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How Not to Spoil Your Credit Score

Like it or not, your credit score is something that will follow you your entire life. Whenever you will need a loan or a credit card your credit report will be involved. In fact, your credit score could also potentially affect your future job applications.

So, what does it tell you? Well, if there is one thing you should learn from this, it’s that your credit score is really important that you should do your best to ensure it stays in a good shape.

The following are some of the things to pay attention to if you want to improve CIBIL score:

  1. Paying EMIs/Bills on Time

Late payments are a recipe for a poor CIBIL score. This is because every single credit card payment and loan EMI matters in the CIBIL score calculation. So, you must do whatever it takes to stay on schedule as far as your payments are concerned. Compromise on your lifestyle; avoid luxuries for some time if needed. But whatever you do, don’t miss a payment. Otherwise, you could be wasting a lot of time in making up for the loss in the future.

  1. Holding off Loan Applications

People apply for personal loans, home loans, etc. all the time. In fact, there is nothing wrong with a good loan that’s available on favorable terms. However, they sometimes become so used to these convenient lending options that they fail to take their impact into account, especially when their score is far from average.

Not only loans for bad credit are hard to come by, applying for them can easily spoil your CIBIL score too. This is because your loan applications result in inquiries to the credit rating agencies by the lenders. The more are your applications the more will be these inquiries, and consequently- greater will be the damage.

So, if you want to increase the score, you must apply for loans in moderation. Make it a rule of a thumb to submit only one or two applications in a fortnight.

  1. Using Credit Cards Within Limits

Credit cards are convenient and help save money too. However, you also want to keep your CIBIL score healthy. So, it’s important that you use your credit cards responsibly as excessive usage can lead to CIBIL score damage.

Ideally, you should use only 35% of the credit limit available on your card. Anything above that can be detrimental to your creditworthiness. If your expenses can’t be covered within that limit, then you can get a second credit card. However, either way, the key is to limit your utilization below 35% on every card.

  1. Making Well-Thought Decisions

Your decisions can avert a situation in which you settle for loans for low score. For instance, by saying “no” to a colleague who wants you to become a loan guarantor for them, you can prevent a terrible mistake. This is because becoming a loan guarantor is a big decision that has repercussions.

If the person you have become a “guarantor” of defaults on their loan, then your CIBIL score is affected. Moreover, if you are a financial loan guarantor, then you may also be held liable for the repayment of their loan. So, unless you know a person very well, you must never agree to become their loan guarantor. This applies to your friends and relatives too.

  1. Fixing your Credit Report

Ignoring discrepancies and mistakes in your credit report is the best way to spoil your CIBIL score. In fact, in the majority of cases of poor credit score calculations, the reason is these credit score mistakes.  Examples include – incorrect personal information, payment history, or even a case of identity theft.

It’s really important that you check your CIBIL report occasionally and report any mistakes/errors that you find to the relevant authorities if you want to improve CIBIL score.

You can’t afford to ignore the above-mentioned points if you want to become credit-responsible. Remember: Your financial freedom is in your own hands. You can either choose to become ignorant and face the music in the future, or you can take the responsibility and be prepared for the worst without a worry.

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