Ajay Khatri is a financially conscientious individual. From a very young age the credit score of an individual matters the most when it comes to accessing any line of credit. Thus, from the very inception of his career five years back, he maintained good credit record and ensured that his CIBIL rating is high. Ajay manages to have a high CIBIL rating by maintaining basic financial discipline. Ajays owes his credit consciousness to the financial education passed down to him by his father AbhayKhatri.
Catch them young
From a very young age, senior Mr Khatri dinted the habit of savings into his son. Every envelope with cash he received on his birthday, was put in a savings account for Ajay. What’s more, Ajay had control of his account and his own cheque book and debit card at the age of 12. Mr Khatri also introduced him to the concept of credit early on.
When Ajay pestered his father to get him his first PlayStation, and said that his savings were not enough, his father said he could give him a loan of ₹ 5000, only if he could pay interest of 5%! It was decided that Ajay could repay the loan with interest over the next 10 months. So, each month for the next 10 months, Ajay paid an amount of ₹ 525 to his father. His father even warned that if he was unable to repay his loan, his PlayStation would be handed over to his younger cousin!
What Mr Khatri had essentially done was dinting into his son the responsibility and discipline one must have in order to maintain a high CIBIL rating at a later stage. Good habits and financial education has indeed paid off and come in handy as Ajay’s SBI Home Loan Eligibility has been enhanced owing to a high CIBIL score of 850.
How to maintain a high CIBIL score
Just like Mr Khatri had envisaged, credit usage has become universal and omnipresent in the present day and age. However, in order to access cheap and timely credit, your CIBIL rating must be at least 750 and above (out of 900). While it is not rocket science, maintaining credit health requires awareness, consistency and discipline. In fact, your financial health is not very different from your physical health and awareness about financial health is all that financial education comprises of.
Just like Rome was not built in a day, your credit score cannot be good or bad overnight. Some of the basic things you need to do in order to maintain good credit health consistently and have a high credit score are:
Make timely repayments- Delinquencies on repayments on a regular basis can turn into a low CIBIL score. Do make it a point to make all payments (including utility bills), especially of your credit lines on the stipulated date. Payment history has the most important influence on the credit score of an individual. Thus, just making timely repayments is half the battle won. It is therefore prudent to automate your payment process so that you do not miss the payment date on any of your credit lines.
Keep a low balance on your credit card- Thanks to the values that AbhayKhatri had dinted into his son Ajay, He ensured that he never crossed the 30% mark when it came to credit utilisation. Credit utilisation is the total amount of credit you use as against the total amount made available to you. Similarly, to keep your credit score high, make sure that like Ajay your credit utilisation does not cross the 30% threshold. This is also a crucial factor that influences your credit score.
Apply for credit only when you need it- While it is true to that it has become much easier to access credit than it used to be in the past, do not get carried away or jump at every offer that is made to you. Applying for too much credit will not only lead to a debt burden that may get difficult to handle, but also has a negative impact on your credit score. Each time you make a new application for credit, it gets recorded on your CIBIL report as a hard inquiry. Too many hard inquiries, especially if they are in quick succession will work against you and bring your CIBIL rating down.
Keep a check on your CIBIL score- You may be doing everything right to maintain your CIBIL score, but things may still come to a naught if you do not make it a point to check your CIBIL score at least twice annually. This is because there are always a chances of errors and discrepancies creeping into your report. By keeping a strong vigil you can prevent such errors from entering your CIBIL report and keeping your score high.
Ajay Khatri’s financial education has enabled him to maintain a high CIBIL score. That fact that his score had enhanced his SBI home loan eligibility is a proof enough. If you haven’t been lucky enough to receive a financial education from childhood, fret not! That fact that you are here reading this today, is proof that you have made a start, and with the right moves it will be successful in improving your CIBIL score.
About Credit Sudhaar
Credit Sudhaar is India's first credit and finance platform for consumers which provide various credit and financial tools such as free credit score, credit monitoring, credit score simulator among others. Credit Sudhaar also provides a wide range of analytical assessments to the users helping them to have an in-depth understanding of their credit health. More importantly, not only does Credit Sudhaar extends guidance on how to improve CIBIL score but it also extends personal loan for CIBIL defaulters apart from facilitating access to various loans and credit facilities based on current credit health.