Some of the Common Credit Mistakes to Avoid Overview
Let us now go through the ways in which you can get a good start on your credit profile.
Your CIBIL score is an important indicator of your financial health, so good credit habits are essential to building and maintaining your profile healthy. Let's take a look at some common mistakes that can get in the way of getting credit quickly and easily.
Not paying bills on time
Even missing a payment can negatively impact your credit file. Late payments show up on your report for years, although the effect on your score diminishes over time as new positive actions are added. Even so, once overdue payments hit your record, they can hamper your credit progress.
A nice way is to set up payment reminders (the lender can send these reminders to you), especially to set up automatic transfers in the account where you are making the payment, and make sure you have enough money in your account for the monthly payment of your debts.
Use the "minimum payment" option
Every EMI payment or alert will show you the minimum amount owed, but using this tool is not only a risky act, but ultimately a costly habit. Long-term interest will cost you more money than paying off your debt every month. Finally, it can also damage your credit file.
By only paying the minimum each month, you can maintain a high balance on your credit card. This increases your use of credit, which is the percentage of available credit you use at a given time, and can cause significant damage if left unchecked. Using a credit above 30% may lower your score. So, less utilization is better.
Applying for a Multiple Credit at same time.
Each time if you apply for credit, the lender checks your credit report and decides whether to approve your application. Lenders may view you as a risky borrower when you apply for multiple loans in a short period of time. So, to avoid compromising your credit profile, you can start by looking for credit cards that you are eligible for. Then apply for the one you think is right for you.
Co-signing a loan without due diligence
Co-signing loans for close friends and family is understandable, but it can become a problem for you if the borrower defaults or defaults on repayments. Because of bad/late behaviour your CIBIL score can get negatively impacted. Therefore, you should be careful when co-signing for any of the loan.
Taking unnecessary loans
Take out a vacation loan or build up a large credit card balance from unnecessary/impulse purchases. These measures make balancing budgets and sticking to payment plans more challenging. The easiest solution is to apply for credit when you are needy, so you don't put yourself in financial danger and avoid incurring interest/penalties for late payments.
Don't check your CIBIL score and report it often
Monitoring and reporting your CIBIL score not only helps you monitor your progress, but also helps you identify potential issues and resolve them before they cause serious damage.
With the help of this given site www.grdindia.in you can view your score and CIBIL reports and access additional features as needed.
In short, getting a health degree from CIBIL takes time. Once you have it, good behaviors like regularly checking and reporting your CIBIL score, paying your bills on time, keeping your credit card balances low, and avoiding unnecessary debt help maintain a healthy credit profile. So stay away from the credit mistakes listed above to get and keep the best CIBIL score possible.