- Timely repayments against credit cards impacts your CIBIL score
- A good credit score helps in getting a loan approved
- A CIBIL score of 750 is considered utterly necessary today
In fact, you run the risk of your loan or credit card application getting rejected if your CIBIL score is not up to the mark. If you are wondering what it is that people do to maintain a perfect CIBIL score, here are some good habits that they maintain:
They always make timely repayments: The most important aspect of maintaining a good CIBIL score is to make timely repayments as it has the biggest bearing on your CIBIL score. Those with a perfect CIBIL score do not even miss a single payment on all the credit lines they service. Even a single late payment can send your credit score tumbling. To keep up a good CIBIL score, it is thus advisable to automate your payments so that there is no scope of delaying or missing a single payment. Needless to say, you need to keep your account replenished ahead of the stipulated date.
Little or no outstanding balance on credit cards: One common habit of those who maintain a high CIBIL score is that they have a little or no outstanding balance on their credit cards. Credit cards when used judiciously can help you build and maintain a good CIBIL score. On the other hand, if you are reckless with your credit card usage, it can turn into a debt trap that can have a detrimental impact on your CIBIL score. The golden rule of credit card usage: never spend anything on your credit card that you cannot afford to repay in full by the end of each billing cycle.
Low credit utilisation: Credit utilisation also plays an important role in determining the CIBIL score of an individual. Credit experts say that your credit utilisation or the total amount of credit you use as against the total credit amount made available to you, should be in the range of 30-40 per cent. Anecdotal evidence however suggests that those with high CIBIL score do not let their credit utilisation exceed 20 per cent.
They use credit only when necessary: With intense competition among lenders, it is likely that you receive either direct mailers or phone calls from banks who urge you to take a personal loan or a credit card. But do bear in mind that credit even when it is easily or readily available should only be used when it is absolutely necessary. In fact this is also another good habit of people with excellent CIBIL scores. They do not avail of credit unless and until they are truly in need of it, and even when they do they ensure that they have a healthy mix of credit and make timely repayments on the same.
They have a lengthy credit history: The age of credit also matters in keeping up with a good CIBIL score. Once again, there is anecdotal evidence that suggests that those with a high CIBIL score have an average account history of 10 years or more. Therefore, even when you are using multiple credit cards and have applied for new credit cards do not close the previous credit card accounts. Repay the full outstanding amount on them and keep them locked away by all means, but do not close them as it brings down the total age of your account.
Maintaining a good CIBIL score is no rocket science. It is all about maintaining financial discipline and good habits. Just like you exercise and eat well in order to maintain good physical health, you must do the requisite to maintain your financial health.
Disclaimer: All information in this article has been provided by Creditvidya.com and NDTV Profit is not responsible for the accuracy and completeness of the same.
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