How to Stay Credit Healthy Always

Updated on: 16 Jan 2024 // 5 min read // Personal Loans
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In the present day times, getting a credit such as a car loan, a Home Loan or simply a Credit Card is rather easy. However, maintaining good credit health by inculcating financial discipline in your life may not come naturally to you. It is for this very reason, that we will be discussing some crucial tips on how to stay credit healthy always. However, before we begin, let us point out some of the benefits of achieving a good credit history:

  • It helps you get quick approval on loans
  • It ensures that you can Avail Personal Loans at comparatively lower interest rates
  • It helps build the trust of the lender in you
  • It reflects an optimal level of financial discipline

Tips to Stay Credit Healthy

Track Your Spending

A great way to know and understand your expenses and keep them in check, is to maintain a record of all your spending. Right from cash payments to credit and debit card transactions as well as any cheques that you may have written. It is a good practice to save at least 20-30% of your monthly income, and it can be put to use towards other financial obligations that you may need to meet in the near future.

Keep Your Credit Card Expenses in Check

Make sure that you always keep your Credit Card expenses below the 30% threshold, implying that if your credit limit is 1 Lakh, you should not spend more than 30,000 in any given month. You can also follow the 20/10 rule, wherein you must not let your Credit Card balance go beyond 20% of your net yearly income, and your Credit Card expenses do not exceed 10% of your monthly income.

Review Your Monthly Statements

It is a crucial practice that you must develop at all costs. Make sure you review your monthly Credit Card statements, and keep an eye on any suspicious transactions. If you find any discrepancies, make sure you report them right away and get them rectified at the earliest possible.

Maintain an Emergency Fund

It is highly advisable to keep at least 3 to 6 months’ worth of your income in a liquid account which earns interest for you. This fund should only be used in case of absolute emergencies, such as if you lose your job, face an unexpected medical emergency or suffer a huge loss in business. It would also help to keep at least 10% of your credit limit set aside solely for this purpose.

Pay Your Bills

Whether it is something as simple and inexpensive as your phone bill or something as significant as your Credit Card bill, make sure you make all the payments well-within time. If, for some reason, you are unable to pay your Credit Card bill in full, at least pay the minimum balance to ensure lower finance charges. And no matter what, never ever skip any of your monthly payments. This will help your future lenders view you as a low-risk candidate, thereby increasing your chances of getting a quick approval.

Stay Organised

Make sure that none of your bills skip your eyes. To this end, you can have a list of your tabs on your phone or a pad. You can then tick off each item on the list as you go on paying the bills. If possible, make sure that the due dates for all or most of your statements are the same. This will make it reasonably easy for you to remember the same.

You can also sign up for automatic payments, wherein a pre-fixed amount towards each bill will be debited from your checking account. However, in this case, you will have to make sure that you have sufficient funds in your account, so that no payment gets stuck.

Consolidate Your Debts

If you believe that you have too many loans under your name and it is becoming hard for you to juggle between them, you can always opt for a single loan such as a Personal Loan, and use the disbursed amount to pay off other loans. This way, you will just have one loan, and a single equated monthly instalment (EMI) to take care of every month.

The same holds true for Credit Cards as well. If you have more than 2-3 Credit Cards, keeping an eye on the expenses through each one of them and reviewing all the monthly statements will prove to be an uphill task. In order to avoid this, do ensure that you close the extra cards. This will help you in the more efficient management of credit.

Refinance Your Loan

In case you have a significant credit such as a Home Loan, towards which you are paying high EMIs, you should look for a refinancing option. In a vast majority of case, you can opt for Home Loan Balance Transfer or HLBT. It is essentially the process of transferring an existing Home Loan from one bank or lender to another, for better services, and more importantly for a lower rate of interest. The astounding facility of HLBT will help you enjoy better interest rates, while also bringing down the amount per EMI significantly. This simple feature can help you save a substantial amount of money while offering you with the much-desired peace of mind, resulting in a perfect win-win situation! We recommend that you opt for this facility in the early years of your home loan, as this is the time when the more significant part of your EMIs goes towards the interest.

You may also ask your bank, if it can offer you with a top-up loan during the process of HLBT, which can help you meet other goals such as interior designing, appliance purchase or home remodelling.

So, if you are servicing a Home Loan, don’t forget to look for some compelling Home Loan Balance Transfer deals and enjoy the perks that come with this special feature!

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