Credit History

Now that we know how important it is to have a good credit score when you apply for a loan ( read  previous post “ Your credit score- meaning and importance), let us see what we can do to maintain a good credit history-

Keep track of the due dates of all your credit card bills and loan EMIs and pay them on time. Opt for reminders or auto debits if required.

• These days credit card companies fall over each other and try and sell you their credit card as a result of which we end up having multiple cards.  Subscribe to only as many cards as you actually need.
• Keep your credit outstanding low. Use any extra money that you save to part pay your loan.
• Try and make the credit payments online as far as possible. This would eliminate the chances of a cheque bounce which could have an adverse effect on your credit worthiness.
• Do not withdraw cash using your credit cards unless is absolutely necessary, as cash withdrawals do not enjoy any credit period and the dues have to be settled immediately.
• Ensure that you have a good mix of different types of credit lines-home loans/vehicle loans and credit cards.
• As far as possible, do not close existing credit cards, especially the old ones as that would also mean that you lose all favorable credit history you had on that card.
• Changing your place of residence and job often leads to the perception that the person lacks consistency and adversely affects his or her credit report.
• Carry your credit cards safely to avoid loss by theft and misuse and maintain a record of all the card details so that the loss can be reported to the concerned authorities on time.
• Spend only as much on credit as is required and you can afford to pay back timely.
•  Review your credit history regularly.