Maintaining a credit score above 700 (measured by CRIF High Mark, Experian or Equifax) calls for credit discipline. This means one should clear one’s credit card bills and loan repayments on time.
Additionally, one should keep the credit utilisation ratio (CUR) under the optimum level of 30 percent. Aside from this, one should make sure that a healthy credit mix is maintained. It is also advisable to regularly check your credit score and dispute the mistakes (if any) in order to get them rectified.
Some of the key things one should do
I. Keep credit utilisation ratio at the optimum level: To keep credit score high, one should keep the credit card limit at the right level. For instance, if your credit limit is ₹1,00,000, one should refrain from spending over ₹30,000 (30 percent) at any time.
High utilisation reflects financial stress and pulls your score down. If needed, you can request a credit limit increase to reduce utilisation while keeping spending stable.
II. Pay credit-card and loan EMIs on time: It is vital to make timely payment of credit card bills, personal loans, home loans, car loans, and BNPL (Buy Now, Pay Later) accounts. A single missed EMI can affect your credit score significantly. It is recommended to set up auto-debit for EMI payments to avoid missing due dates.
III. A healthy credit mix: A balanced mix of secured loans (home/car loan) and unsecured loans (credit card, personal loan) also helps improve your credit score. Only relying on unsecured credit can negatively impact your credit profile.
IV. Avoid excessive loan applications and hard inquiries: Each time you apply for a new loan or credit card, the bank carries out a hard inquiry, which also negatively impacts your score, albeit temporarily.
Too many loan applications in a short period (particularly personal loans) signal high credit dependence. Space out credit applications and avoid frequent rejections.
V. Check your credit report regularly: It is recommended to get a free credit report annually from the credit rating agency such as CRIF High Mark or other bureaus such as Experian. One should watch for fraudulent accounts or incorrect late payments and dispute errors instantly.
VI. Try to avoid closing old credit cards: The longer your credit history, the better is the score. This means even older credit cards contribute to your credit age.
If a credit card has no annual fee, keep it open even if you don’t use it often. Closing a credit card brings your total credit limit down.
