How can you maintain a good CIBIL score after paying off debt? Follow these 6 steps
credit score. However, it is a responsible financial management that leads to a good CIBIL score. Therefore, a borrower must take some steps to ensure that credit score stays healthy and sound.
These steps include monitoring your credit report from time to time, timely bill payments, keeping low credit utilisation, and maintaining a good credit mix, among others. Timely payments of bill: Needless to say that one should pay all bills, including loans, credit cards, utility bills, and other financial obligations on time. Payment history is a significant factor in determining your credit score.
Even a single missed or late payment can negatively impact your score. Keep low credit utilisation: Maintain a low credit utilisation ratio by not using too much of your available credit. Ideally, keep your credit card balances well below your credit limits.
High credit utilisation can signal to lenders that you may be overextended financially, which can lower your credit score. ALSO READ: How do student loans influence your credit score? Hard inquiry: Be cautious when applying for new credit accounts. Each new credit application results in a hard inquiry on your credit report, which can temporarily lower your credit score.
Only apply for credit when necessary and avoid opening multiple accounts within a short period. Credit mix: If you have only one type of credit account, consider diversifying your credit mix. Having a mix of instalment loans (like personal loans or auto loans) and revolving credit (like credit cards) can positively impact your credit score, as long as you manage them responsibly.
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