The profound impact a good CRIF Score can have on one's life cannot be ignored. Your CRIF Score, also known as the credit score, plays a pivotal role in determining your financial health. It directly affects your ability to secure loans and credit cards, and even impacts the interest rates you qualify for. To help you achieve and maintain a stellar CRIF Score, here are 7 simple habits that can make a significant difference in your financial journey.
1. Pay your bills on time
Punctuality is key when it comes to maintaining a good CRIF Score. Always pay your bills, including credit card dues and EMIs on time. Delinquent payments can substantially damage your CRIF Score, as lenders view consistent on-time payments as a sign of financial responsibility. Set up reminders or automatic payments to ensure you never miss a due date.
2. Keep credit utilisation low
Credit utilisation refers to the amount of credit that you use compared to your credit limit. To maintain a healthy CRIF Score, it is recommended to keep your credit utilisation below 30%. Maxing out your credit cards or using a significant portion of your credit limit can signal potential financial strain and negatively affect your score.
3. Monitor your credit report regularly
Mistakes can happen, and erroneous information on your credit report might drag down your CRIF Score. Stay vigilant by regularly checking your credit report for any discrepancies or errors. You are entitled to one free credit report annually from CRIF or other credit bureaus. Reviewing your report helps you identify and rectify inaccuracies promptly, ensuring your CRIF Score reflects your true creditworthiness.
4. Avoid frequent credit applications
Each time you apply for new credit, a hard inquiry is recorded on your credit report. Multiple hard inquiries in a short span can suggest financial stress and lower your CRIF Score. Be strategic and apply for credit only when necessary, and avoid making multiple applications simultaneously. Instead, focus on maintaining existing credit accounts responsibly.
5. Diversify your credit mix
Diversification is not just for investments; it is essential for a robust CRIF Score too. A well-rounded credit mix demonstrates your ability to manage various types of credit responsibly. This includes a combination of credit cards, secured and unsecured loans, and other forms of credit. However, remember that opening multiple credit accounts just to improve your credit mix can have an adverse impact. Only take on credit you genuinely need and can handle responsibly.
6. Keep older credit accounts open
While it may seem counterintuitive, closing old credit accounts can negatively impact your CRIF Score. The length of your credit history is a crucial factor in determining your CRIF Score. Older accounts with a positive payment history add value to your creditworthiness. Closing them reduces your overall credit history length and might lower your score. Instead, keep those accounts open and in good standing, even if you use them only occasionally.
7. Communication with creditors
Life is unpredictable, and financial challenges may arise unexpectedly. In such situations, communicate proactively with your creditors. If you foresee difficulty making payments, discuss alternate arrangements with them before missing a due date. Many creditors are willing to work with you through tough times, which can help prevent a negative impact on your CRIF Score.
Maintaining a good CRIF Score is a journey, but with the right habits, you can pave the way to financial success. Remember, building a strong credit profile takes time and discipline, so be patient with yourself. By paying bills on time, keeping credit utilisation in check, and maintaining a healthy credit mix, you will set yourself up for a bright financial future. Additionally, regularly reviewing your credit report, being cautious with new credit applications, and keeping open old accounts will contribute to the overall strength of your CRIF Score.
Incorporate these habits into your financial routine, and over time, you will reap the rewards of an impressive CRIF Score, giving you the freedom and opportunities to achieve your dreams.
