A Guide To Improve And Maintain Your Creditworthiness
It is easy to access credit in any form today with the advancement in financial technology and companies. Banks continue to exist but even they have moved to net banking along with other online financial institutions to provide loans and other form of credit to credit-worthy individuals.
Accessing credit might have become easy but it comes with responsibilities. One can only avail funds if they are eligible in certain criterias. One such criteria is their creditworthiness which is determined by a three-digit CIBIL score in India. If you are looking for ways to improve or maintain your current creditworthiness, read through the following guide.
A CIBIL score ranges from 300-900. The closer to 900, the better.
Poor- 300-549
Average- 550-649
Good- 650-749
Excellent- 750-900
- Be disciplined with payments.
Whether or not you pay your EMIs on time has an effect on your credit score. Delays in payments can lead to penalties, thereby lowering your credit score. To avoid this, you need to be disciplined with all your payments so that your lender can rely on your payback ability.
Set aside an amount for your monthly EMIs and put a reminder on a credit card or CIBIL score app so that you never miss your payments.
- Maintain old credit cards.
Before you avail a loan, your credit card history will be scrutinized to check your financial habits. Try to stretch out your old credit card for as long as you can so that your credit history can show a solid record of timely payments. This will help you maintain a good score for future credit requirements.
- Don’t burden yourself with liabilities.
As mentioned above, your ability to pay your instalments on time has a significant impact on your overall credit score. If you take on more loans than you can pay back, it will disturb your credit score, especially if you miss any payments. Paying for many loans at one time can be stressful and push you into a debt cycle.
To keep your CIBIL score in a healthy condition, finish paying for one loan and then take the other one. This will boost your creditworthiness when you do a CIBIL score check.
- Keep track of your progress.
A good habit to follow to improve or maintain your current credit score is to always keep track. You might think that you need to take a look at your CIBIl score only when you want to avail of a loan, but being intentional about it and keeping an eye on it from the beginning will help you in the long run. There are CIBIL score tracking apps available online that can help you with this.
Maintaining your creditworthiness with a good CIBIL score will come with a lot of benefits. You will be able to quickly avail of a loan of your choice or get a credit card with a higher upper limit. You will feel confident in your spending habits and become a trustworthy borrower in the eyes of the lender. Thus, be disciplined with your money and enjoy the benefits of a high credit score.