Credit history of a person is tracked by their CIBIL score. CIBIL score is a three-digit number that is a reflection of their credit history. The three-digit number ranges between 300 and 900. It is a prominent measure for all financial banks to check the credibility of the borrower.
The credit score is managed by Credit Information Bureau Limited, one of the credit bureaus in India. CIBIL score is not made in a single day and requires a long credit history of the borrower. It takes around 18-36 months to build a healthy CIBIL score. Know about all the habits that need to be avoided to maintain a healthy CIBIL score.
1. Be aware of excessive credit
It is always wise to keep a check on your spending habits. Spending more than your earnings will increase the need for credit. Borrowing money for a long time due to excessive spending might lead to a large debt on you that might reduce your CIBIL ratings.
2. Avoid unpaid credit card bills
Sincerity is the key to earning good CIBIL ratings. If you keep your credit card bills unpaid for a long time and also are an irregular payee of your loan instalments, then it is the right time to get these habits changed for a healthy CIBIL score. Lack of EMI and credit payment on time indicates poor planning of funds.
3. Do not take only unsecured loans or multiple loans
Focusing only on unsecured loans like personal loans, credit cards, etc, can take a toll on your CIBIL score. It is always advised to maintain a healthy mix of secured loans like home loans, education loans, auto loans, etc to generate a healthy score of income. On the other hand, applying for multiple loans at the same time can bring you under the scanner of financial institutions and reduce your credibility.
4. Don't miss your EMIs or payments toward existing loans
Just like unpaid credit card bills, unpaid EMIs and loan instalments can be detrimental to your credit score. A high CIBIL score is not generated without taking loans or borrowing. At the same time, it is equally important to maintain consistency in repaying that loan or credit on time. Delayed payments will impact your CIBIL score negatively and ultimately decrease your reliability against financial institutions.
5. Do not miss tracking your CIBIL report
One may be able to improve their credit score only if they are aware of its current status. Hence, irregular tracking of CIBIL reports increases the chance of deterioration of your CIBIL score, as you won’t be able to rectify technical errors and others. One can request their CIBIL report by visiting www.cibil.com.
6. Be cautious of joint accounts
It is better to avoid becoming a joint account holder or a guarantor of someone else's loan. Any default on that loan will directly impact the CIBIL score of the joint account holder as well. Hence, it is better to take up such responsibility only for those whom you trust well.
