5 Ways To Break Bad Credit

Not all credit scores are excellent and everyone’s score is not perfect all the time. There is always a scope for some errors that can lead to a few bumps in the road. Your credit score is a quantifier for how responsibly you have maintained your credit and repaid them. Now, if you have made a few mistakes like missing loan EMIs or credit card dues, then rebuilding your CRIF credit score should be the first thing on your mind.

 Before you devise a whole plan on how to increase your score, you might first want to address bad credit habits that you could have developed. It’s time to replace them with good credit habits and build a healthy credit score.

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 Here’s a list of habits that could be considered bad for your credit health:

● Forgetting the importance of keeping a regular check on your credit score

● Opting for minimum payment options or not paying EMIs and dues altogether

● Taking your credit card statement lightly and not going through it thoroughly

● Over-utilizing your credit cards

● Closing credit card accounts without evaluating their impact on your credit report

 If you have made any of these mistakes, your credit score will see its impact but don’t worry. You can always change these habits and get your credit score back on track by developing good habits and filling your credit history with positive information such as the ones listed below:

 ● Monitor your credit continuously

If a bank checks your credit score, your score will see a drop since it counts as a hard inquiry but not when you check your score. Don’t forget to keep a close eye on your credit score, especially before planning a significant expense.

Keeping a close eye on your credit score will help you iron out the creases that could affect your credit applications. Right from a minute glitch in your KYC details to multiple hard inquiries you have not authorized, ensure that your credit report is clean and rightfully informed.

Checking your credit score regularly will help you track how positively or negatively different factors affect it. This analysis will help you identify the steps to address the potential issues and fix them in time.

● Learn how to read your credit card bill

Get into the habit of going through your bills thoroughly. If you are using your credit card, it becomes your duty to take a close look at the expenses, especially if you are an active credit card user.

Any credit card is susceptible to fraudulent attacks and not checking your statement every month could make you miss such unauthorized activities. If and when you find any such transactions, you should immediately file a dispute to fix it and ensure that it doesn’t impact your credit score.

● Keep your credit utilization low

Your credit utilization is the second most crucial factor in determining your credit score. It tells you how much credit you are using out of your entire available credit limit.

If you utilize over 40% of your available credit limit, you could appear as a credit hungry individual to the banks and financial institutions. To ensure that your credit utilization is in check, keep your credit card expenses to a minimum and take only the required loan amount.

● Avoid closing your credit card account

If you are not a frequent credit card user and are planning to close an account, it might make sense but having old accounts on your credit report adds length to your credit history, which is good for your credit score. In addition to that, it adds to your available credit limit that increases your spending limit and keeps your credit utilization ratio in check.

However, if you plan to keep an inactive credit card open, banks often tend to close them if they are not used for a specific period. So use your card for a couple of purchases now and then to keep it active and contribute to your credit history.

● Build a positive payment history

Your payment history is the basis on which your entire credit report stands, so even one missed payment can bring your credit score down. To add to that, these negative entries stay on your credit report for an extended period. However, if you have missed just one payment, it is not too late to correct your mistake! It usually takes 30 days for a bank to report a missed payment to the credit bureaus. So you can always pay and avoid a negative entry on your report.

Once you start working, your expenses increase, and it is bound to affect your repayments but what’s important is to keep your dues at a minimum and stay regular with your payments.

It is always best to set reminders for your repayments or enable auto pay options for these to avoid any missed payments.

If you stay vigilant and closely monitor your credit report, you can always stay one step ahead in determining what is going right and wrong in it. All you have to do is inculcate these good credit habits and get rid of any bad credit habits that could affect your CRIF Credit Score.