Here’s how to manage your credit score

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Your credit score has a lot of power when it comes to life’s big milestones, like buying a new car or taking out a mortgage on your first home. Lenders rely heavily on your credit score when deciding whether or not to approve you for a new financial product. After all, it works as a key factor for banks and financial institutions while offering you a loan or credit card.


A credit score is a three-digit numeric number ranging from 300 to 900, and is assigned to each person who has used a credit product, based on their credit / lending behavior during the period. In India, credit history is kept by credit bureaus approved by the RBI. Currently there are 4 credit bureaus in India namely TU CIBIL, Experian, Equifax and CRIF Highmark. Each of these credit bureaus has its own algorithm for assigning a credit score to each individual.

The score is generated based on an individual’s credit repayment behavior over a period of time. We all need to maintain a good credit rating because it determines our ability to borrow. Keep in mind that it is not only potential lenders who use the credit scores, but even existing lenders continue to examine your repayment and borrowing behavior and determine whether to continue with the credit facility. or improve or downgrade the credit facility or the product. Increasingly, insurance companies are using credit scores as a predictor, not only of on-time payments, but also of an individual’s overall financial behavior which increases their level of risk. Other financial institutions and employers also check credit scores to screen out unwanted applicants.

Simple Tips to Improve Your Credit Score

Pay Loan IMEs / Credit Card Bills On Time: Your payment history, whether or not you pay your bills on time, has the biggest impact on your credit score. This is also something lenders pay close attention to when they are doing your credit report before they approve a loan or new credit card for you.

Never pay only the minimum amount owed on credit card bills: Typically, you need to pay your credit card bills in full or at least pay more than the minimum amount owed. Paying the minimum amount owed on credit card bills reduces your chances of improving your credit score.

Avoid unnecessary inquiries for loans / credit cards: Multiple requests for credit in a short period of time from potential lenders, solicited or unsolicited, can actually lower your score. This includes mortgage company inquiries whenever you get pre-approved for a home loan and apply for a credit card at department stores that give you a 10% discount or request for an offer. unsolicited credit card that you receive in the mail. Avoid applying for a loan / credit card until it is necessary.

Keep credit card limit usage below 60-70%: Avoid using up your credit card limit as this negatively impacts your credit score. If you happen to use the limit completely, you need to make sure that payment is made in full / in part to reduce the use of the limit to 60-70 percent.

Good mix of credit product: Always keep a good mix of secured loans (home loan / car loan / two-wheeler loan, etc.) and unsecured (personal loan / credit card / sustainable consumer loan, etc.). A good mix improves the chances of having a better credit rating. However, having too many unsecured loans should not be preferred.

Regularly review your credit report: One should check his credit report for any bad report made by a lender in the credit report. If, in the case, there is a discrepancy in the business loan / credit lines, you can directly raise the dispute with the credit bureau or lender and resolve the issue (s). This practice helps in improving your office score. It is always recommended to check your credit score well in advance as there is no way to correct the report at the last minute.

Also watch for loans for which you are a co-borrower or guarantor: If you are a co-applicant or guarantor for a loan for which you are not a primary borrower, you should monitor the repayment behavior of these loans as they can also affect your credit score.

Good credit management leads to higher credit scores, which in turn lowers your borrowing costs. Living within your means, using your debt wisely, and paying all bills, including minimum credit card payments, on time, every time, are smart financial moves. They help improve your credit score, reduce the amount you pay for the money you borrow, and put more money in your pocket to save and invest.

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