If you are familiar with the use of credit cards, you should know that credit score or CIBIL score is hugely important for your financial stability. Having a high credit score will surely help you get easy credit and loans.
If you are a personnel or running an organization, you must understand the weightage of credit scores, manage things better, and avoid making any silly mistakes. In this blog, we will talk about some of the common mistakes made by Indians, how they can affect your financials, and more. Check a Finance DSA app so to learn some of the useful techniques.
Some Common Mistakes
After a long discussion with financial experts, we have come up with a few points. Learn about these mistakes, the issues you will face, and how avoiding these mistakes can help you create sustainable and stable financials.
- If You Miss Your Payment Day or Make A Delay
If you miss your payment or cause a delay, this is going to harm your credit score. The more you take time to clear your debts, the drop in your credit score will be steep. In case your late is inevitable, try to pay a required penalty so that you don’t have to face anything on your credit score front.
You must use the following methods to ensure that there are no delayed payments-
- Set alarms or reminders so that you don’t forget to pay your bills.
- Are you familiar with making a payment schedule? When you have just made a schedule, the payment will be automatic.
- Having a buffer between your accounts will help you handle cash crunch in difficult times.
- Has Your Credit Card Maxed Out?
Another common mistake we have seen people doing is maxing out their credit cards. The utilization ratio is going to impact your credit score. The ratio of your spending and your total usable income should not cross 30%. When the number is higher than that, it means that you are taking a heavy risk.
- Have more focus on managing your utilization ratio. For example, if a credit card is offering you 100 Rs, you shouldn’t use more than 30 Rs. If you can do that, your credit score will be perfect.
- One way to manage your utility ratio is by improving your credit limit. Banks or credit card companies will increase your credit limit after checking your credit score.
- Don’t wait for your billing cycle to end. Start paying in advance so that the bank can trust you.
- Pay the Minimum Amount
Have you ever tried to pay the minimum amount? This is a mistake and can damage your credit reputation in the market. When you have credit card debt, and you have just paid the minimum amount, the interest will keep increasing.
Here are some tips you must follow-
- Even if you are unable to pay the full amount, at least try to pay as much as possible.
- Keeping your budget in check is the only way to deal with pending debts.
Consultation with a Loan agent will help you handle things more professionally.
- Don’t Close Your Old Credit Cards
Many people discontinue using old credit cards as their financial move. Doing so will impact your credit score. Once you shut down your card, your credit limit will be less, and the utilization ratio will go up.
- Try to continue using your existing cards and look for cards that come with less or no annual fee. Having a prolonged credit history is good for your score.
- In return for inactivating your less-used card, it is better to use them less and still continue.
- Too Much Use of Credit Cards Is Not Good
Keeping too many credit cards will ultimately hamper your credit scores. When you apply for a new card, it will bring a hard injury to your financial situation. It is better to keep your credit options organized and take less toll on your credit rating.
- People Often Ignore Credit Reports
As an independent and responsible person, you should not ignore credit reports. It is better to avoid hard inquiries. When you check your credit reports carefully, it is possible to learn about possible mistakes.
We hope you will take care of these items and take the right call to secure a better financial life.