CIBIL Score: Despite good earnings, if you do not pay EMI or credit card on time, your credit score may get damaged. Even a person with limited income can maintain a better CIBIL score with right financial habits.
Tezzbuzz Desk- Getting a good salary every month can be a sign of being financially strong, but it does not mean that your CIBIL score will also be good. Credit score is not decided on the basis of your income. The most important role in this is how you use your loan and credit and whether you pay on time or not.
If a person earns Rs 2 lakh every month, but continuously pays his credit card bill or loan EMI late, his CIBIL score may be negatively affected. On the other hand, even a person with limited income can maintain a good score through timely payments and responsible credit usage.
What is more important than salary for CIBIL Score?
Credit score tries to tell how responsibly a person has handled his borrowings and credit so far. Therefore, the score is not determined only by the salary coming into the bank account or the amount present in the account.
If you are preparing to take a loan for home, car or any other need in future, then it is important to pay attention to your credit history. Paying EMI and credit card bills on time can be the beginning of this.
Whether you have paid the loan EMI or credit card by the due date or not is an important part of your credit profile. Credit score may be affected if payment is delayed.
Therefore, it is important to remember the dates of all EMIs, credit card bills and other important payments. Features like auto-pay or reminder can also be used so that the payment date is not missed.
Do not fully utilize credit limit
The higher the credit card limit, it does not mean that you should spend the entire limit. Constantly using too much of your available credit limit can affect your credit profile.
Generally it is advisable to keep credit utilization less than 30 percent. For example, if your card limit is Rs 1 lakh, then try to keep the outstanding credit utilization around Rs 30 thousand or less.
Your past credit accounts and their payment records are also part of the credit profile. Therefore, closing an unnecessary old credit card is not always considered a right decision.
Having a well maintained credit account over a long period of time can help in strengthening your credit history.
Avoid applying for loan again and again
Applying for loans or credit cards from multiple banks or financial institutions in a short period of time can also affect your credit profile. Therefore, it is better to apply only after understanding the need and eligibility.
Additionally, balanced and responsible use of different types of credit can also be important to your credit profile.
A good credit score can be beneficial while taking a loan. Banks and financial institutions look at many aspects like credit history and score while evaluating a loan application.
Having a better score can increase the chances of loan approval and in some cases, there is also a possibility of getting a better interest rate. However, the interest rate and loan approval does not depend only on CIBIL Score, but many factors like income, existing loan, job or business and the bank's own policies are also considered.
How much time does it take to improve CIBIL Score?
If your credit score is low, its improvement does not happen immediately. Making timely payments, limiting credit card usage and avoiding unnecessary applications for new loans can gradually have a positive impact.
Changes in credit reports depend on updates sent by your creditors to the bureaus. Therefore, after adopting the right habits from today, it may take some time to see a change in the score.