Debt Counseling: Mohan Jayaraman

Today, Managing Director of Experian Credit Information Company, Mohan Jayaraman answers your questions

I lost my job recently and I am in the middle of repaying my home loan, taken two years ago, which means a majority of repayment is yet to be made. I am sure I will get another job soon but I don't know when. How should I convince my bank?

It is absolutely essential that as a responsible borrower, you report the drop in overall family earnings in advance to all your lenders, not just the bank from whom you have taken a home loan. If you let your lender know about your change in circumstances as soon as possible, they should be able to help. They do not want the expense and bother of chasing you for repayments or, in extreme cases, taking you to court. They would much rather find a way of helping you out. Getting a copy of your credit information report will help you remember all the lenders you need to contact. Your report will also help you to understand how your liabilities compared to your total sources of income.

I recently got a premium credit card. Since I indulge in impulsive shopping at times, I want to know if there is any way by which I can protect myself from getting into a debt trap, if in a certain month I am unable to repay the credit?

The prudent path would be to ensure that you make use of credit limits wisely and typically spend on your card what you can repay to your bank on the repayment due date. A few tips that can go a long way in keeping a check on purchases made on credit cards would include:

• Set sub-limits on cards
• Set cash withdrawal limits
• Register for SMS alerts on the usage of these add-on cards to monitor the amount being spent

If an increased credit limit usage on a credit card is unavoidable, it would be a good idea to take a credit report from any one of the Credit Information Companies and ensure you have visibility to all your credit lines and liabilities. This can then be used to determine your overall liabilities and what can be repaid by you. Wise usage of credit will ensure the long term health of your credit profile and score.

Last year, I took debt counselling. What are the chances that banks or finance companies will know about this? Will it affect my credit score or me in any way?

Debt counselling done by independent and non-profit entities like Disha, etc, are safe avenues to understand the best way of addressing any credit-related problems you are going through. Debt counselling is anonymous and it is not likely that the banks or finance companies will come to know of this. Seeking debt counselling will not impact your credit score but it is likely that the underlying credit problems for which you are seeking counselling would have impacted your score. Seeking counselling and following the advice is the best way of ensuring you are working towards improving your credit score.

The views expressed are the expert's own. Send your queries to yourmoney@bsmail.in