As a conscientious individual you probably know that you need to maintain a CIBIL score of 750 and above (out of 900). This will ensure that you get easy access to credit, as lenders will deem you creditworthy. A good CIBIL score backed by good credit history in your CIBIL report will help you move forward economically and ensure your financial well-being. A new year round the corner is the best time to begin the journey to your attractive credit profile – high credit score. Here is how to go about building and keeping up a good CIBIL score.
Credit card- The first stepping stone
If you just started out in life with your first job, and have no credit history, it is prudent to begin building credit with a credit card. However, do not leap at the first offer that you come across. Compare the fees and reward points on each and pick up a card that is best suited to your needs. A credit card, when used judiciously can indeed be a stepping stone to a good CIBIL score. Spend small amounts on your credit card and ensure that you repay the whole outstanding within the billing cycle. The golden rule of using a credit card is, never to go beyond your means, i.e. not buying anything on the credit card that you think you will not be able to repay within the stipulated time frame of your billing cycle.
Make all repayments on time and clear loan outstanding
This is applicable not just to your credit card, but also to any other credit that you may have availed of. For instance, if you have a student loan running when you have begun your career, make it a priority to make the repayments on time. In fact, it is a good idea to make bullet payments and clear the loan outstanding, if you can afford to do so.
Most people get too overwhelmed in the transition phase between the life of a student and a life of an individual who is financially independent and tend to go overboard in a pursuit of “living well”. It is financially prudent not to give in to the lure of luxuries right away at such times and continue living the way you used to as a student till you find a foothold in your career.
Have a good mix of credit
When you begin your life as an independent individual your needs begin to change. You would probably want to avail of credit to purchase a two wheeler or a car and do up your home. Based on your cash flow, avail of credit prudently based on your needs. A good mix of credit, meaning a combination of secured and unsecured loans will augur well for your CIBIL score. However, do not opt for all such credit all at once as that will make you seem credit hungry to a prospective lender and bring down your CIBIL score on account of too many “hard inquiries”. Each time you make an application for fresh credit to a bank, the bank accesses your CIBIL score and CIBIL report in order to assess your creditworthiness. These requests from the banks gets recorded in your CIBIL report as “hard inquiries” and bring down your CIBIL score a few notches each time.
Check your CIBIL score and CIBIL report periodically
This is the part where most people tend to falter. Apart from maintaining good financial habits it is also of utmost importance to keep a tab on your CIBIL score and CIBIL report. This is to ensure that there are no discrepancies that have crept in. There can be errors like a wrong entry under your name, incorrect personal information on your CIBIL report. If you do not check your CIBIL score or CIBIL report periodically, these errors may surface when you are applying for fresh credit and may mar your chances of getting a loan when you need it the most. To ensure that things are in order thus, pull out your CIBIL score and CIBIL report at least once or ideally twice in a year and ensure that all your records are in order.
Thus as you can see, building a good CIBIL score and keeping it up is closely connected to good financial habits. Just as you would take care of your physical health by eating right and adequate exercise, take care of your financial health too by keeping up a good CIBIL score. Not only will this open up doors for you when you need credit, it will also give you perennial peace of mind!
Author :- http://www.moneycontrol.com/
Reposted By :- http://credit4loan.com/
Credit card- The first stepping stone
If you just started out in life with your first job, and have no credit history, it is prudent to begin building credit with a credit card. However, do not leap at the first offer that you come across. Compare the fees and reward points on each and pick up a card that is best suited to your needs. A credit card, when used judiciously can indeed be a stepping stone to a good CIBIL score. Spend small amounts on your credit card and ensure that you repay the whole outstanding within the billing cycle. The golden rule of using a credit card is, never to go beyond your means, i.e. not buying anything on the credit card that you think you will not be able to repay within the stipulated time frame of your billing cycle.
Make all repayments on time and clear loan outstanding
This is applicable not just to your credit card, but also to any other credit that you may have availed of. For instance, if you have a student loan running when you have begun your career, make it a priority to make the repayments on time. In fact, it is a good idea to make bullet payments and clear the loan outstanding, if you can afford to do so.
Most people get too overwhelmed in the transition phase between the life of a student and a life of an individual who is financially independent and tend to go overboard in a pursuit of “living well”. It is financially prudent not to give in to the lure of luxuries right away at such times and continue living the way you used to as a student till you find a foothold in your career.
Have a good mix of credit
When you begin your life as an independent individual your needs begin to change. You would probably want to avail of credit to purchase a two wheeler or a car and do up your home. Based on your cash flow, avail of credit prudently based on your needs. A good mix of credit, meaning a combination of secured and unsecured loans will augur well for your CIBIL score. However, do not opt for all such credit all at once as that will make you seem credit hungry to a prospective lender and bring down your CIBIL score on account of too many “hard inquiries”. Each time you make an application for fresh credit to a bank, the bank accesses your CIBIL score and CIBIL report in order to assess your creditworthiness. These requests from the banks gets recorded in your CIBIL report as “hard inquiries” and bring down your CIBIL score a few notches each time.
Check your CIBIL score and CIBIL report periodically
This is the part where most people tend to falter. Apart from maintaining good financial habits it is also of utmost importance to keep a tab on your CIBIL score and CIBIL report. This is to ensure that there are no discrepancies that have crept in. There can be errors like a wrong entry under your name, incorrect personal information on your CIBIL report. If you do not check your CIBIL score or CIBIL report periodically, these errors may surface when you are applying for fresh credit and may mar your chances of getting a loan when you need it the most. To ensure that things are in order thus, pull out your CIBIL score and CIBIL report at least once or ideally twice in a year and ensure that all your records are in order.
Thus as you can see, building a good CIBIL score and keeping it up is closely connected to good financial habits. Just as you would take care of your physical health by eating right and adequate exercise, take care of your financial health too by keeping up a good CIBIL score. Not only will this open up doors for you when you need credit, it will also give you perennial peace of mind!
Author :- http://www.moneycontrol.com/
Reposted By :- http://credit4loan.com/
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