30-Mar-2019 written by : FSI-Team
Every new year people resolve to achieve the set objectives. However, the vows fizzle out as time passes. Since perseverance is the key to any set goal, people find them juggling with various aspects of complex life lose out on the consistent effort. People wish if there were ways to achieve set out goals in shorter term. But, alas, there are no quick fixes in life. But if you are one who has resolved to improve your CIBIL score, following is the list of five easy tricks that can help you in accomplishing the target and maintain a good credit profile in 2019.
Read on to know more on this. These five tricks will help you both improve CIBIL score and maintain it.
A lot of people confuse credit utilization with the debt burden ratio. The debt burden ratio is the capacity of one individual to secure debt across various lending institutions. In other words this is the threshold of income to service the EMIs and is pegged at 50%. So if a person has an income of Rs 100,000 then a total monthly repayment of debt cannot go beyond Rs 50,000. On the other hand the credit utilization is the percentage of current outstanding against the total debt issued to the individual. This is the sum of disbursed loans that are currently running and the credit limits extended across all cards. A higher credit utilization leads to drop in the scores since it is treated as an indication of financial stress and or financial mismanagement. Bring down the outstanding on your cards and you would experience improvement in your CIBIL score.
Similar to old friends, the old accounts help in maintaining better credit scores. There are fewer products that run through years. A home loan, which is a long term debt also comes with an expiry date. On the other hand a credit card outnumber any other loan product on vintage. So do not close those old credit cards that you today find to be obsolete in comparison to newer card products that come with specific benefits that may suite your needs. Keeping another plastic in the wallet may just be prudent for continued management of bureau profile.
In case you are in need of a fresh loan, do not go shopping. This will hurt your objective. Not only does your credit profile gets impacted but even the chances of rejection on the required debt increases multifold. Every bank that you apply for a loan, will run an enquiry on the bureau and it will become part of your historic performance. A higher number of enquiries in shorter span are treated as hunger for credit and impacts your interest severely.
Just like the doctors advise on regular physical check, it is advised to keep a track on your bureau report as well. With free reports being made available as per the directive of the Reserve Bank of India, one does not even need to spend any money. Do obtain the report and check for discrepancies or errors. As per estimates, as high as 25% of the scores decline on account of the errors.
Be a responsible borrower. Show this by ensuring that all repayments are happening without any lag. The word default may sound a bit harsh so used lag, while the fact is that even a lag gets treated as a default. Do check your account prior to the due dates and ensure that the required funds are available. Do not miss payment on your credit cards even by a day. Pay on or before the due date without exception.
Just by being mindful on a few of above, where you are not even required to initiate any action will help you meeting this objective in 2019.