When you are just about to achieve one of your life goals or a dream, and suddenly the bank says NO for a loan. Because your score is too less to qualify for a loan. Things come shattering and mistakes done in past especially the financial ones start running like a movie in the brain. Well, it is important to maintain a decent score. So how do you keep a High CIBIL Score? Let’s learn the 7 habits practiced by the people who have high CIBIL Score.
The banks & financial institutions are plagued with increasing delinquencies, hence they want to loan only people who can pay without hassles. And to judge that CIBIL Score is the most important barometer.
Earlier the CIBIL score was not so easy to obtain, as a financial institution can pull the score for you, but the attempt will be noted in the CIBIL, and many attempts make you look like hungry for loans and this would lower the score. The only way was to pay Rs 470/- and obtain one. But way too high amount. But now you can obtain your CIBIL score for free. We wrote here about it some time ago and details are here.
So, now since the score is easily accessible, you need to keep an eye on it. If it is low (something less than 750 is low), it can be because of these 2 reasons:
- Your past mistakes like late payment/defaults on loans or credit card or too many loan inquiries etc.
- Database problem as it has been seen that Banks/Financial institution supply wrong data or data gets mixed up with other individual pushing the score down.
Habits that people with High CIBIL Score follow
Well, we all know why financial indiscipline is necessary. And it is important to follow certain good habits that people with High CIBIL Scores follow:
- Payment history is most important criteria. So stay on top of your bills. Never delay or underpay credit cards or EMIs. Maintain sufficient funds for payments which are automatic.
- Don’t pay credit card dues/EMIs multiple times in a month.
- Credit utilization ratio or gap between your credit sanctioned/credit eligibility and credit availed should be healthy. It should not be zero too. So if you have a credit card use it as keeping it in safe will not help. Anything between 20% to 40% is healthy with timely payments.
- Maintain a total control of expenses through credit cards. Too much variation is not good.
- Several years of credit usage in a disciplined manner increases your score. So it is not a one-time movie, but a long tele-series with many seasons. More the years more is the score.
- The loans which are harder to get makes your CIBIL score strong. So home loans take preference over personal loan as former is generally of longer duration and there is a collateral attached to it. Similarly, credit cards with yearly charges are preferred over cards which you can easily subscribe like a card with retailers (cobranded like big bazaar or irctc).
- Keep an eye on the score. Now it is possible as you can get free CIBIL score once a year. The data of a foreign credit score keeping company has shown that 76% of the people out of a total number of people who obtained their score, saw an improvement in their scores.
I practice all these guidelines hence can proudly say that I have a good score because of these habits.
What if the score is low due to an error in the database?
This can be a possibility too as cases have come frequently. The data to CIBIL is supplied by banks/financial institutions. Chances are that they may report wrong or late.
CIBIL requires that you have to log in the complaint on their website in the fixed format. The onus to get the data rectified also lies with the account holder. Follow it rigorously as it may take 3 to 6 months to get an erroneous data removed from your report. Do not pay to obtain report after you have made a request to correct it, as you are entitled to a free report for every complains that you make.
If the score is down due to your own financial mistakes, the only option you have to pay back the dues or settle it. Practice appropriate behavior with existing debt. It takes about 3 years to get the score to normal levels.
Hope you will follow these or already practicing these habits. Share your views and anything that you did to improve your score.