Loan on credit card and cibil link

[zenchill]

Most credit cards offer two types of loan options to card holders

Loan Against the available Credit Card Limit and Loan Above Credit Card Limit.

Let’s assume a card holder has a card with 1 Lakh limit and is being offered loan under both cases.

In case the user avails option 1 and takes a loan of 1 Lakh let’s assume for 12 months. So does that mean his credit utilization for the card is 100%? That means cibil will take it as a negative even with timely repayment?

In case the user avails option 2 and since it’s a pre approved sort of offer does that show up as another loan in cibil or is combined under the CC account?

From a cibil point of view which of the options are better?

 

[Deleted member 5552]

If anyone takes loan from available credit limit, it may affect credit utilisation ratio

Option 2:- I think new loan account will be created as loan is not linked with credit limit

 

[the_dark_knight]

In option 2 also, no new personal loan account is shown on cibil.
Basically both these loans are actually credit card based personal loans which is completely different from a standalone regular personal loan
Other differences are, in the cc based loans, the interest amount will attract a gst of 18% whereas the same is not applicable for the regular personal loans where there is not gst applicable
You won't be provided any loan acc number in case of cc based loans, the payment, amortization details etc everything will be included in your monthly cc bill statement.
Hope this clears the air about cc based loans

 

[Deleted member 5552]

In option 2 also, no new personal loan account is shown on cibil.
Basically both these loans are actually credit card based personal loans which is completely different from a standalone regular personal loan
Other differences are, in the cc based loans, the interest amount will attract a gst of 18% whereas the same is not applicable for the regular personal loans where there is not gst applicable
You won't be provided any loan acc number in case of cc based loans, the payment, amortization details etc everything will be included in your monthly cc bill statement.
Hope this clears the air about cc based loans

That's really great if there is no new loan account on cibil

 

[zenchill]

In option 2 also, no new personal loan account is shown on cibil.
Basically both these loans are actually credit card based personal loans which is completely different from a standalone regular personal loan
Other differences are, in the cc based loans, the interest amount will attract a gst of 18% whereas the same is not applicable for the regular personal loans where there is not gst applicable
You won't be provided any loan acc number in case of cc based loans, the payment, amortization details etc everything will be included in your monthly cc bill statement.
Hope this clears the air about cc based loans

Thanks for your insights. option 1 is outright disadvantagous for an applicant then right due to credit utilisation being high. Impacting cibil negatively even with timely repayments untill utilisation comes below 30% yardstick.

 

[Anil_Singh]

I took both types of loans few months ago.
1) Loan within credit limit - Reflects as total outstanding. Greatly affects cibil score. Utilization ratio goes up as outstanding goes up. I got offer of 13% on reducing basis from SBI. Took 1L for home renovation. Preclosed after 3 months.
2) Loan outside credit limit - No presence in cibil. I got offer of 12.5 % on reducing basis from ICICI. On call they reduced additional 1% with 0 processing fees. Took 3L. Used some money to close SBI loan and remaining amount for home renovation. Still 7 months remaining for this to get completed.

 

[Vasuki]

Most credit cards offer two types of loan options to card holders

Loan Against the available Credit Card Limit and Loan Above Credit Card Limit.

Let’s assume a card holder has a card with 1 Lakh limit and is being offered loan under both cases.

In case the user avails option 1 and takes a loan of 1 Lakh let’s assume for 12 months. So does that mean his credit utilization for the card is 100%? That means cibil will take it as a negative even with timely repayment?

In case the user avails option 2 and since it’s a pre approved sort of offer does that show up as another loan in cibil or is combined under the CC account?

From a cibil point of view which of the options are better?

Koi hume urdu me samjhega

 

[akshayhs]

In case the user avails option 1 and takes a loan of 1 Lakh let’s assume for 12 months. So does that mean his credit utilization for the card is 100%? That means cibil will take it as a negative even with timely repayment?

It will. I had an Encash loan which is technically over and above the limit. Even then in my case, my utilization ratio for that card was 230% for the entire duration of my tenure. However, it didn't affect my credit score one bit as the overall utilization was 6%.

 

[zenchill]

Koi hume urdu me samjhega

Bhai cc pe Jo loan options hote hein 1: limit ke ander ka loan and 2: limit ke over and above loan. Unja cibil pe jo asar padta hai comparatively wo discuss kar rahe hein.

Kaise loan within credit limit se utilisation increases and timely repayments bhi Karo par cibil negatively impact hi hoga. So bank earns but customer ke cibil ki lagegi GST on emi dene ke bad bhi.

 

[Anil_Singh]

It will. I had an Encash loan which is technically over and above the limit. Even then in my case, my utilization ratio for that card was 230% for the entire duration of my tenure. However, it didn't affect my credit score one bit as the overall utilization was 6%.

230%? SBI? ICICI did not report mine. Learned something new.

 

[zenchill]

It will. I had an Encash loan which is technically over and above the limit. Even then in my case, my utilization ratio for that card was 230% for the entire duration of my tenure. However, it didn't affect my credit score one bit as the overall utilization was 6%.

Thanks for the insights

 

[akshayhs]

230%? SBI? ICICI did not report mine. Learned something new.

Yes, it's still the same despite foreclosing it. Hoping it changes this month.

 

[Vasuki]

Bhai cc pe Jo loan options hote hein 1: limit ke ander ka loan and 2: limit ke over and above loan. Unja cibil pe jo asar padta hai comparatively wo discuss kar rahe hein.

Kaise loan within credit limit se utilisation increases and timely repayments bhi Karo par cibil negatively impact hi hoga. So bank earns but customer ke cibil ki lagegi GST on emi dene ke bad bhi.

So should take loan on cc .
Which is over the limit and .ignore whats within the limit ..

Because even though its same kinda loan but they are reported differently in cibil

 

[Itsoldsport]

I had an Encash loan (Over the limit loan) on an SBI card and it was shown on the same account on Cibil making utilization at 238%.

Similarly, on Axis also I had Over the limit loan but it created a separate account on Cibil with a credit limit same as my cards and it shows utilization 239% as well since the loan amount is greater than the Card Limit. However, my Axis Card accounts shows a normal utilization limit excluding the loan amount.

 

[zenchill]

So as far as I have understood it till now, Option 2 of taking a cc loan over and above the credit limit, most users with Encash option of SBI have reported very high almost 200%+credit utilization ratio as per their loan amount and credit limit etc.

Interestingly both cases are encash loan from SBI cards as confirmed by @Itsoldsport and @akshayhs

Now @ItsAnilSingh who also opted for option 2 loan got no such high utilization in his cibil ( ICICI card.)

Does that mean it varies bank to bank and no standard policy?

Also as @the_dark_knight said "In option 2 also, no new personal loan account is shown on cibil" is also conflicting with what @Itsoldsport loan with Axis.
Again no standard policy by banks then?

 

[Anil_Singh]

So as far as I have understood it till now, Option 2 of taking a cc loan over and above the credit limit, most users with Encash option of SBI have reported very high almost 200%+credit utilization ratio as per their loan amount and credit limit etc.

Interestingly both cases are encash loan from SBI cards as confirmed by @Itsoldsport and @akshayhs

Now @ItsAnilSingh who also opted for option 2 loan got no such high utilization in his cibil ( ICICI card.)

Does that mean it varies bank to bank and no standard policy?

Also as @the_dark_knight said "In option 2 also, no new personal loan account is shown on cibil" is also conflicting with what @Itsoldsport loan with Axis.
Again no standard policy by banks then?

Axis shows loan in cibil? How can they? Does Axis provide loan account number?

 

[Itsoldsport]

Axis shows loan in cibil? How can they? Does Axis provide loan account number?

This is the seperate account that it shows. Unlike other accounts, it's account number has "L or I" at end whereas in other accounts it's usually card no last digits. Also it's initiation date is same as issue date of the card on which loan was given.

 

[Anil_Singh]

This is the seperate account that it shows. Unlike other accounts, it's account number has "L or I" at end whereas in other accounts it's usually card no last digits. Also it's initiation date is same as issue date of the card on which loan was given.

Learned something new today.

 

[zenchill]

Amazing how Axis is doing one thing while SBI is doing another and ICICI another when it comes to cibil for such loans

 

[Vasuki]

Amazing how Axis is doing one thing while SBI is doing another and ICICI another when it comes to cibil for such loans

Sbi is sbi 😁