Besides taking loans and credit cards, repaying them in a disciplined manner is an equally important task in everyone’s financial life. No doubt that loans and cards help us meet crucial financial goals, tackle financial exigencies, maintain a high degree of liquidity and fulfil any monetary shortfall of life, but mismanagement of these credit facilities can turn out to be harmful to both your credit score as well as financial health. And since credit score is a crucial aspect of your financial health itself, as a consumer, it’s necessary to know that you can get a free cibil score and hence, check the status of your credit score’s ups and downs every month and take the required steps accordingly.

So here are the best money moves that can help you boost your credit score:

Always try to pay your dues timely – Credit bureaus closely look at your payment history, even if it is a shorter one, to analyze whether you have been a good borrower or not. Payment history accounts for about 30% of your credit score computation criteria, which also includes another vital aspect of pan card cibil score. Never forget that timely and regular payment of your loan EMIs and credit card dues creates a positive impact on your credit history & increases your chances of achieving a good credit score and availing of a quick and hassle-free loan when needed. Any discrepancy or default in payment record can lower your credit score, which can be visible when you get free cibil score and review the credit report too.

Build credit history to show your repayment discipline – Your credit history plays a vital role in the computation of credit score. Using credit cards regularly for various expenses assists in building a credit history since the amount you spend through a credit card is the card provider’s money, and you are a creditor, in this case, for the credit bureaus. Using them to make payments is equivalent to taking loans and is a convenient way of establishing credit history for those who have none. If you do not have any credit history, a credit score cannot be computed.  Your credit history forms the base for lenders to decide whether to approve your loan or not, or they may even approve at a higher interest rate if you do not have a good credit score and profile. And with the facility to get a free cibil score available, it does not make any sense to not build a credit history, which, thankfully, creates a good credit score gradually in some months.

Keep your credit utilization ratio (CUR) at a low level – Credit utilization ratio should be kept low, mostly around the 30% mark, to create a favourable image in front of credit bureaus. Higher credit utilization depicts credit hungriness which creates a negative impact during credit score computation, which can further be witnessed by you when you get a free cibil score and review the aspects and reasons of whatever happens to your credit score. To lower your CUR, take a new credit card or request an increase in your existing credit limit, more so in case you from time to time tend to go beyond 30% utilization of the current credit limit.   

Keep checking your credit report every month – Credit bureaus compile your credit score with the help of the Credit information report (CIR) provided by the bank/financial institution. Your credit report contains details of all the loans and credit cards availed by you and repayment behaviour. Reviewing your credit report at regular intervals, whose one crucial aspect is pan card cibil score, allows detection of any errors or frauds, and you can report them to credit bureau and lenders for rectification. Thus it is advisable to review and keep a tab on your credit report frequently to avoid any errors getting ignored and thereby harming your credit score also. You can visit the online marketplace to get free credit reports and scores.

Space out your credit applications – Multiple and frequent credit applications for credit cards and loans(especially unsecured loans like a personal loan) may impact your credit records negatively because when you keep requesting credit through frequent applications in a short span, it depicts that you are in dire need of finance, even if it isn’t completely true. This behaviour of asking for and taking too much credit is indicative that your debt burden is likely to or has increased, & you may be less capable of honouring any additional debt. Lenders may even take advantage of your credit need and usually charge a higher rate of interest from such borrowers. Also, as you can get a free cibil score,  the drop in your credit score upon making multiple credit application request submissions, especially within a short period, would in all likelihood be visible in the next few months post doing that.

Avoid direct loan enquiries – Loan enquiries directly reaching the banks and financial institutions to grant credit may likely affect your credit score negatively, especially when your score is already low. And despite knowing the importance of pan card cibil score, committing this mistake of making fresh loan enquiries and applications directly to lenders can have a negative impact on your score, as all this gets recorded in your credit report. Avoid direct enquiries and instead visit online marketplaces to safely enquire and know if you are eligible for credit or not. This won’t be included in your credit report and score and also solve your purpose simultaneously. 

Close your old accounts wisely – Old credit cards and loan accounts boost your credit age and are generally kept open to increase your credit history’s length. Closing your older credit card or prepaying loan accounts that have high-interest rates can also boost your credit score. Increasing the proportion of secured loans in your portfolio by prepayment of any unsecured loan with a higher rate of interest works favourably for your credit score and creates a positive impact in front of credit bureaus and lenders.

Maintain a healthy credit mix – A good credit mix contains a higher proportion of secured loans over unsecured ones. Secured credit includes home loans, business loans, gold loans etc., while unsecured includes personal loans, credit cards etc. A higher proportion of unsecured credit may reflect poorly on your credit score because lenders generally prefer a higher proportion of secured loans in credit portfolio, and thus, credit bureaus also score such borrowers higher. Hence you should prefer to prepay your unsecured loans first in order to boost your credit records and score.

Be careful while becoming guarantor – Before you sign up as a co-borrower, co-owner or any other type of joint obligation, be careful as this affects your credit score as well and not only of the primary borrower. Negligence on the part of the joint holder/guaranteed individual may adversely affect your pan card cibil score, as you are ultimately liable to pay for the missed payments and discrepancies. Always monitor and analyze his/her statements before giving your nod and signing the loan documents.