New Delhi11 minutes ago
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We try to maintain a high CIBIL score to get loans in future and get new credit cards. For this, timely credit cards pay attention to bill payment. Despite this, the CIBIL score decreases many times.
In such a situation, we need to know that it is not enough to pay bills on time for high credit score. The low utilization of the card limit is also necessary to maintain the credit score.
Why is it necessary to pay attention to credit limit?
Credit card limit is very important for your financial health. It tells how much credit the bank has given you and how you manage it. The higher the limit, the less the credit utilization ratio (the use of the total limit). This is very important to increase the score.
Understand by example
- If your credit limit is ₹ 1 lakh and you spent ₹ 40,000, then the utilization ratio will be 40%. This will damage the score.
- At the same time, if the limit increases to ₹ 2 lakh and the expenditure is the same ₹ 40,000, then the ratio will be reduced to 20%. It is better for the score.
Take care of 4 things to keep credit score maintain
1. Follow 30% rule: Always keep the expenses up to 30% of the limit. For example, spend less than Rs 30,000 on a limit of Rs 1 lakh. More than 70% of the limit uses reduces the score.
2. Apply to increase the card limit: If your income is stable and the payment history is good, then request to increase the limit from the bank. Your credit score is good and if you repair the bill on time, the banks themselves offer to increase the credit limit. You can apply to increase the limit after increasing income or timely repair for 6 months.
3. Divide the expenditure into separate cards: If you have more than one credit card, then divide regular bills into 2-3 cards. This will not increase the utilization ratio of the same card.
4. Apply spending alert: Set the card’s mobile app or SMS alert, so that you can get an alert if the expenditure goes above 30%.
Loss of low credit limit
- Banks consider you financially weak by completing the limit again and again.
- The application of a loan or new card may be rejected.
- It is difficult to get a loan in future due to falling CIBIL score.
The effect of negative records can last 7 years
Even if you are currently doing all the payments on time. But if the old record is not good, then this effect can be seen on your credit score for 7 years.
How to check CIBIL score?
The CIBIL score is viewed with the help of pen number. The CIBIL score can be seen for free on the official CIBIL website www.cibil.com. However, this facility is available only once a year. A paid subscription plan has to be taken more than one time to check the CIBIL score from the CIBIL website. For this, a monthly subscription plan of Rs 550 has to be taken. Apart from the CIBIL website, CIBIL score can also be checked from the mobile app, banking service aggregators or website of Non Banking Institute.
