How to Maintain Good CIBIL Score: Maintaining a good CIBIL score is essential to maintain financial health. These are the practices and habits adopted by a person to maintain a healthy financial life. This includes managing your finances with responsibility and organization, avoiding loans, investing wisely and building a solid financial foundation. Let us know about it in detail.
CIBIL Score is an essential aspect of financial profile. Loan giving agencies i.e. lenders use it to determine the creditworthiness of a person. CIBIL score is a three-digit number between 300 and 900, with a higher score indicating a lower risk of default in loan repayment capacity. Maintaining a good CIBIL score is essential to avail loans and credit cards with preferential terms and conditions. However, defaulting on loan payments, non-payment, or excessive credit enquiries, can negatively impact your CIBIL score.
Maintaining a good CIBIL Score is essential to maintain financial health. These are the practices and habits adopted by a person to maintain a healthy financial life. This includes managing your finances with responsibility and organization, avoiding debt, investing wisely, and building a solid financial foundation. Just as personal hygiene involves taking care of your physical health through habits like washing your hands and brushing your teeth, financial hygiene involves taking care of your financial health through budgeting, saving and investing wisely. .
Bank customers should take care of these points
- Being aware of credit score.
- Check your credit report regularly.
- Taking steps to protect your identity and financial information from fraud and theft.
Pay bills on time
Manavjeet Singh, MD and CEO, CLXNS (Collections), explains that an important factor that can adversely impact your CIBIL score is late payment. Therefore, it is essential to ensure that all your bills including credit card bills, loan payments and other bills are paid on time without fail. If you cannot make the payment on the due date, try to make the minimum payment to maintain your CIBIL score.
Apply for a large loan at once
If you seek a loan, the lender will review your credit report, and a large number of inquiries can harm your CIBIL score. As a result, it is better to avoid applying for too many loans at once and proceed with your loan applications separately.
Monitor Credit Report
Manavjeet Singh says that it is essential to monitor your credit report to maintain a healthy credit profile as it contains information about your credit accounts, payment history, credit inquiries and other details that determine your creditworthiness. Reviewing your credit report regularly ensures that the data is accurate, up-to-date, and free from errors. You can detect any fraudulent activity or unauthorized accounts opened in your name and take immediate action to correct them. Monitoring credit reports helps identify areas where you can improve your credit score, such as reducing debt or making payments on time. Additionally, many lenders and financial institutions use credit reports to determine the terms and conditions of loans and credit cards, so information about your credit report will enable you to negotiate better rates and terms.
Keep old credit accounts open
Maintaining a positive credit history is important for calculating your CIBIL score. Therefore, it is advisable to avoid closing old credit accounts, even if you do not use them regularly. Closing such accounts may reduce the length of your credit history and adversely affect your CIBIL score.
use credit wisely
Credit can be a helpful tool for making purchases or investing, but when not used responsibly, it can lead to debt that can be challenging to repay. By using debt wisely, you can avoid getting stuck in a debt cycle that can negatively impact your credit score and financial situation. It is best to avoid excessive use of debt. One way to keep credit utilization under control is to keep the credit utilization ratio (the amount of credit you use compared to the credit limit) below 30%. If you are using credit too much, it may indicate to lenders that you are burdened with debt and may be unable to repay it.
Your CIBIL score is an important aspect of your financial life. By following these five measures, you can help protect your CIBIL score and ensure that you are in a solid financial position when you need credit in the future. Remember, building a good credit history takes time, so be patient and maintain discipline in your financial habits.
