Always Pay Your Dues On Time
This is the most critical habit for a healthy credit score. Your payment history is the single biggest factor that CIBIL considers. Lenders report your payment behaviour to the credit bureau, and even a single missed or delayed payment can negatively
impact your score and remain on your report for years. To ensure you never miss a due date, set up automatic payments for at least the minimum amount due or use calendar reminders. Consistently paying your credit card bills and loan EMIs on time demonstrates financial discipline and builds trust with lenders, which is the foundation of a great score.
Keep Credit Utilisation Below 30%
Your credit utilisation ratio is the percentage of your available credit that you are using. For example, if your total credit card limit is ₹1,00,000, you should aim to keep your outstanding balance below ₹30,000. A high ratio signals to lenders that you might be overextended and reliant on credit to manage your expenses. Consistently keeping your utilisation low shows that you manage your finances responsibly. If you find your spending regularly exceeds this 30% threshold, consider requesting a higher credit limit from your bank or paying down your balance multiple times a month.
Review Your Credit Report Regularly
You can't fix what you don't know is broken. Errors on your credit report, such as incorrect personal details, loans you never took, or payments marked as late when they were on time, can unfairly drag down your score. Make it a habit to check your CIBIL report at least once or twice a year. You are entitled to one free full credit report annually from each credit bureau. If you spot any discrepancies, dispute them immediately with the credit bureau. A clean, accurate report is essential for a high score.
Maintain a Healthy Credit Mix
Lenders like to see that you can responsibly handle different types of credit. A healthy credit mix includes both secured loans (like a home loan or auto loan, which are backed by an asset) and unsecured loans (like credit cards and personal loans). Having too many unsecured loans can sometimes be viewed negatively, as it might suggest a high reliance on debt without collateral. You don't need to take out new loans just for the sake of it, but as your financial life evolves, a diverse portfolio of credit will naturally contribute positively to your score.
Avoid Multiple New Credit Applications
Every time you apply for a new credit card or loan, the lender performs a 'hard inquiry' on your credit report. While one or two inquiries a year are normal, applying for multiple lines of credit in a short period can make you appear 'credit hungry' or financially distressed to lenders, which can lower your score. Space out your applications and only apply for new credit when you genuinely need it. This shows lenders that you are not seeking credit excessively.
Don't Close Your Old Credit Cards
The length of your credit history is another important factor in your CIBIL score. An older credit account with a positive payment history shows lenders that you have a long track record of responsible behaviour. Even if you don't use an old credit card frequently, keeping it open helps maintain the average age of your accounts. Closing an old card can shorten your credit history and reduce your total available credit, which can in turn increase your credit utilisation ratio and lower your score.
