Credit score: A good credit history for a secured future

Jan 21 2013, 10:04 IST
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SummaryPep up your credit history because banks and non-banking financial institutions read it before they decide on your loan application or a credit card upgradation

credit reports is to enable them to understand their own financial history and work on areas of improvement. And given time and effort, it is possible for anyone to enhance their credit score and polish up their credit report.

How to improve your Credit Score

Be punctual: Always, always pay your loan EMIs on time. If you have more than one loan, maintain a calendar of the due date for each payment and if possible, consolidate all loans in a single account. This will ensure that the payment process becomes easier for you.

Be prudent: Never lag behind on credit card payments as it is a revolving credit and is sharply reflected on your credit score. It is always best to make full payments on your credit card each time, but if you are running short of cash in a particular month, do ensure to pay the minimum due. Also if you have two credit cards, instead of using the maximum limit in one card, try to break it down and use both cards equally for payments.

Be practical: Don’t apply for credit cards or loans if you don’t need to, as it means increasing your credit exposure. Also, always remember — more credit cards means you have more room to spend even if you do not have the means to repay back the debt.

Be a planner: Keep a tab on your savings. At times, it is better to pay back outstanding loans by using up some of your savings than paying interest on the debt. Not only does it mean a better credit score, but in the end you also save more as the interest component on loans is usually much higher than what you earn by keeping cash in your savings account or in a fixed deposit.


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