Your credit score is a benchmark number for your credit worthiness. The banks and financial institutions always request your CIBIL score details before accepting a loan or credit card application. If you have a good score between 750 to 900 points you are considered as a less risky prospect for granting a loan. Thus it is very important to maintain a good credit history and score.
In order to keep track of your credit score the easiest step is the first step. All you need to do is keep a track of your credit report. For this, simply check CIBIL score online for free time or make a quarterly schedule for the same. If you fail to study your CIR regularly, chances are you could be affecting your score unknowingly. Sometimes a missed-report by bank is enough to bleed the score. So keeping a track of the report ensures that you keep a track of all of your credit activities.
With credit report in hand you would know how many loans and credit cards you owe. You can easily calculate your income to loan ratio. Your credit percentage should always be 45 % or below the income level. If EMIs for credit card expenses and loans other than home loan total more than 25 % of your income you should consider it inappropriate. As long as you could maintain a manageable income to loan percentage you are less likely to fall into debt trap and miss the payment.
To maintain a decent score, it is mandatory to have a clear credit history wherein there is no lapse in repayment. Thus timely payment of loans and bills is one of the most important steps to add to your credit score.
Some tips to ensure timely repayment of balances-
- You can try to put all your bills details handy in one place so that you don’t miss any of them ever. Use a computer excel sheet or maintain a journal for the purpose.
- You can also consider to make a habit of paying out on a same day each month. This avoids least management of bill payments.
- Always carefully note down the last due date for payment. It is a good habit to make payment well in advance rather than enjoying the last day ride.
- Use an automatic payment via your bank account. This ensures regular payments. However you would need to make sure your account holds enough funds always. Check bounce can have a very negative impact on your score, so beware of this fact always!
When you study your report, be vary of any mistake in personal information or account information. Re check if all the credit related information is true. If there is an error, you should raise a dispute with the bank at the earliest. Also, never ignore an unidentified query or action on CIR.
Other than your repayment habits, your card plays a major role in maintaining a good score. As it is easy and convenient to use a plastic card for your day to day expenses, it is easier to increase CIBIL score with that card, provided you keep clearing the card balance before the due date every month. Unpaid credit bills and large card balances can heavily damage the score.
When you keep a good care of your credit score, you can be future safe for credit. Another way to increase the score is to keep your old credit card account with good history with you. Never close this card. Old card would not only grant a positive and longer credit history but would also emphasize on unrestricted repayment history. These two factors make you a desirable prospect for credit.
However you should not use your card for all expenses. For, your credit utilization would be very high in that case. You should instead use up to 30 per cent or lesser credit limit provided to you. This helps you maintain a healthy CIBIL score. Sometimes bank might offer you better credit limit on account of your good credit rating. Accept the increased limit as it will improve the credit utilization further and help your score. The increased limit should never be a means to increase the expenses.
Last but not the least, you should also pay attention to the accounts of the co-signors, joint account holders, or for the ones’ you signed as guarantor to. If any of these parties fail to repay they would directly damage your report as well.
All in all it is easy to manage the score if you follow these tips.