5 H AB I T S OF P E OP L E W I T H H I G H C R ED I T SC OR E T H AT E VE R Y

ON E M U ST F OL L OW

We have said this time and again that a good credit score is important to secure loans at best
rates. It often happens that to establish strong credit, people use credit cards, get their credit
limit increased but subsequently get swayed by expenses that come along with it.

While establishing credit is easy, reaching a good credit score range and then maintaining it
is quite a challenge in itself.

If you’re struggling to improve your credit score or to maintain it, we’re here to help. In this
post we have compiled a few common habits that you’ll find in people with a good credit
score.

1. They check their credit scores and credit reports regularly

Credit score usually ranges between 300 and 900. The higher it is, the easier it will be for you
to secure loans and get other credit benefits. To improve your credit score, you must first
know where you stand on the credit meter. People with good credit scores have a habit of
checking it every month to ensure there is nothing wrong with their credit.

If there is a dip in their credit score, it will be due to reason(s) about which they either know
or don’t know. If they don’t know the reason behind the drop in their credit score, they check
their credit reports carefully to find possible error(s) such as incorrect personal information,
incorrect credit information or signs of fraudulent activity. If they spot an error, they take
steps to rectify it as quickly as possible.

Tip: To keep a track of your credit score, you can either request credit report every month
from credit bureaus, which will obviously cost you or get free credit report and credit score
along with monthly updates at Paisabazaar.com.

2. They pay their repayments full and in time

Credit bureaus calculate your credit score on the basis of various factors, one of them being
your credit history. It is also one of the factors that largely affect your credit score. People
with good credit score develop a habit to pay their loan repayment and credit card bills in
time without fail. They ensure to make full payments so that it does not impact their credit
score.

Tip: People who constantly miss their credit repayment dates can either set a reminder
regarding the same or set up automatic money transfer from your savings account to your
credit account. You can adopt other ways as well if they help you pay credit repayments in
time.

3. They apply for new credit only when it is required

Some people think that signing up for every lucrative credit card that comes in the market will
help them improve their credit scores. However, that is not always the case. Taking multiple
credit cards or applying for loans frequently in a short span can affect your credit score
negatively. When lenders see multiple new credit accounts on your credit report, they get a
negative impression about your credit profile and therefore extend loan offers with high
interest rates to secure their money.

In addition, when you apply for a new line of credit, creditors fetch your credit report from
credit bureaus (This is called hard enquiry) to check your credit worthiness. Each time they do
so it gets reflected on your credit report, which resultantly impacts your credit score
negatively.
Tip: Don’t apply for a new line of credit unless it is absolutely required as multiple new credit
accounts and unnecessary hard enquiries can pull your credit score down.

4. They do not overuse the available credit

A good credit score is an indication that the borrower has used his/her credit responsibly in
the past. To assess how responsibly you use your credit, credit bureaus and lenders look at
credit utilization ratio, also known as debt-to-limit ratio. Credit utilization ratio is the ratio of
credit card balance to available credit limit. Although to establish and improve your credit
score, you must use your credit regularly but without getting caught with high balances.
People with good credit score have their credit utilization ratio not more than 30%.

Keeping your credit utilization ratio under control will not only save you from potential debt
troubles but also help you improve your credit score.

Tip: If your credit utilization ratio is above 30%, pay your credit card debts to make more
credit available. Another way to keep your credit utilization ratio down is to find out when
your lender sends your credit information to credit bureaus so that you can make the required
payments before that date.

5. They keep long and stable credit histories

Keeping long and stable credit history also helps in increasing your credit score. Credit
bureaus and lenders consider the age of your credit lines and people with good credit score
know it and therefore, do not close their old credit accounts until necessary. A long and stable
credit history gives an impression that the borrower can be trusted with credit. If you’re just
starting with credit, use your credit card regularly (at least once a month) to establish a good
credit history.

Tip: To build long and stable credit history, do not close old credit accounts. Make small and
manageable purchases to build stronger credit history. As your credit report will get old, your
credit scores will improve.