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A healthy credit score can influence your financial opportunities. Understand the key factors that shape it and the practices that help ensure it remains in good standing.
Learning how to maintain a good credit score is crucial to getting easy loan approvals and better interest rates. By following a few simple habits like paying EMIs on time and managing your credit usage, you can keep your score healthy.
Key Takeaways
A CIBIL score of 750 or above is considered good, indicating responsible borrowing.
A good CIBIL score may help you get faster approvals, competitive interest rates, higher credit limits, and overall better loan terms.
You must pay EMIs and bills on time, keep credit card usage under 30%, and check your credit report for errors.
Avoid applying for new credit often. Keep a mix of secured and unsecured credit.
Do not close old credit accounts unnecessarily. Foreclosing a loan can sometimes lead to a drop in your credit score.
Having at least one active credit product managed responsibly
Checking your own CIBIL score (termed as a soft inquiry) does not reduce it.
A CIBIL score of 750 or above is considered good for getting quick loan approvals and competitive interest rates. It indicates to lenders that you are a responsible borrower. In India, four credit bureaus provide credit scores for individuals. The lenders provide the data related to your credit, repayment history, regularity in payment to the bureaus, post which they generate your score/report. CIBIL is amongst the most preferred ones.
Learning how to maintain a good CIBIL score helps demonstrate to lenders that you manage credit responsibly and repay loans on time. The benefits include:
Faster approval for loans and credit cards
Lower interest rates on credit facilities
Higher credit limits and improved loan eligibility
Offers chance for negotiation for flexible EMIs and longer repayment tenures
Maintaining a healthy credit score isn’t difficult if you follow a few smart habits. Here are a few tips for maintaining good credit:
Always pay your EMIs, credit card bills, and other dues before the due date. Timely payments remain the simplest and most effective method to improve your credit score.
Keep your credit card spending within 30 percent of your total credit limit. High utilisation signals risk and can negatively impact your score.
Check your credit report at least once every few months to identify errors or suspicious activity. Dispute any incorrect entries to protect your credit score.
Refrain from applying for several loans or credit cards within a short period. Each application triggers a hard enquiry, which can reduce your credit score.
Use a combination of secured and unsecured credit products. A balanced credit portfolio indicates sound credit management practices.
Pre-closing a loan frequently affects your credit profile negatively. Continue regular repayments as agreed unless there is a compelling reason to foreclose.
Maintain older credit cards or loan accounts to strengthen your credit history. Close them only when there is a strong reason.
Ensure the primary borrower pays on time in case of co-signed loans. Missed payments on such accounts can also damage your credit score.
Maintain at least one active credit card or loan and manage it responsibly. This helps establish and build a strong credit history and score.
No, checking your own CIBIL score counts as a soft inquiry and does not reduce your credit score.
Yes, missing even a single EMI negatively affects your credit score. It indicates poor repayment discipline to lenders.
To maintain a good credit score, you need to use less than 30% of your total credit card limit.
Yes, closing old or unused credit cards can slightly reduce your credit score.
Yes, applying for loans or credit cards frequently is not advisable. Multiple applications result in several hard inquiries, which may lower your credit score.
A joint loan or co-signing reflects on your credit report. It does not affect your CIBIL score as long as repayments are made on time. Missed payments will lower your score.
Yes, foreclosing a loan can sometimes cause a drop in your credit score.
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