What impacts your credit score and how?

In order to maintain your financial health, you should be mindful about your credit health.

Here are a few things which positively affect your credit score

  • On time loan EMI payments in case of loans.
  • On time credit card bill payment and in full rather than paying minimum due.
  • Longer and stable credit history.
  • Proper utilization of approved credit limit
  • A good mix of credit : if you are taking only one type of credit consistently rather than a mix of different types of loans viz. secured and unsecured, and personal loans, credit card usage, car loans etc.
  • Maintaining strong finances (example : a healthy income to debt ratio).
  • Regularly checking your credit reports are correct and error-free and ensuring financial institutions that you deal with submit your data to credit bureaus.

Here are a few things which negatively affect your credit score

  • Irregular or late loan repayments.
  • Defaulting, being late or regularly paying part of credit card bills.
  • Cheque bounces.
  • High utilization of approved credit limit or overshooting the limit.
  • Multiple credit report enquiries by banks and other institutions.
  • Multiple unsecured personal loans applications and/or rejections.
  • Defaulting as a guarantor.
  • Errors in records by banks and finance institutions.

Always ensure you have good credit health. You never know when you will need to borrow money, for emergency or otherwise!

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