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In today’s day and age, it is more important than ever to know where you stand financially. It is critical since each and every variable, including your loans, credit cards, and bank balance, plays a factor in determining your credit score; and, in turn, your eligibility for a loan. Here are five ways in which you can check your financial health and what you can do to improve the same credit score.

Steps to Ensure Financial Fitness


  1. Monitor Your Credit Utilisation Ratio: The credit utilisation ratio is essentially the percentage of credit available to you that has been used up. Leading financial institutions are of the opinion that to ensure financial fitness, you must keep your credit utilisation ratio under 30%. For example, if the total credit available to you is ₹1 lakh, make sure that you use equal to or less than ₹30,000 only. If your credit utilisation percentage exceeds the 30% threshold, it may impact your credit score negatively.
  2. Check Your Credit Portfolio: You should also check the ratio of secured as well as unsecured loans that you have in your overall credit portfolio. If you have more unsecured loans than secured ones, it is time for you to consider taking a collateral-backed loan next time you need credit. Doing so will ensure your financial fitness as you will take a step towards a healthy credit portfolio. Additionally, a healthy ratio of secured to unsecured loans will give a lender the impression that you are a creditworthy individual. A dominance of unsecured loans in your credit portfolio, on the other hand, will give the lender an impression that you are a credit-hungry individual, which could lower your chances of getting a loan or a credit card.
  3. Check Your Credit Score: Several lenders think of a CIBIL score between 750-900 as a sign of creditworthiness and overall financial fitness, which is why you should ensure that your CIBIL score is within that range as well. If it does, you will stand a good chance of getting a loan or a credit card at a time of need. If your CIBIL score is between the range of 650-749, chances are that you will still get a loan but at a higher interest rate. A CIBIL score below 650 may cause a rejection of your loan or credit card application. So, bottomline, if your CIBIL score is below 750, consider improving it by paying your loan EMIs and credit card bills on time.
  4. Use Your Credit Cards Sensibly: You should always make it a point to keep your credit card usage reasonable and ensure that none of your cards are maxed out. Using up your entire credit limit or most of it increases your overall credit ratio, which would mean that the lender will think twice before giving you any extra credit as they will think that you are financially unfit to repay the loan you are applying for.
  5. Check the Number of Active Loan/Credit Card Accounts: It could be very hard to keep track of several loan and credit card accounts. If you miss the EMI payment of even one, it could possibly spell disaster for your credit score. Not to mention that it could impact your overall financial fitness as well. So, you must check the number of loan and credit card accounts that you have. If you have many loan and credit card accounts running parallely, consider taking one personal loan of larger amount and prepay all other loans if possible. A side benefit of prepaying all your other loans is that it improves your CIBIL score and, in turn, your overall financial health as well.


If you would like to learn more, read up on CIBIL score, secured and unsecured loans, and how credit rating in general works oBajaj MarketsTS. If you are planning on taking any kind of loan, you can apply for one througBajaj MarketsTS as well.

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