These days there is a surfeit of information about CIBIL score and there are newspaper articles and television ads telling you that you need a score of at least 750 out of 900 to procure timely credit. Does that leave you wondering what you need to do in order to get that perfect score? Well, if you are a little confused about where to get started, here are some easy ways to do it.
Pay all your debt on time
It is as simple as that! Whatever line of credit you have availed of be it a loan or a credit card, make sure you are making repayments within the stipulated time frame. Keep your account replenished, so that you do not miss your EMI dates on loans, and always make sure that you are paying off your credit card outstanding in full in each billing cycle. Just following this simple financial discipline will ensure that your CIBIL score is in order and you never have to fret about having to increase your score when it is time for you to access credit.
Use your credit card well
Your credit card is your primary tool to enhance your CIBIL score only if you use it well. It is easy to buy almost anything with this shiny piece of plastic, but do bear in mind that it can land you in trouble if you are being reckless with it. At first you think you have just gone a little overboard and before you know it, things have spiraled out of hand, thus landing you neck deep in debt. You find yourself paying only the minimum amount due each month and ending up with revolving credit that has a detrimental impact on your CIBIL score.
Pay off your Credit Card debt immediately
If you find yourself in a situation, where your credit card debt has gone out of hand, concentrate on clearing your dues as soon as possible. Cut some corners if need be, and liquidate some assets to pay off your outstanding amount. If you have a relative or a friend who you think can bail you out at a time like this, take the help and pay off your credit card dues as soon as you can. A credit card to your CIBIL score is akin to fire to man, it can serve well if kept under control but if it takes control of you, it will bring your CIBIL score crashing down.
Keep your credit utilization low
Credit utilization is a very important element that impacts your CIBIL score. Simply put, it is the amount of credit you are using as against the total amount of credit you have been sanctioned. At any given time your credit utilization should be in the range of 30-40%, never exceeding 40%. If you manage to do this, it is half the battle won as far as keeping good CIBIL score is concerned.
Keep an eye on your CIBIL score and report
This is an element of the CIBIL score that most people tend to ignore. Even if you think you are doing everything right to maintain a good CIBIL score, do not forget to check your CIBIL score and CIBIL report periodically. Sometimes, due to no fault of yours, errors or inaccuracies such as a wrong entry or a delay in the entry of a detail pertaining to your loan or credit card account may cost you dearly. If you do not check your CIBIL score and report periodically not only will this errors bring your CIBIL score down, it will only come to light when you are about to make an application for fresh credit. At such times, a poor CIBIL score may impact your chances of getting credit when you may require it the most.
Thus as you can see, maintaining a good CIBIL score is no rocket science. Just maintaining good financial habits and instilling financial discipline in yourself will help you maintain a good CIBIL score and thus open up doors for you when you are in need of credit.
The author is Co-Founder & Director, CreditVidya.