A Credit Score, also known as CIBIL Score is a number between 300-900 which indicates the Creditworthiness of an individual. This score helps financial institutions to determine whether to grant you a Credit or not. If yes, what should be the Credit Limit, etc. The better your Credit Score the higher the chances for your loan to get sanctioned. Similarly, with a higher CIBIL Score, banks can easily increase Credit Limits.
Now, if we know that it is so important to maintain a healthy credit score, then we should also know the measures to maintain a healthy credit score:
#1: Always clear your credit card dues on time:
One very staple rule to maintain a healthy credit score is to always pay your bills on time and clear any other dues on or before time. For example: Paying your EMIs on debts like a home loan, auto loan, or personal loan on time will help you keep your credit score up.
#2: Avoid Withdrawing Cash from your Credit Card:
It is wise to avoid withdrawing cash from your credit card purely because it is very costly to do so. You will be charged a cash advance fee, of around 2%-4% of your withdrawal amount. Moreover, you will also have to pay a significantly greater interest rate than your typical APR%. All this can increase your financial burden and if these charges are not paid on time it will hurt your CIBIL Score to a great extent.
#3: Do not apply for Multiple Credit Cards all at once:
Applying for multiple credit cards with different financial institutions all at once is certainly not a good idea. If you use multiple credit cards to pay off your debt, the pressure of debt will continue to rise, causing considerable damage to your credit score.
#4: Keep track of your CIBIL Score:
A Smart Person will always continuously check his/her CIBIL Credit Report to see if there is an error to look out for. Regularly checking your Credit Score Report also helps you see if you have any anomalies or inaccuracies and can then notify the credit bureau right away so that they can be corrected as soon as feasible.
#5: Consider Applying for a Secured Credit Card if you have a thin file:
If you are someone who has a poor credit score and is working towards making it better then you should consider getting a Secured Credit Card. This is a type of card that requires one to deposit some cash with the bank as collateral and according to the same deposit, the credit limit of the credit card is decided. This can help you build a credit history and improve your Credit Score.
#6: Keep away from factors that can harm your Credit score:
To maintain a healthy Credit Score, you should know what are factors can affect the Score. Here are the following factors, make sure to always be on the positive side of these aspects:
- Credit History
- Types of Credit taken
- Payment History
- Length of Credit Period
Additional Reading – How to use a credit card responsibly
