Personal finance simplified

Simple steps to maintain a good credit score in India

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Credit score is a three-digit numerical summary to show your credit score or credit rating. This rating and score is done by credit bureaus after collecting credit data from all lending agencies including Banks. The credit score of an individual is mostly based on the credit utilization, payment history, credit score inquiries etc.  A good credit score range between 750 – 900 score.

What is a good credit score in India?

There are 4 credit bureaus in India which are licensed by RBI to operate as Credit Information Agencies in India; they are CIBIL, Highmark, Equifax and Experian.

A good Credit score means – You will get low interest rate from banks, you will be eligible for higher loan amount, quicker loan approval and higher repayment period.

How to maintain a good credit score?

Improving a credit score is not a big deal for someone who does timely payments and keeping a low credit utilization ratio.

It is important to note that the maintaining a good credit score or rating is not impossible to achieve. Here are a few simple steps to maintain a good credit score in India

1. Check your credit score: Checking your credit report is the first step in bringing a discipline to your financial life and to fix your credit score repairs. Login to any one of these Credit agency website and fill online form and make a payment using net banking or with your credit card. Once you get your credit report – check your important details like Name, Age, DOB and Pan Card details, your repayment history etc. and check whether they are accurate. If not, report immediately this to your credit agency to fix this information.

2. Make your payments on time: Always make sure you pay your credit card dues, loan dues, telephone bills and insurance premiums on time to maintain a good credit score. Any missed payments will negatively impact your credit score.

3. Manage your credit cards: Avoid having too many credit cards and making hugh purchases can result in bad credit score. Bad credit scores can be improved by avoiding having too many credit cards and always pay down your credit cards bills and avoid credit card default. If your credit card has 2 lakh credit limit, it does not mean that you have to use the entire 2 lakh. Credit utilization plays a key consideration for credit score, hence keep your credit utilization lower to maintain a good credit score.

4. Make your EMI payment on time: Another easy way to maintain a good credit score is timely payment of your EMIs. Pending EMI’s will make a big impact on your credit score, hence it is advisable to pay-off your loans on-time and every-time. So be punctual on paying your EMIs to improve your credit score and report.

If you have any doubts regarding credit score, kindly leave as comments. We would try our level best to address those.

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