Four Simple Secrets Of People With 800’s
Secrets? Not anymore. Let’s get your credit score ready for 2017!
There are a lot of benefits of having a good..no…GREAT CIBIL score! This means that you can pay lower interest rates, handle your monthly payments effectively, get the best offers, etc. You save money in the long term by managing your credit day to day. On the other hand, there are many disadvantages of having a bad credit score. This means that you have to pay high interest rates on credit cards, auto loans, home loans, and more.
On the other side of the coin, quite obviously, bad credit makes everything harder. Harder to make payments because of a worse interest rate, harder to boost your CIBIL score, and getting out of debt is a slower process. Besides all this, the truth is you, yes you, can achieve a credit score of 800 or above and get the best deals on your largest purchases. But you need to follow the right ways. The credit world’s platinum standard…a CIBIL score above 800, is in your reach. If you know what you need to do in order to boost your credit score, you can get there.
Have a look at some of the open secrets of a good CIBIL score, which can teach you something to improve your own credit score.
1. Never miss your payments
One of the most important secrets of having a good CIBIL score is to never miss your monthly payments. Since your payment history makes nearly one third part of your credit score, it is crucial that you make payments on your credit card or loan every month. Just think about this: Just missing one month of your payments will result in a CIBIL score drop that could take up to 6 months to recover from. Even if you have a good credit score, then also you should never miss a payment. And, if you do miss it, then your CIBIL score can lower by 110 points or more in extreme cases.
2. Keep your credit limits high and balances low
Your credit score is also determined by your credit utilization ratio. In simple words, credit utilization ratio is the proportion of the credit used by you (balances) and the credit that is available to you (credit limits). And, the lower the ratio is, the better it is for you and your CIBIL score. It is advised that you keep your credit balances below 50% of your credit limits.
If your credit utilization ratio is 50% or above your credit score will start lowering and if your credit utilization ratio is below 50% your score will start increasing. Moreover, you should ask for an increase in your credit limit only if your income can support the higher debt possibility and you have a good CIBIL score.
3. Mix credit types
People, who have a credit score of above 800, mix their credit types including revolving credit such as credit cards, mortgages, and installment credit such as student loans, car loans etc. Although, you should not apply for credit that you do not require, managing different credit types responsibly can boost your CIBIL score. Just know when to stop, which is usually around 4-5 cards.
If you only possess credit cards and want a mixture of different types of credit, then you can talk to your bank about a CD or a savings secured loan. This is a type of installment loan similar to student loans and car loans.
4. Do not close accounts or apply for credit that you do not need
Do not close any credit card accounts that you do not use. This is because when you close one of your credit card accounts, your available credit amount lowers, your credit utilization goes up in case you have balances on your other credit cards, and your CIBIL score goes down. Instead of closing your old credit card account, you can use it for making small purchases, such as for gasoline, which you can pay off in full every month.
Moreover, you should never apply for credit that you do not require. This is because every time you apply for a loan or a credit card, your credit score gets affected. Although one or two of them would not hurt your CIBIL score badly, a lot of inquires and that too within a short time period can affect your credit score. This is why it is advised that you should take only credit that you require and not get tempted by the various offers.
Being smart and proactive while using common sense will take your CIBIL score where it needs to be. Prepare your CIBIL score now if you plan to make any big purchases in 2017, you have plenty of time!