December 10, 2020 / 02:00PM / Shiv Nanda* / Header Image Credit: Lakeland Bank
What is a Good Credit Score?
A credit score is a three-digit number known as a CIBIL score that is given to you as a representation of your creditworthiness. Credit bureaus associate this score with your profile based on your financial wellbeing. If you have a history of making all your credit payments on time, clearing your card debt balance, and taking justified loans, then your statement will reflect a good credit score. Any credit score which has credit utilization below 30% is considered a good score.
Benefits of Your Good Credit Score:
What Factors Impact Your Credit Score?
1. Timely bill payments: Pay your bills on time to ensure that your CIBIL score is not impacted negatively.
2. Pay off your debts: Debt accumulation can result in a weak credit score. You can also consider debt consolidation by using a personal line of credit, which offers seamless debt management and lower credit rates.
3. Manage how often you apply for credit: Applying for credit too often results in 'hard inquiries' on your credit score, which further weakens your score. So be judicious in choosing when to apply for credit, and span out your applications.
4. Manage your credit card usage: Using the credit card within limits and ensuring timely payment of the bills will positively impact your credit score.
5. Check your CIBIL score and report regularly: It's good to keep a tab on your credit report and periodically check your credit score to help identify any inaccurate or incorrect information and rectify it.
Securing a good credit score requires perseverance, diligence, and prudency. Be realistic with your financial spending capacity before using various means of credit; be sure that make your bill payments on time. With a high credit score, there are several more benefits that you shall reap. You may be able to secure an interest-free loan, better credit rates; you will even be able to save on rentals and mortgages. You will be able to negotiate the best deals and interest rates. So make sure that you consistently work towards achieving a good credit score.
About the Author
Shiv Nanda is a financial analyst who currently lives in Bangalore (refusing to acknowledge the name change) and works with MoneyTap, India's first app-based credit-line. His expertise and interest are around budgeting, investment, personal finance and loan advisory. He also helps and educates people on various financial topics. To contact Shiv, you can send an email to firstname.lastname@example.org.