A CIBIL score is a 3-digit number that rates your creditworthiness or credit profile. The higher the CIBIL score, the better your chances of getting and availing of a loan, opening a card, or any other financial product.
For more information on how a CIBIL Score impacts you, please look at our blog CIBIL Score, How it impacts you?
Factors that impact your CIBIL Score
- The number of loan accounts you hold at various lenders
- How much you borrow compared to your available credit limits
- How long your accounts have been open and active
- How often you pay bills on time (and if there are any late payments).
Every individual is a potential victim of the consequences caused by a low CIBIL score. While it’s not unusual for scores to fluctuate over time, it’s still important to understand why your score dropped and how you can boost the score again with smarter approaches. Few tips to keep your CIBIL score high are mentioned below,
1) Keep your credit cards open and active
It’s important that you don’t close any of your existing credit cards or stop using them altogether. This will lower the average age of credit reported on your report and could negatively impact your scores. If you don’t prefer to keep all of them open, look at closing the oldest accounts first as they will have less impact on your average age of credit history. So be sure to keep them active.
2) Pay your bills on time
Paying bills on time is a key factor that can impact your credit score. Delaying the payment even once or twice, may be enough to drop an otherwise good score by several points or more. Make sure that all of your bills are paid off in full and on time every month so that late payments don’t become an issue for you in the future.
3) Avoid applying for futile loans
Ensure that you aren’t overspending or carrying too much debt. Albeit loans are life-savers that pull you out of the financial crunch for balanced financial planning, overspending has the capability to leave you in deep trouble.
Choose Smartly, Spend Wisely.
Finally, one should be mindful of interest rates and credit limits as to avoid falling into debt traps and incurring penalties. Further, utilisation of balances on cards and loans is an important consideration that can have an impact on the CIBIL score.