL CMI data.

    Corrective action

    Bajaj Finance has reduced exposure to urban unsecured retail loans by 8 per cent and rural loans by 14 per cent. MD Rajeev Jain said the rural B2C segment looked the most vulnerable at the moment and was the only segment where the lender has taken “corrective action” based on the bounce and slippage rates and portfolio efficiency.

    While Kotak Bank will continue its policy of completely providing for unsecured retail loans that are 180 dpd (days past due), RBL Bank said it has accelerated risk mitigation by fully providing for such loans at 120 dpd. This led to the bank providing an ₹48 crore more, in addition to which it also made contingent provisions of ₹252 crore on its microfinance and credit card portfolios.

    Yes Bank said it has strengthened underwriting and is strategically going slower in certain retail segments such as unsecured loans, given the increasing trend of delinquencies, especially in the 30 dpd segment.

    In the October policy, RBI had asked lenders to strengthen their internal risk mechanisms as the “first line of defence” to avoid any future challenges, adding that robust risk management and stronger underwriting standards are the “need of the hour”.

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  • Lenders approve Hinduja Group’s ₹9,661-crore resolution plan for RCap

    Lenders approve Hinduja Group’s ₹9,661-crore resolution plan for RCap

    The committee of creditors (CoC) of Reliance Capital has approved the resolution plan put forth by IndusInd International Holding, with 99 per cent lenders voting in favour of the plan, sources told businessline.

    Hinduja Group had submitted a bid of ₹9,661 crore, all of which will be paid as upfront cash to acquire Reliance Capital and its subsidiaries. This will be in addition to the cash reserve of about ₹400 crore that RCap has generated by way of loan recoveries, among other avenues, a source said.

    Accordingly, lenders of RCap will receive about ₹10,000 crore against principal outstanding dues of ₹16,000 crore, translating to a recovery of around 65 per cent. Voting on the resolution plan began on June 9 and concluded on Thursday. The plan will now be submitted for approval of the National Company Law Tribunal (NCLT) in 7-10 days, they added. The deadline to file the final resolution plan with NCLT is July 15.

    Hinduja Group via IndusInd International Holdings, was the sole bidder in the extended challenge mechanism for resolution of RCap, submitting a bid of ₹9,650 crore, which included a proposal to infuse ₹300 crore in Reliance General Insurance. The CoC had, in May, voted in favour of equal distribution of proceeds between all members, regardless of whether they are in favour of the resolution plan.

    Meanwhile, Reliance Capital has approached the Supreme Court with the details of the second auction as per the requirements of the pending litigation against Torrent Investments which had alleged preference to the Hinduja Group and had objected to holding the second round of the challenge mechanism.

    The apex court is expected to next hear the case in August; however, with the resolution plan being finalised, the CoC has approached the SC for a hearing sooner than scheduled, businessline had previously reported.

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