Habit 1: Pay Your Bills On Time, Every Time
This is the single most important factor influencing your CIBIL score. Your payment history makes up a significant portion of your credit rating, and lenders want to see a consistent and reliable track record. A single delayed payment can negatively impact
your score, signalling financial mismanagement. Even a 30-day delay can cause a noticeable drop. To avoid this, treat every due date for credit cards, EMIs, and utility bills as non-negotiable. Automating payments for at least the minimum amount due is a foolproof way to ensure you never miss one. Consistently paying on time demonstrates financial discipline and reliability, which are key to building a strong credit profile that lenders trust.
Habit 2: Keep Credit Utilisation Low
Your Credit Utilisation Ratio (CUR) is the percentage of your available credit that you are currently using. For example, if you have a total credit limit of ₹1,00,000 across all your cards and your outstanding balance is ₹40,000, your CUR is 40%. Consistently high utilisation signals to lenders that you may be over-reliant on credit, which they view as risky. Financial experts recommend keeping your CUR below 30% to maintain a healthy score. You can manage this by paying down balances before your billing cycle closes, spreading expenses across multiple cards, or requesting a credit limit increase on an existing card to lower the ratio. A low CUR shows you manage credit responsibly, not out of necessity.
Habit 3: Review Your Report and Limit New Applications
Applying for multiple credit cards or loans in a short period can hurt your score. Each time you apply, the lender performs a 'hard inquiry' on your credit report, which can temporarily lower your score by a few points. Several hard inquiries close together can signal financial desperation to lenders, making them more cautious about approving your application. This can create a cycle of rejection. Before applying for new credit, check your eligibility using 'soft inquiry' tools offered by many platforms, which do not affect your score. It's also vital to regularly review your CIBIL report for any errors or inaccuracies. You can get a free report annually from each of the credit bureaus in India. Disputing and correcting errors can provide an immediate boost to your score.
Habit 4: Maintain a Healthy Credit Mix
Lenders like to see that you can responsibly manage different types of credit. A healthy credit mix includes both secured loans (like a home or auto loan, which are backed by an asset) and unsecured loans (like credit cards and personal loans). This diversity shows lenders that you have experience handling various financial obligations. However, this doesn't mean you should take on new debt just to improve your mix. It's more about demonstrating responsible management of the credit you already have. Also, avoid closing old credit accounts, even if you don't use them often. A longer credit history is generally viewed favorably, as it provides a more extensive record of your financial behaviour and stability.
