A healthy credit score is essential for getting easier access to loans and lower interest rates. Many people are unaware of the importance of a good credit score. It can impact a number of things in their lives, from their ability to buy a house to how many credit cards they can access.
One of the ways to measure your ability to avail credit is the Cibil score, which divides people into categories based on their credit scores.
Lenders usually consider a score of 750 and above to be good. If you need to improve your credit scores before securing a loan or credit card, there are a few simple tips you can follow. This will help you maintain your financial health and make you less risky for lenders.
Tips To Maintain Healthy Credit Score
Timely EMI payments: Make sure that you pay your loan or credit card dues on time. Maintaining timely equated-monthly-instalment payments can help you avoid late fees and boost your credit score.
Don't max out your credit cards: Having a credit card is helpful if you want to buy things that are not in your budget currently. However, it can sometimes make you forget about your financial planning. Do not use your credit card to the maximum limit. To maintain a good credit score, it is advisable to keep your credit utilisation ratio (how much credit you have compared to the total credit you are allowed) to less than 30 percent of the limit. Using credit cards in moderation can help you balance your budget as well.
Don't apply for too much credit: Every time you apply for a loan or credit card, your Cibil score gets evaluated. Adding a new card in the mix can lead to a temporary drop in your score, which goes up again over time. If you apply for multiple loans or cards in a short period, your credit profile will be negatively impacted. This can lead to difficulties in securing a loan in the future.
Monitor your credit reports: Keep checking your Cibil score and credit reports from time to time for any discrepancies. If there is any mismatch, report it to the authorities as soon as possible to get the data corrected.
Maintain older credit accounts: Ensure that you keep some older credit accounts open so that you can show your financial history over time. This can show your behaviour when it comes to paying back your dues and establish your reputation as a responsible borrower.
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