When you don’t repay your debt on time, it can negatively affect your credit score. Therefore, it is important to maintain discipline while paying your loan and EMIs. To do this better, you can set reminders for your payments so it becomes easier for you to pay them on time.
It's good practice to repay your current loan before you apply for another one to keep your credit score from dropping. Applying for multiple loan applications demonstrates your credit-hungry behavior. This can ultimately result in the bank rejecting a loan request.
One way to improve your credit score is to not use your credit card to the maximum. It is recommended to keep the CUR low, preferably within the 30% mark. Assuming your credit limit is 1,000,000 rupees a month, you should try not to exceed spending 30,000 rupees a month.
Credit Mix is the range of credit products and services you have on your record. The higher the number of types of credit you have, the better your score will be. A healthy Credit Mix shows that you understand the different types of credit that are available to you and how these can help improve your financial situation.
When you are trying to get a loan, make sure you choose a longer tenure for your payment. This will ensure that your EMI is low so you can pay it back on time without any issues.
Avoid becoming a joint account holder or loan guarantor, as any default on the part of the other party will also affect your CIBIL rating. If the borrower defaults on the loan, does not pay or delays the repayment of the EMI of the loan, there can be a sharp drop in the CIBIL score for both the borrower and the co-applicant or guarantor.
Never say NO if your bank asks you to increase your card's credit limit, or you can ask your bank to do the same. That doesn't mean you're going to spend more money every month, but you should manage your spending wisely..