How to maintain a Good Credit Score in India?

• Borrow only what you need when you need it.
• Pay your EMIs on time every month.
  • Regular and on time bill payment has the highest weightage when calculating your credit score. So always pay your credit card bill or loan EMI on time. Make sure you have set up an alert to remind you about payments or opt for automatic payment where the lender withdraws the money owed on the day already decided by you.
• Keep your credit utilization low
  • Keep your credit card balances below 30% of your borrowing limit—and try to stay below 10% or pay off your balances in full each month.
• Don’t close old credit cards.
  • When you close old credit cards the card issuer stops sending updates to the credit bureaus. The credit bureaus also give less weightage to closed accounts. This could bring about reduction in your credit score. Also, your overall credit limit reduces which means your spending capacity and staying below the ideal credit utilization ratio is difficult. You must remember that after 10 years the closed credit card account will be removed from your credit report which could bring down your score when your really don’t want it to happen.
• Limit new credit applications.
  • It is best to limit new credit application within a short time period as each hard enquiry will be listed on your credit report, which brings down your credit score. Also, if lenders see a lot of enquiries listed on your credit report, they will get the impression that you are desperate for credit and don’t know how to manage your finances.
• Monitor your credit report regularly.

The key to a Good Credit Score is to stay consistent over the long haul. Your score will tend to increase over time, as you demonstrate long-term financial discipline.