Five steps for a healthy Credit InformationReport (CIR)

Credit score is very important when it comes to availing credit, especially loan approvals. The banks may check credit score through different credit bureaus like CIBIL, Experian, CRIF- Highmark and Equifax. Credit score helps determine the creditworthiness of a client which in turn will help them avail loans faster and easier.

While a low credit score can be a major hindrance in getting one’s loan request approved, credit scores are dynamic and change with one’s credit activities. The following steps can be immensely useful for improving credit scores and should ideally be followed by everyone to maintain a healthy credit rating.

 

Be punctual about payments: It is very important to be on top of all your bill and loan payments in order to ensure a healthy credit score. Keep track of payment deadlines and clear off any outstanding bills at the earliest possible. Online banking allows one to set automatic deductions for loans, credit card bills as well as utility bills and these can be very handy for ensuring payments are made on time every time.

Do not be credit hungry: It is common for people to get multiple credit cards to acquire additional credit. However holding multiple credit cards indicates that the individual is credit hungry and might not be wise about managing his finances. This can have an adverse impact on ones eligibility for a loan or credit in times of emergency.

Do not apply for too many loans: Another thing that can influence one’s Credit scores is the number of times one applies for a loan. Every time an individual enquires or applies for a loan, the bank reaches out to credit bureaus for his details. A higher number of such enquiries can also hamper one’s credit scores with CIBIL

Spend wisely: Credit cards should be used cautiously as one spends cash. Avoid exceeding the credit card limit and if possible try not to use more than 75% of the credit allowed to you. This indicates a wise spending attitude and will benefit your credit standing.

Have a balanced mix of loans: The type of loans one holds is also a significant criterion in deciding one’s creditworthiness. Since secured loans like home loans help in the creation of assets, they positively influence one’s CIBIL score. Unsecured loans on the other hand include personal and car loan and can have an adverse effect on the credit scores. Thus it is important to have a balance between unsecured and secured loans.

With the evolving financial markets a financially active individual cannot afford to be ignorant about his credit standing. It is imperative that you keep a tab on your credit related activities and check the credit reports periodically to ensure no discrepancies mar your credit scores.