Credit score defines your overall financial trust profile? Exercise caution

Credit score defines your basic trust profile, indicating not only your eligibility to get a new loan but also how financially disciplined you are. A cursory glance at your credit score lays bare your day to day financial habits. So exercise caution to maintain a good credit score.

Hyderabad: Credit score defines your basic financial trust profile, indicating not only your eligibility to get a new loan but also how financially disciplined you are. It tells whether you are paying EMIs (equated monthly installments) of your loans properly or not. Do you have eligibility to take a new loan? All these details can be had by taking just a cursory glance at your credit report. In a nutshell, it will lay bare all your financial habits in a matter of seconds.

If your credit score is low, it is time to exercise utmost caution and scrupulously follow remedial measures to improve it. A good credit score indicates not just your eligibility to take a loan but also your overall financial discipline. When taking a new loan, creditors will look at your CIBIL (Credit Information Bureau India Ltd) score. If your loan application is approved, it means the bank or financial institution concerned has trust in your financial profile.

You will have no financial issues until you pay your EMIs and credit card bills in time. During festivals, you might have taken a loan to make higher level purchases. This should be paid back in due time. Any delay in repayment will make it difficult for you to take loans in future. You must stick to the budget to the maximum possible extent while dealing with loans and repayments.

First, there should be no confusion in loan repayments. The EMIs should not be above 40 percent of your income so that it will not be difficult to pay installments with an unfailing regularity. Also, you should have a spare amount in the bank equal to two months of your EMIs. This will help you maintain regularity in payment of loan installments.

You may be having many credit cards but always try to use only the first card that you have taken. As a result, your credit record will get a higher valuation. This will also help in increasing your overall credit score, which will come to your rescue in times of urgent and unexpected financial needs.

Exercise caution while seeing messages or email links sent by banks, credit card companies and non-banking financial institutions. If you click these messages to submit your primary data, it amounts to you submitting your loan application. If an impression is created that you are seeking to take a loan, it will reflect adversely on your credit score and eventually lead to erosion of trust in your financial profile.

Another important thing is to take utmost caution while leaving your signature as surety for loans taken by others. Also be careful when continuing as a co-applicant for any loan. In such instances, make sure and check whether the main applicants are making repayments properly or not. It is your responsibility in your own interest to ensure strict compliance with timely repayment of such loans.

Sometimes, even when you pay your EMIs and bills timely, these details may not be recorded properly in your credit report. So, you should check your credit report at least once a year. If there are any mistakes, contact the banks and credit bureaux concerned to rectify the same without delay.