A healthy credit score is important for a variety of reasons when individuals look for loans and credit cards, among other financial products & services. Credit scores for any person can range between 300 and 900, and any score above 750 is a good one; it proves you can repay loans on time, creates a good impression on lending institutions and helps you save a good sum on insurance and other areas.

Even a few years earlier, people did not know what is a CIBIL score or how to maintain it. Credit scores are directly related to CIBIL scores and keeping up a high CIBIL score is important. There are several ways you can do that.

The most important 7 methods are:

1. Understand What Makes a Good Credit Score

People will be able to maintain a good credit score only when they know how these scores are calculated. Generally, NBFCs and lending institutions refer to your repayment history, current credit portfolio, etc.

2. Never Take Large Loans Initially

Whenever people ask financial experts about what is a good CIBIL score and how to maintain one, the most common answer is to avoid large loans at the start. Starting with short-term small loans you will not have to pay large EMIs initially. In turn, it will positively affect your credit score. Besides, it will also help you learn how to deal with loans so that you can take larger ones later.

Leading financial institutions such as Bajaj Finserv offers financial advances or loans to individuals with CIBIL scores around or above 750 along with attractive benefits.

3. Manage your Debt

Debt management is important to expect a good CIBIL score which will ensure higher credit score for you. Never taking too many loans at the same time, repaying all your outstanding loans or instalments on time and controlling expenses- these factors are important to manage debts.

Financial institutions do not consider people with large amounts of outstanding debts favourably.

4. Keep a Check on Credit Card Usage

One of the things you need to know about your credit score is how to manage it in tune with your credit cards. Many users tend to spend more than needed, i.e., they utilise an excessive section of their credit limit. A common practice for many credit card users, it will negatively affect your CIBIL score and create an avenue for higher expenditure at the end of each month when the bill arrives. In this respect, debit cards can sometimes be a better choice than credit cards.

5. Try and Avoid using Multiple Credit Cards

Many people have a tendency to cover one card’s bill with another. It is a bad practice and may even create a debt trap. Try and pay off each bill individually and on time. Even if you own more than one credit card, stick to a single card for all your standard and routine expenses. The alternate card can always serve as a backup.

6. Mix Secured and Unsecured Loans

One secret tip which experts recommend is to mix between secured loans and unsecured loans when you take financial advances. It is one way of the best ways to improve the credit report for people who still want to know what is a good CIBIL score and how to improve it. Secured loans may include home and auto loans while unsecured loans constitute of personal loans and credit cards. Too many unsecured loans will negatively affect your credit score and will be viewed negatively. The effect of secured loans on your CIBIL is much less in comparison to that of unsecured loans.

Also, keep a check on loans that may have been taken by your joint account holders and by those whose accounts you guarantee. Remember that missed payments by your joint account holders will also make you equally liable.

7. Try not to Close your Old Credit Cards

Being choosy about closing old credit cards is important, especially if the card is in use for a considerable period of time. In fact, an old credit card often lends value and weight to your credit history, something that lending institutions prefer. Try and keep the card in use, even if for minor transactions. That way, you will never have to search for tips to improve cibil score again as your credit history will improve automatically.

A healthy credit score need financial discipline. Make sure you practise all of the points you see below and become eligible for further benefits from your bank or NBFC. Also, you can ask professionals and ask them what is a good CIBIL score and how you can keep it on the higher side.