As a conscientious individual, you may already be aware of the fact that it is of utmost importance to have a good CIBIL score in this day and age. A score of 750 and above (out of 900) is considered good and is treated as a barometer of your financial health. Whenever you apply for a fresh line of credit, the lender accesses your credit report to check whether or not your score is satisfactory and whether or not you can be considered capable of making repayments as required on the line of credit you have applied for.
Therefore, as a user of credit, need to make a constant effort to increase your CIBIL score. However, with the easy availability of credit, it is easy to get carried away and ultimately end up in a debt trap. So that you do not land in such a mess, here are some easy tips you can follow to keep your credit usage under control and build your score in the process.
Automate repayments on existing loans
If you have already taken a loan such as personal loan, vehicle loan or even a home loan in the early stages of your career, the first thing to do is automate your repayments. You can coincide your repayment cycle with your salary cycle, so that the repayment of your loan happens as soon as your salary is credited into your account. This will not only ensure that your repayments happen on time but will ensure that your CIBIL score remains intact. As a result, you will never have to think of a personal loan for a CIBIL defaulter when you are in dire need of funds.
Using your credit card to build score
You may have received a fair warning many times about how reckless use of your credit card can land up in a financial mess. But did you know that you can use your credit card effectively to build score as well? Let us tell you how.
Use your card for utility repayments– Utility repayments are usually small amounts that can be paid through your credit card. What’s more, most lenders help you garner reward points on making bill payments on your card. However, you probably make your utility payments directly through your bank account. What you can do instead, is make the utility payments through your card first and transfer the same amount from your savings account onto your card immediately. This way you can increase your CIBIL score by making regular repayments each billing cycle as well as garner reward points on the same.
Use a credit card for grocery shopping– Budgeting plays an important role in maintaining financial health. You can budget to spend Rs x on groceries and build a disciplined habit of spending Rs x (amount of money) on groceries on your credit card. Once again transfer this amount from your bank account onto the card once you reach this limit. This will help you maintain your budget as well as keep a track of the money spent on your monthly grocery budget through your credit card statement.
What you achieve by dong this simple but important things is that you improve your credit score in the process, by spending small amounts on credit cards and making one or more repayments within a single billing cycle. What’s more is that you have a perfect mechanism in place to keep track of your monthly expenses and take a step back whenever you are exceeding your budget.
By internalising this good credit habits, you will be able to maintain a good credit record and preferably not be in a situation where you have no choice but to opt for a personal loan for a CIBIL defaulter when you are in dire need of funds. While there is no saying when life will throw a curve ball at you, having a good score always helps when you are in need of credit.
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