Maintaining a good credit score is essential in today’s world of digital finance and credit-based purchases. Whether you’re applying for a home loan, a car loan, or even a credit card, your credit score is the first thing lenders check. Here are five habits that can help you build, improve, and maintain a strong credit score over time.

1. Always Pay Your Bills on Time

Timely payments are the single most crucial factor in determining your credit score. Missing a payment—even by a few days—can have long-lasting negative consequences:

• Delayed payments are recorded in your credit report and can stay there for up to seven years.

• Your credit score can dip sharply even with one missed EMI or bill payment.

To prevent this:

• Set payment reminders on your calendar or mobile apps.

• Use auto-debit features on your bank account to ensure timely settlements.

• Prioritise credit card bills, EMIs, and utility bills as these directly impact your score.

Consistency in bill payments not only improves your score but also builds your financial credibility with banks and lenders.

2. Keep Your Credit Utilisation Ratio Low

The credit utilisation ratio refers to how much credit you use out of your total credit limit. For instance, if your credit card limit is ₹1,00,000 and you spend ₹40,000 regularly, your utilisation is 40%.

• Experts recommend keeping this ratio below 30% for an optimal credit score.

• A high credit utilisation can indicate financial stress or over-dependence on credit.

Here’s how to manage it:

• Pay your credit card bill more than once a month to keep the ratio low throughout the billing cycle.

• Request a higher credit limit (if your income and repayment record support it) to reduce your ratio without cutting down expenses.

A lower credit utilisation not only reflects well on your financial health but also significantly contributes to improving your credit score.

3. Don’t Apply for Multiple Credit Lines in a Short Time

Every time you apply for a new credit card or loan, the bank performs a hard enquiry on your credit report.

• Multiple hard enquiries in a short period can signal credit-hungry behaviour to lenders.

• This can negatively impact your score and reduce your chances of future approvals.

Tips to avoid this:

• Space out your credit applications wisely, especially if you’re planning a big loan soon.

• Use soft enquiry tools provided by many online platforms to check your eligibility without affecting your credit report.

Only apply for credit when necessary and ensure you are likely to be approved before submitting applications.

4. Maintain a Healthy Mix of Credit

Your credit mix refers to the variety of credit types you manage, such as:

• Secured credit: home loans, car loans, loan against property.

• Unsecured credit: personal loans, credit cards.

Having a balance of both types shows that you can handle diverse credit responsibilities, which boosts lender confidence.

However:

• Avoid taking loans just to improve your credit mix—it can lead to unnecessary debt.

• Only take credit when there’s a genuine financial need and a repayment plan in place.

A good credit mix helps demonstrate financial maturity and strengthens your credit profile.

5. Check Your Credit Report Regularly for Errors

Errors in your credit report can go unnoticed but have serious consequences:

• Incorrect name or address

• Fraudulent transactions

• Duplicate accounts

• Outdated information

Checking your credit report regularly helps:

• Identify and fix errors quickly by raising disputes with the credit bureau.

• Stay aware of unauthorised activity that may indicate identity theft or fraud.

Under RBI guidelines, you are entitled to one free credit report per year from each of India’s four major credit bureaus:

• CIBIL

• Experian

• Equifax

• CRIF High Mark

Make it a habit to review one bureau report every quarter—this keeps your financial health in check year-round.

Long-Term Benefits of a Good Credit Score

When you follow these five key habits consistently, your credit score naturally improves over time. A high score unlocks a host of financial benefits:

• Lower interest rates on loans and credit cards

• Faster loan approvals

• Higher credit limits

• Better negotiation power with banks and lenders

• Higher chances of rental or employment clearances in background checks

More importantly, it puts you in control of your financial life and gives you access to credit when you actually need it.

Final Thoughts

A strong credit score doesn’t develop overnight—it’s the result of cultivating disciplined financial habits over months and years. If you want to boost your financial health, start by making small but impactful changes:

• Be punctual with bill payments.

• Monitor your spending and credit utilisation.

• Be strategic with your loan or credit card applications.

• Diversify your credit only when necessary.

• Monitor your credit report regularly for accuracy.

By adopting these five habits, you are laying the foundation for a robust financial future, backed by an excellent credit reputation. Remember, your credit score is not just a number—it’s your financial identity.

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