In the context of the current economic condition, loans are no longer seen in a negative light. They can be like lifeboats that can help you sail through financial disturbances. Dealing with day-to-day expenses can be a challenge you might face every day. It’s pretty likely that you would wish for financial stability in your life and could own property while saving a significant portion of the amount you spend on rent and other commodities.
Sadly, this is the reality for many of the global population. With inflation and the rising costs of real estate, the ability to purchase things when you need them can be a rare thing to possess. Sometimes even a yes bank credit card is only able to offer limited support. In such instances, it is not rare for people to rely on small or large loans to fulfill their life goals or sustain emergencies. Therefore, it’s essential to be cautious about your daily financial activities, so you’re not mistakenly hurting your credit/CIBIL score.
A credit or CIBIL score is a three-digit number that shows your likelihood of returning the borrowed amount on time. Usually, when borrowing a loan, the first thing that a bank checks is your credit score. Any score above 700 is considered good and makes you eligible for financial assistance as a loan. No matter if you’re a slice credit card holder or some other card owner, if you’re a frequent credit card user or a borrower, there are a few things that you must never neglect unless you want to shoot your chances of taking a loan.
- Missing due dates: Think of them as assignment deadlines. Either they can improve your grades, or you are at risk of getting a lower grade as more time elapses from the due date. Credit/CIBIL score works similarly. For instance, if your bob credit card has a payment date of the 30th, be sure to get that settled before the 30th. Paying your due amounts, including EMIs on pre-existing loans, can strengthen your credit score and vice-versa. But don’t worry too much if you miss a few deadlines. Your decreasing CIBIL score can change its trajectory again if you start paying back on time. However, it’s worth noting that it may take a significant amount of time for your credit score to be good again.
- Taking multiple loans or credit cards simultaneously: Having multiple loans simultaneously can decrease your credit score because it will increase your debt-to-income ratio. Banks would assume that you’re already in a lot of debt and would likely not want to offer you more loans. Moreover, keeping multiple credit cards at once, for example a citi bank credit card and a slice credit card, may make it difficult for you to keep both of them active.
- Having a high credit utilization ratio: It refers to the amount used out of the approved credit limit. For example, if your credit card’s limit was set at 100000 INR, and you only used 36000 INR, you had a credit utilization of 36%. Any credit utilization ratio below 40% is suitable for your credit score. If you already own a credit card, such as a kotak credit card, and want to get another credit card, be mindful that your credit utilization ratio will be affected.