Secrets of Maintaining a 750 Credit Score

A credit score is a 3 digit number between 300-900 which represents your creditworthiness. Majority of banks and non-banking finance companies (NBFC) consider a credit score of 750 and above as ideal. Low credit scores will brand you a risky borrower and bankers will be hesitant to approve your loan or credit card application. On the other hand, a high credit score improves your chances of not only getting better deals, rewards and benefits on your credit card but also for lower interest rates on loans. So, how can you increase your credit score to 750 and maintain it for a longer period? Let’s take a look at some of the important secrets to maintain a high credit score.

• Start the right way

Building a credit history is a long-term process and requires patience. A good credit history is a result of a systematic and good buying as well as repayment behaviour. Therefore, you should start following a balanced credit usage behaviour right from the beginning as it will eventually lead to a healthy credit score going forward. Be aware of your credit usage right from your first loan or credit card. If you follow a systematic approach right from the beginning, you will have to work on repairing your credit score that requires lot of time and effort.

• Budget and planning is the key

It is important to understand your income before taking a loan. Understand your monthly budget first and then apply for a loan as it will give you an idea on how much EMI you can afford every month without feeling the crunch. You should first try to keep enough amount for your monthly expenses aside and then pay all your EMIs on time. Only after doing these two things, you can think about spending additional money on the things you want to buy. It is important that you stick to your monthly budget and avoid going haywire with your expenses. Make sure you don’t arrive at a point where you have no funds to pay your EMIs.

• Don’t chew more than you can bite

Once you get a loan and start paying EMI, it is already becomes difficult to manage monthly expenses. In such situations, do not consider taking another personal loan or more credit cards as it can be stressful for you to handle more EMIs. Always borrow only that amount which you can pay off.

• Maintain a low credit card utilisation ratio

Spending not more than 30% of your available credit is one the best keys to maintain a healthy credit score. However, it can benefit you even further if you try and keep the credit utilization ratio even lower as this can help you maintain a credit score of 750 and above.

• Pay all your dues on time

Finally, this goes without saying that paying your dues on time you must repay all your bills and EMIs on time. Your payment history accounts for 30% of your credit score. Hence, it is important to pay all your dues on time. If you have any unpaid dues, clear them off at the earliest even if they have been delayed for a long time. Missed payments on your credit cards will keep reflecting in your credit history until you pay them off completely.

• Always make full payments

You should always pay the entire bill amount instead of paying minimum amount due on your bills as it will reflect badly on your CIBIL score. This behaviour suggests that you are struggling to repay your credit debts. Also, if you keep paying minimum amount due on your bills, you might end up paying a huge amount in interest fees.

• Avoid hard enquiries

When a lender or a bank checks your CIBIL score, the enquiry is termed as a hard enquiry. Multiple number of hard enquiries can bring down your credit score. Therefore, once your credit card application gets rejected, do not apply immediately instead, work on improving your credit score and then apply again after sometime. Make sure to keep number of hard enquiries to minimum.

• Don’t close old accounts

Closing your credit card accounts hampers your credit score as they could have a decent credit history. Losing on a good credit history will negatively impact your credit score. It is advised to keep all your accounts open as it will help you in building a healthy credit history. Removing old accounts could also lower your available total credit and increase your credit utilization ratio.

• Periodic checking of credit report

Check and monitor your credit report regularly to ensure it is error-free. If there are any errors in your credit report, it could be one of main reason for a low credit score. You can dispute errors with the credit bureaus and get them fixed.

At the end, it must be noted that you have to maintain a financial discipline when it comes to using a credit card and paying your monthly bills. Following all the aforementioned measures will help you maintain a credit score of 750 and above.