Debt counselling: Mohan Jayaraman

I learnt that owning too many credit cards can also have a negative impact on one’s credit score. Is that right?
The prudent path would be to ensure you make use of credit limits wisely and typically spend on your card what you can repay to your bank on the 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. This helps ensuring no card goes over- limit individually
• Set cash withdrawal limits. If possible, consciously use only one to two cards for cash withdrawals
• Register for interactive channels of communication like Internet or SMS alerts on the usage of these add-on cards, to monitor the amount being spent

Generally, having too many credit cards does not have a negative impact on your score till you default your payments by the due date. However, the chances of you forgetting to make credit cards payments in time increases when you have a number of cards and, hence, having fewer credit cards is recommended for financial discipline.

When companies have unmanageable amounts of debt on their books, they go for debt restructuring. Can an individual also do the same and how?
While traditional debt restructuring options are not available to individuals, it would be a good practice to initiate a conversation with the bank with which the individual has the loan/card. Most banks will view this as a positive step and will look at options like extending the tenure or a 'holiday' that can provide relief to the consumer while ensuring the long-term health of the loan to the bank.

I am facing a fund crunch. I have to choose between taking a personal loan and loan against property. Which one should I prefer? I will be charged 22 per cent for the personal loan because I am already servicing two personal loans from the same bank and had missed one EMI of each loan at different points in time. In the second option, my house is the biggest asset I have and I am a bit apprehensive about choosing it.
Consolidating your loans under loan against property will have the benefit of a lower interest rate and higher tenure, enabling a lower repayment burden. It is prudent to only avail such amount as is warranted to tide you over the current cash crunch and to also keep repayment capacity in mind. 

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

Today, Mohan Jayaraman, managing director, Experian Credit Information Company of India and Country Manager, Experian India, answers your questions