A good credit score was never as important as in today’s fast-paced world. Lenders go through your three-digit CIBIL score that lies between 300 and 900 for checking on your creditworthiness. A high CIBIL score would not only translate into better financial deals for you, but it would also save more money in the long run. This blog post will now go on to take a closer look at just why it is so important that you keep a healthy CIBIL score and how you can practically achieve this.
Why it Really Does Matter: Your CIBIL Score
Your CIBIL score is not just like any other score; it is the very mirror image of your financial responsibility. The lender can evaluate using this score what kind of risk they are likely to take in giving money to you.
Higher scores mean that you are a good borrower, which will ensure access to loans, credit cards, and even better rental agreement. On the other side of low rating, access to credit can be limited and this may even call for higher rates, which prove challenging in ways for one to reach their financial goals.
How to Maintain A Good CIBIL Score
A good CIBIL score is something that is achieved by constant effort in handling your finances responsibly. Following are a few techniques that will ensure you have a healthy score:
1. Pay All Bills on Time for keep a healthy CIBIL score
Payment history is one of the most vital factors in considering your CIBIL score. You should, hence, make all the possible best efforts to pay all your dues on time—be it the minimum amount due. You can set up automated reminders for this or use automatic bill payments to make things easier.
2. Credit Utilization
The credit utilization ratio is the monthly credit card bill amount you are required to pay based on your credit limit how much of the credit you are using relative to the total amount of credit that is available. High utilization can adversely affect your score.
3. Restricting the Use of Hard Inquiries
Hard enquiries are ones that are initiated when you opt to take out new credit cards or loans. Your score can be damaged by too many hard enquiries carried out over a very limited period. Only request the credit that is necessary.
4. Maintain a Mix of Credit Types
Having an assortment of credit like credit card dues, personal loan repayments and mortgage payments can improve your score. This reflects that you have the capability to handle different types of credit.Â
5. Monitor Your Credit Report
You should check your CIBIL report occasionally, searching for any inaccuracies or discrepancies within it. Should you find a result that doesn’t look right, alert the credit bureau to an investigation. It also helps keep track of any identity theft or other fraudulence occurring on your account.
6. Increase in Credit Limit
You should ask your card issuers to increase your credit limits. As this does not translate into more spending but just the extension of credit facility, this shall do good to your CIBIL score.
7. Avoid Closing Old Accounts
It is always better not to close old accounts, as their age is going to help in building and maintaining a longer credit history-something that can be helpful to your CIBIL score.Â
Conclusion
Your CIBIL score matters much for your financial well-being. You can, in this regard, follow these best practices and make financially sound moves which will keep your CIBIL score healthy so that you enjoy better access to credit and also favorable terms for loans. Building a credit score is a marathon and not a sprint, but remember the fruits at the end of the line are very sweet.
Written by – Srilekha
