The key to being credit-ready is having an excellent CIBIL score and a commendable financial profile. Here, the key is to have the right financial habits. When it comes to your CIBIL score, it isn’t enough to simply build a high score, as it takes effort to maintain it as well. A good score helps your eligibility for new credit, and can fetch you favourable repayment terms that do not strain your finances.
But in order to maintain a good credit score, you need to understand the credit factors that influence your score. These factors include your credit utilisation, credit mix, and repayment history. Besides understanding these factors, you should also know the best habits to practice to sustain a high CIBIL score. To get you started, here are 4 simple and smart ways to maintain your CIBIL score.
Make informed credit decisions
When you decide on taking a loan, your creditor will check your credit history to assess your past dealings. This includes any prior loan applications, repayment track record, and the state of your accounts. All of these are crucial factors that impact your CIBIL score and are things that you must check before you apply. By performing a self-assessment, you get an idea of your creditworthiness and can tweak your application accordingly.
If you have recently suffered a financial shock and have missed a few EMI payments, you can find this data in your report and this suggests that it may be wise to wait before you apply for new credit. Checks like these offer invaluable insight and could save you from getting rejected.
Review your credit report regularly
If you have many types of credit active at the same time, examine your credit statements every month to keep track of it. This way you avoid the chances of missing the bill due dates and can notice any errors in your transaction history. Check for any unaccredited transactions and alert the lender about discrepancies, some of which can point toward fraudulent activity.
Fixing such issues is important and can save you from incurring heavy penalties. Unnoticed errors in your report can also hamper your CIBIL score as it piles up indicating a high-risk profile to lenders. When you raise a dispute to the credit bureau, they verify the mistakes and resolve the dispute keeping your credit history error-free.
Pay EMIs diligently and without delays
When it comes to your active accounts, joint or solely borne by you, any history of late payments of credit bills can affect your CIBIL score. Your payment history is one of the main factors that influences your CIBIL score, and thereby the lenders. Whenever you neglect the due dates, especially when you have joint or co-registered accounts, you hinder your chances of getting better credit offers.
Check your monthly deadlines beforehand and ensure that you have enough funds in your account to pay the credit bills on time. You can choose to pay larger amounts early on so that the remaining payments are smaller, and easier to manage.
Use your credit limits strategically
While you use up your credit balance and repay the bills over time, you may not pay as much attention to the outstanding credit limit. This impacts your credit utilisation ratio, which reflects on your total debt and your current credit balance left in the account. As per experts, maintaining a low credit utilisation influences your CIBIL score positively. Try to use only 30% of your total credit limit to keep your CIBIL score healthy.
Following these habits can help you maintain a good CIBIL score and avoid the pitfalls that lead to a low score. Remember, as a high-risk borrower, it is challenging to avail credit and get funds easily. Regular CIBIL score check help in this regard, by enabling better decision-making and enhanced maintenance. Keep in mind that on the CIBIL website, you can run a free credit check only once a year.
Monitoring your credit score on a yearly basis is not ideal. Thankfully, fintech provisions by Bajaj Finserv allow you to check your CIBIL score frequently and help you prioritise your financial wellbeing. You can access the free CIBIL score checking service with just a few basic details and get your score in minutes. So, check your CIBIL score today and take the right steps to improve your credit health.