People do not realise it but keeping a high credit score will prove extremely useful when need arises.

Bad credit score may lead to rejection of loan request when need is top priority.

A good credit history may also prompt banks to offer one lower interest rates.

But not many people has an immaculate credit scores.

What such people can do to build high credit score?

The answer is ‘change habits’.

The way one handles money in day-to-day life can help building high credit score.

Problem with majority is that they do not know about their credit score.

Keeping track of one’s credit score is step one of building high credit score.

In India CIBIL provides credit report by charging a nominal fee of Rs 500 / report.

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Lets see few key habits of people with high credit score

#1.They Pay Bills on Time

Payment of all utility bills on time makes a great credit history.

Bills like:

• Electricity,
• Water,
• Telephone,
• Internet,
• DTH,
• Credit Card Bills,
• Loan EMI’s etc….

….must be paid on time to build high credit score.

Out of total, if one is paying bills on time, 25% of credit score will already be in good shape.

Many people do not intentionally forget paying bills, it simply slips their mind.

Such people must create reminder system that get activated every month.

Easier will be to keep a TO-DO list ready and load it in Google Drive.

Every month visit this list and get reminded of your bills.

EMI must be kept paid automatically (with standing instructions to banks).

Missing even one EMI drastically hampers ones credit score.

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#2.They Never Overspend

People who miss to pay bills on time are the ones who overspend.

Overspending in one area means lack of funds in other area.

It has been generally observed that people with high credit score track their expenses compared to their budget.

Every penny spent by these people are in line with their budget.

These people never overspend and hence never miss any compulsory bills.

Overspending is a characteristic of only financially disorganised people.

A good habit to correct this mistake is to prepare a monthly budget and keep tracking (recording) every expense made in a day/week/month.

#3.They Manage their Credit Card well

Suppose one has a credit card with credit limit of Rs 500,000.

One must never use credit card close to its credit limit.

As a rule of thumb, credit card bill of a card whose credit limit is Rs 500,000 should not cross 30% of 500,000 = 150,000.

There are people who do not use credit card enough.

Even if they have one in their wallet but they seldom use it.

One must never keep credit card idling.

Use it every month to make some payment or the other.

Let the payment be as low as Rs 100, but use it every month.

High credit limit and low credit card bills is a great credit score aggregator.

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#4.Their Debt/Income Ratio is very Low

There are people who thinks it fashionable to keep multiple credit card in one’s wallet.

One must avoid to keep multiple credit cards if one card is more than enough.

Rule of thumb says, debt/income ratio must be kept as low as possible.

People with high credit score has Debt/Income ratio of less than 0.2.

Using too many personal loans, auto loans, education loans at a time drastically decreases ones credit score.

[Earn Air Miles every time you swap your credit card]