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Rebuild Your Credit: Six Simple Habits to Boost Your Financial Profile
- •Pay all EMIs and credit card bills on time, using reminders or auto-debit to avoid overdue payments that harm your credit history.
- •Keep credit card balances low; aim to clear full bills by the due date and maintain credit utilization comfortably below your limit to appear less credit-dependent.
- •Clear any overdue debt, and always confirm the outstanding amount with the lender, retaining receipts and checking your credit report for accurate updates.
- •Regularly check your credit report for errors like incorrect loans or late payments, and dispute any inaccuracies with the credit bureau and lender.
- •Avoid making multiple loan or card applications in a short period, as numerous inquiries can negatively impact how lenders view your credit-seeking behavior.
- •Think carefully before closing old credit cards with good repayment histories, as they contribute to the length of your credit history, which is a factor in your credit score.
Key Questions Answered
Credit utilisation measures how much of your available credit limit you are regularly using, such as having a Rs. 70,000 balance on a Rs. 1 lakh limit card. Regularly using a large portion of your limit makes you appear more dependent on borrowed money and can negatively impact your credit profile.
Submitting several loan or credit card applications in a short timeframe triggers multiple hard enquiries on your credit report. Several enquiries close together can negatively influence how lenders perceive your credit-seeking behavior and make you appear riskier.
You can obtain a free full credit report once a year from each of India's four credit information companies, subject to their respective procedures. If you find errors like an unowned loan, an unclosed account, or a late payment mistake, you should raise a dispute with both the credit bureau and the lender that supplied the data.
