Although people assume that handling credit cards and managing debts loans is a cake walk; it’s as simple as “paying off on time”, but that’s not all. There’s more to loans than that. Why credit counsellors insist that credits and credit scores need to be managed properly, is that in reality, they are mismanaged, resulting in chaos and disappointment. There are always chances of errors, mistakes and confusion. Let us consider some credit score management tips that will help us maintain a good credit score on our credit report.
Tip #1: Always use and maintain only as many credit products as you can handle. These days, banks are offering loans very easily to maximize marketing. Since actual capacity to repay is only known to you, never borrow money more than your capacity to repay.
Tip # 2: Always understand the functions and nuances of the loan products properly before you begin servicing them. Read the documents given properly and seek clarifications.
Tip # 3: Loans once taken need to be serviced on time, no matter what. The due amounts must be paid in full. An incomplete payment or a missed payment reflects poorly on the credit report and dents scores.
Tip # 4: Use the credit card limits wisely. Do not overspend on your credit card just because of the ease of available limit.
Tip # 5: Do not be tempted to make frequent enquiries with banks about loans, etc. This shows that you are credit hungry or financially burdened. It also dents your credit score.
Tip # 6: Monitor your budgets, finances and scores closely and regularly.
Tip # 7: Review your credit report regularly for errors, identify mistakes and ‘delinquencies’. Once detected, make sure to resolve it quickly and avoid CIBIL disputes. Do not delay.
Tip # 8: Opt for loans [if and when needed] with shorter tenure. This will help you keep the pay back amount to minimum possible. The longer the tenure you serve, the more money you shell out as EMIs.
Tip # 9: Pay all bills on time. Utility, phone, gas, and all other monthly bills must be paid regularly, without delay. Avoid getting into any disputes with your service providers who send you bills on your name.
Tip # 10: Do not take too many loans, else you will end up servicing loans all your life.