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!