27-Nov-2018 written by : FSI-Team
Credit scores have become an integral part of every one's life today. These three digit numeric expression of one's credit profile today impact far more aspects of life than just the availability of loans and credit. As the awareness on importance of credit score has grown, more and more people are seeking to understand as to what should be done to manage and maintain the scores so that not only are they able to save lakhs of rupees as a result of better credit profile but are able to have these scores facilitate achievement of their financial objectives.
Following are the six must follow habits of people who have been able to ensure that their CIBIL score is high.
Do you know that the repayment of your obligations is the highest influencer on your credit score. It carries a weightage of 35% in the over all scheme of things. The people with high credit score ensure that there is no delay in payment against any of their trade lines. Even if they are unable to pay the complete outstanding amount on their credit card, they ensure that at least the minimum amount due is paid on or before the due date. They would check the account balances before the due date to avoid an lapse.
Vintage of accounts is also an important factor that contributes to the score. While the loans keep get closed, the credit cards will continue to be part of the wallet and bureau report without an expiry date. While new and exciting products keep getting introduced, the people with high credit score ensure that they do not close the old credit card accounts. And thus continue to enjoy positive attribute on length of credit.
The total exposure also impacts the score. Any loan that forms part of the report is bound to get reduced on the outstanding as the EMIs get paid over time. It is the usage on credit card that impacts this important aspect. Maxing out on cards is only an indication that you might be undergoing a financial constraint (given that it is a high interest product) and will impact the profile negatively.
Getting the best deal on any product is always the desire. However, in the quest to get the best deal on a loan product can turn out to be adverse if you keep letting the lenders ping the bureaus. You may not know but each time the bank enquires the bureau it gets registered and a higher number of enquiries in a short span of time can lead to drop in the scores and can leave you taking corrective measures to increase credit score.
Another important highlight of people with good credit score is their budgeting exercise and the ability to stick to it at all costs. In the consumerism driven world today where the marketers keep coming up with innovative ideas to attract and make people spend more, these people only spend what they have budgeted for. This ensures that they are saving enough money for grey periods of life and are not required to over indulge themselves in credit for any reason.
Checking the bureau updates is as important as your regular medical check ups. And this is what these people do. They check their credit reports periodically and in case of any anomaly take immediate action. Now with free reports being extended even you should be checking out on the reports at least once a year, if not more frequently.
If everything mentioned above was to be summed up, it would only be two words “financially responsible”.