Your CIBIL credit score is arguably an important factor influencing and shaping your financial health. Hence, it is most important to monitor it continuously. It is also necessary to know the factors that influence it. This includes taking a good look at your credit card statement, bill payments, and more.
Here is a list of five tips that can help you exercise more control over your credit score. To know more, read on.
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Payment History
Your payment history is arguably the most important factor influencing your CIBIL credit score. A robust repayment record makes you a valued customer in the eyes of the creditor. Make sure to pay your outstanding credit card bill, rent payment, utility bill, and any other obligations on time.
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Credit Utilisation Ratio
The credit utilization ratio is another crucial factor influencing your credit score. It mainly refers to the amount of credit that you use out of your total credit limit. A lower credit use ratio conveys that you aren’t desperate for credit and have sustainable income to back your finances. Therefore, you must avoid various uses of your credit card up to the maximum limit.
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Length of Your Credit History
The length of your credit history also has a considerable impact on your credit score. This is why you need to consider taking loans and applying for credit cards to start building a credit history. Long and stable credit history has a positive influence on your credit score. Besides, you can always take a peek into your credit card statement to get an idea as to where your credit history is heading.
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Hard Credit Inquiries and New Credit
Multiple hard credit inquiries bring down the credit score. In case you didn’t know, every new credit card application is followed by a hard inquiry, which brings your score down by a few points. New credit approvals have a similar effect on your credit rating. Therefore, you must refrain from applying for several cards at once. Also, to get the maximum benefits, always remember to do a proper credit card comparison.
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The Mix of Different Credit Types
A mix of different credit types is another factor that influences your credit score. For instance, a mix of credit cards, home loans, education loans, etc. all go on to have a bearing on your credit score. A simple solution to this is that you should open individual accounts for every fresh credit. Diverse sources of credit translate into a better credit score since it shows that you have been trusted by many lenders.
To keep your credit score in a good zone, it is imperative to plan and work on basic credit management. This will help you exercise more control over the factors influencing your ratings as well as, help keep a good check on your credit score.
