5 Important Tips to Improve Your Credit Health
There is no short-cut to gaining a good health. It requires time and meticulous effort to achieve it. The similar strategy applies when it comes to your credit health.
You may be new to the credit system or having a bad credit or on the process of improving your credit health. Whatever situation you are in, there is always a way to improve your current position. To help you out, CreditMantri has put together 5 important tips to improve your credit health.
Additional Reading: 5 ways to raise your Credit score
1. Borrow Within Your Limits
Knowing your capacity to withstand is the first step towards taking sensible borrowing decisions. If you are a first-time borrower who intends to build credit health, start small to efficiently manage your repayments. The lenders may try to woo you with a wide range of offers, but know your needs and wants. Though the best loans or credit cards may benefit you in multiple ways, ensure that your borrowings do not cross 50% of your income. If you are having a bad credit, step away from further borrowing and look for ways to clear your past credit issues.
2. Never Miss a Repayment
A smart borrower repays consistently. But, what are the benefits of making on-time repayments? Your payment is recorded by the lender and reported to the credit bureaus who calculate your credit score based on your past credit behaviour. Missing your credit card bills or loan repayments will create a negative impression on your credit report, ultimately damaging your credit score.
Written-off accounts, settled and foreclosure are the results of such behaviour which eventually make you ineligible for a loan application.
You can opt for Auto Debit facility to avoid missing your repayments. Your payment will be automatically debited from your savings account.
Additional Reading: Ways to stay on top of your Credit Health
3. Keep a Tab on Your Credit Report
Bad credit could also be a result of an error on your credit report which you did not resolve due to not monitoring your credit report. Credit Bureaus allow you to check your credit score for free and offer free credit report once in a year.
CreditMantri too provides free credit score and credit analysis and it has now become simple and quick with CreditMantri app as it helps you keep track your credit health.
4. Avoid Applying for Multiple Credits at a Time
While having a bad credit, you might be hungry for more credit to payback your current loans and credit card bills. In such scenario, too many applications mean too many enquiries which will show up on your credit report and have a negative impact.
Though a good mix of credits enhance your credit score, you must be able to manage them as well efficiently.
5. Keep Your Credit Card Balance Low
This is exclusively for individuals who use credit cards. Keeping your credit card balance below 30% helps you gain a good credit score. A low credit utilization ratio is an indicator that you are not overspending which is a good criterion for your credit score.
Having good credit health can open windows of opportunities in the world of finance. It can get you loans with low interest rates and flexible repayment options. If you have not yet entered the world of credit, start small and build a robust credit health gradually.