Your credit score and profile are the two important factors which lenders consider while evaluating your creditworthiness. The credit score is a number that summarizes your credit history, and it falls in the range of 300 to 900. Lenders generally prefer scores between 750 and 900, and this will indicate that you are a creditworthy individual. For a strong credit profile, you should possess a good repayment history and a sufficient experience with credit. With both these, you can earn your lender’s trust as a low-risk borrower and get the best deals on offer. To ensure that your credit profile reflects your creditworthiness and has no error or disparities, evaluate it regularly. Doing this aids you to track changes and notice suspicious activities. For guidelines on the top ways to monitor and maintain your credit score and profile, read on.
For guidelines on the top ways to monitor and maintain your credit score and profile, read on.
Check Your Credit Report Periodically
The first step toward maintaining a good credit profile is to monitor. To comprehend how your decisions impact the credit score, you must know how to check the credit score and report details online. This will help in following any changes that occur and you can monitor your profile as and when needed. This process is much easier today as you can verify your credit report online and also quickly. You can do afree and download your credit report from CreditMantri
Flag Any Errors In Your Credit Report
Flaws in your credit report can be quite common and in order to maintain your score, you should get these fixed right away. Some of the more common mistakes can occur due to mistakes made by lenders. These can reduce your score if left unresolved. You can get these addressed online by reporting to the particular credit bureau. Apart from flagging errors, you should pay close attention to your open credit accounts. If you see inquiries or open accounts that are not owned by you, you should report the issue immediately.
Also Read: Credit Improvement Services
Maintain A Low Credit Utilization Ratio
When you use your credit cards, be aware of the total limit. Ideally, you should maintain a credit utilization ratio of 30% or lower. Exceeding this amount will cause your credit score to drop. If you are not sure of your current utilization ratio, evaluate your CIBIL™ report and compute the value. Track your spending patterns and if you feel that you are exceeding the 30% mark, lower your credit card usage.
Apply For Credit Wisely And Avoid Multiple Applications
Whenever you apply for new credit, lenders and issuers will initiate a hard inquiry into your credit profile. These hard inquiries lower your score by a small amount and on a temporary basis. Additionally, these inquiries are noted in your report and multiple inquiries in a short period of time will cause your score to drop. This has several disadvantages:
- Your score may reduce significantly, maybe to the point where you are not eligible for a loan or the credit offer extended to you.
- The lender notices these multiple hard inquiries into your credit profile and considers you a credit-hungry applicant.
- Credit-hungry behavior indicates poor financial health. Therefore, it is wise to avoid applying regularly for loans and credit cards.
In case of denied application and no immediate requirement for new credit, you can wait for six months before reapplying.
Have A Credit History Without Any Defaults
Your credit repayment track record is one of the most important elements of your repayment history. Repaying without defaulting indicates your financial discipline. It is good to be disciplined when it comes to repayment because missing even a single payment can cause your score to lower significantly. This is also true for payments that are made partially. Although it is better than missing a payment, try to repay the full amount due and not just the minimum amount. The amount due will reflect on your credit report and can be a cause for concern. Remember, consistent payments aid you to establish a stable credit history, thus increasing and maintaining your credit score.
Have A Healthy Credit Mix
You should have a sound mix of secured and unsecured loans in your portfolio. This will help you augment your credit score. Since the type of loans you have chosen can impact your score, try obtaining a secured loan and paying off the insecure ones first. A large number of creditors on your profile could lead to a drop in your credit score.
Also Read: Credit Health Report
Keep Old Accounts Open and Deal With Negligences
The older your credit age, the more favorable you appear to lenders. If you have old credit accounts that you are not using currently, do not close them. Although the credit history for these accounts would remain on your credit report, closing credit cards while you have a balance on other cards would lower your available credit and increase your credit utilization ratio. This could lead to your credit score dropping by a few points. If you have accounts with delinquencies, such as several missed or late payments, clear off the past dues and then make a plan to make timely future payments. This will not eliminate the late payments but can improve your payment history going forward.
FAQS of Top Ways To Monitor And Maintain Your Credit Score And Profile
1:What are the different ways in which you can repair your credit score?
The different ways in which you can repair your credit score are: check your credit report, pay outstanding bills, keep your credit utilization below 30%, do not remove old accounts from the report, limit the number of hard inquiries, plan your credit, and consolidate your debts.
2:What is a credit profile?
Your credit profile or credit report is a record of your credit activities. Every time you apply for credit, whether it is approved or rejected, it gets registered on your credit report as an inquiry. Your credit report is a record of how you utilize credit and how much is available.
3:What are the 5 factors that generally impact your credit history?
The 5 factors are payment history, the amount you owe, length of your credit history,new credit you apply for, and types of credit you use.
4:Credit report versus credit score. What is the difference?
Your credit report is a record that consists of all the details about your credit history. Your credit score is a numerical score that is computed based on the information in your credit report. It summarizes your credit history. One important thing is that you can raise a dispute for the information on your credit report but you cannot dispute your credit score. If you notice any disparities in your credit report, you must report them to the credit bureaus immediately to avoid any negative impact on your credit score. On the other hand, if you see a sudden decrease in your credit score, you should check your credit report to learn why and report any potential mistakes.