First, What is a Good CIBIL Score?
Your CIBIL score is a three-digit number between 300 and 900 that tells lenders how responsible you are with money. A higher score means you are a lower-risk borrower. In India, a score of 750 or above is generally considered excellent. Achieving this
score makes it easier to get approved for loans for a car, home, or education at better interest rates. For a fresher with no credit history, the score will be 'NA' or 'NH' (No History). The journey to 750 starts with your very first credit product.
Habit 1: Pay Bills On Time, Every Time
This is the golden rule of credit. Your payment history is the single most important factor affecting your CIBIL score. Even one missed or late payment can negatively impact your score and stay on your credit report for years. To avoid this, treat your due date as sacred. Set up auto-pay for at least the minimum amount due, or create calendar reminders a few days before the deadline. Paying the full balance each month is the best practice to avoid interest charges, but never, ever miss the minimum payment.
Habit 2: Keep Your Spending Well Below Your Limit
This is known as the Credit Utilisation Ratio (CUR), which is the percentage of your available credit that you use. For example, if your credit limit is ₹50,000 and you spend ₹10,000, your CUR is 20%. Lenders see a high CUR as a sign of financial stress. A simple habit is to always keep your spending below 30% of your total limit. A lower ratio shows you're not dependent on credit and manage your finances well, which positively impacts your score.
Habit 3: Start Small with a Single Card
As a fresher, you might get several credit card offers. It can be tempting to accept them all, but this is a mistake. Each time you apply for credit, the lender performs a 'hard inquiry' on your report. Multiple inquiries in a short period can make you appear 'credit hungry' and lower your score. Start with just one card. If you're finding it hard to get approved, consider a secured credit card against a fixed deposit, which is an excellent tool for building credit from scratch.
Habit 4: Review Your Statement Every Month
Make it a monthly ritual to check your credit card statement thoroughly. This isn't just about checking the total amount due. Look for any errors, fraudulent transactions, or charges you don't recognise. This habit serves two purposes: it helps you catch potential fraud early and makes you more aware of your spending patterns. Understanding where your money is going is the first step toward better financial discipline and control.
Habit 5: Don't Close Your Oldest Credit Card
Once you've had a credit card for a few years, you might be tempted to close it and get a new one with better rewards. Think twice. The length of your credit history is another factor in your CIBIL score. An older, well-managed credit account demonstrates stability to lenders. Closing your oldest card can shorten your credit history's average age and potentially lower your score. Unless the card has an exorbitant annual fee, it's often better to keep it open and use it for small, occasional purchases to keep it active.
