Many people try to achieve their future goals, but only a few of them accomplish their dream. Even when life may not provide you with lessons on achievement, one of the excellent ways to achieve your goal is to take lessons from those who have accomplished numerous milestones.
To successfully manage your finances, you must have a clear goal and a plan of action to keep yourself from going into debt. Wouldn't it be prudent and easy to adopt the good credit card habits of those with good credit conditions? Although we cannot positively state that those with good credit conditions are wealthy, we can unquestionably consider them as a model and adopt their financial practices.
If you want to know what are the good credit habits then take a look at some good credit practices that you can follow to keep your high credit score:
Keep an eye on your score and view your credit reports periodically:
Knowing what affects your credit score is the first step in maintaining a good credit profile. Therefore, it is advisable to maintain track of information that reflects your credit report, such as credit inquiries, active, and closed credit accounts. You must notify CIBIL immediately if you find any inaccuracy or discrepancy in your credit report to rectify it.
Ensure that you pay your debt on time:
Your credit score can be badly affected by your bad credit habits, like financial unpunctuality. It is advised to never skip a payment on your monthly installments or credit card bills if you hold any active loans or credit cards. Loan and credit card payments made on time indicate excellent financial behavior on your side, which makes you more trustworthy in the eyes of lenders and results in a higher credit score.
On the other side, if you are not making your loan EMIs and credit card payments on time, lenders may think you are not trustworthy when making loan repayments. Therefore, missing your loan EMI deadline or your credit card payment due date negatively impacts your credit score.
Don't apply for credit unless necessary:
Your credit report and credit score from CIBIL are requested by the lender or the card issuer every time you apply for an unsecured loan or credit card to check your eligibility for the loan or credit card. If you make too many such requests, it appears that you are credit hungry, which indicates the poor financial condition. Therefore, always refrain from frequently applying for unnecessary loans or credit cards.
If your loan or credit card application is rejected and you do not need it urgently, then wait for at least six months to reapply.
Keep your credit utilization low:
Normally, financial institutions, banks, and retailers set credit limits. Make sure you don't go beyond your credit limit because this bad credit practice will give lenders the wrong impression. It also lessens your chances of obtaining new credit cards. The ideal range is between 30 & 40 percent of the credit limit.
For instance, if the credit card's limit is $4000 and you spend $2000 in a given month, your monthly credit use is 50 percent. The good credit habits for attaining a good credit profile are to keep your credit utilization between 30 to 40 percent.
Have a long credit history:
Your credit score can significantly impact your credit history's length or age. Lenders are more likely to trust you as a borrower if you have a long credit history because it shows that you have previously taken out loans and successfully returned them. If you do not have a long credit history, then apply for a secure credit card granted against a fixed deposit that serves as collateral and helps you build the trust of lenders.
Importance of maintaining a good credit score:
Your credit score is the first thing a lender or Credit Card Company will check whenever you apply for an unsecured loan or a credit card. Most banks and other financial institutions use your CIBIL score as the most critical factor to decide whether you qualify for a loan or credit card.
A credit score of 750 or more is typically regarded as good and qualifies you for most loans and credit cards. You can verify your CIBIL score through a variety of online tools. Fill in the compulsory information, and you will instantly get your credit report.
In conclusion, maintaining a good credit score is essential for achieving financial goals, and we know that a good credit score & profile is the result of your good credit habits. So developing good credit habits is an excellent approach to accomplishing financial objectives.