4 Rules That Credit Experts Live By

Credit profile management has become the buzz word today and there are a host of people who are claiming themselves to be an expert. While you might be able to hear a few beneficial, few not so beneficial and a few utterly off the mark advises on how to manage your profile. We have drawn the list of four most important rules that each of the experts vouches for.

So read on to know what are these basic yet significant rules that would help you manage and improve your credit profile and will ensure that you do not fall in a debt trap and help you manage your score.

Preplan, Plan and re-plan

So you think you have been planning well on your financial front. Most of us think on similar lines. But is that actually true? May be in your case it could be a yes, however, in most of the cases it is not the case. While planning their financials, people miss out on taking the need of credit. As we all know, credit is an integral part of our lives today. From a mobile instrument to larger expenses like buying a house or expenses related to a marriage may partially or wholly depend upon the credit. One needs to plan in advance even for the credit requirement in advance. Especially, in case of the need being equivalent or greater to one’s monthly income.

Planning in advance will give you enough clarity on how to manage it. While you would have done the homework well in advance it is prudent to it before implementation and evaluate your finances again. In case of a slightest of doubt on comfortably repaying the monthly obligation, downsize your requirement and if cannot defer it. While expenses like marriage may not be possible to defer, but reworking on the costs and allocation to various outlays is definitely an option.

Even after one has availed the loan do revisit as to how the same can be knocked off your liability in a shorter span.

The dates are important

Paying in time is of high importance is not a hidden fact. Delay in payment only leads to spoiling your history available with the bureaus and has the potential of you finding your name in the loan defaulter list. However, what the experts impress upon is not the repayment but the importance of the date of payment. While the default could be on account of financial stress but if that is not the case, then do remember the dates of repayment. Whether it is a loan, a credit card payment or any other credit instrument, do remember the dates of repayment. Ensure that the account is well funded prior to the due date.

While date of payment is to be tracked, so is the end date of the loan. As he loan nears the final installment, it gives you another chance to plan the finances in light of the increase in available funds and allocating them to derive optimum benefit.

Keep an eye on your debt

Keep a close watch on your debt. Meaning that the amount of debt that you have availed. While at times people do this exercise, most of the times people forget or ignore the credit card usage. The outstanding on your credit cards is a highly important factor that impacts your credit score. As you inch towards the maximum limit assigned on your cards, the credit score starts to get impacted adversely. Not only this, it also impacts your financials to a great extent. Psychologically, people derive comfort from repayment of the minimum amount due which generally is 5% of the total outstanding. This should not be the case. Credit card outstanding is the single largest factor to push you towards debt trap. So keep a close watch on the debt.

Check the facts regularly

While we all know that the data on bureaus is not accurate and that one of four reports actually have errors, we fail to take corrective actions. Do check your credit report from time to time and check out for errors. In case you find one, take corrective action immediately. Please take a note that once a year one free CIBIL score can be obtained. So do take an advantage of that given by the Reserve bank of India and pull out your report. Being an active force rather than a reactive one will always serve you well in meeting your financial objective.

Follow the above four advises and lead a credit healthy life.