Making credit related mistakes are easy, but with awareness, they are also easily avoidable.Are you making any of these mistakes?
Paying just the bare minimum dues
Every month, you receive a credit card statement with a minimum payment amount and more often than not, you may choose to pay that exact amount instead of the entire dues. While this may seem like the easy way out, it can prove to be more expensive in the long run. In fact, you may end up paying significantly more interest on the remaining due amount. It is a wise practice to eliminate as much of your debt every month as possible.
Increasing tenure to reduce EMI
If you are faced with an EMI too high, you may choose to extend the tenure and reduce the monthly payment. While this may be a temporary relief, it can cost you significantly in the long run in terms of interest. If you are in a similar situation, it is wise to review your expenses and other costs and minimise wastage wherever possible. Ensure that your EMIs are truly the maximum amount you can pay each month to save on your home loan.
Increasing your credit limit
Increasing the credit limit sounds like a sure fire way to keep a good credit score. However, most people often go overboard with greater credit limit. In the end, regardless of the credit limit, it is your personal control that makes all the difference. It is also important to remember that your interest rates are often calculated on your credit limit and due payments. Your CIBIL score is also dependent on the credit limit and can negatively affect your report.
Ignoring your CIBIL report
Most people are under the impression that they maintain a good credit score solely on their view of spending and earning. However, the real credit score is valid only through a CIBIL report which should be regularly requested. Without a CIBIL report to prove the transactions, you could be at risk of identity theft. If you are a victim of this crime, you could face huge losses as someone else could apply for loans through your name. With regular access to your CIBIL report, you can keep tab on your expenses and their influence on your credit score.
Ignoring the fine print on credit cards
Most introductory offers for credit cards are attractive on the first look. However, there is always a fine print. This tiny and seemingly unimportant text contains a world of information like terms and condition of the offers. Without reading these terms, you could be at the losing end of the deal.
Having a singular credit form
Your CIBIL report plays a pivotal role in the approval of your home loan. This score is constantly changing based on your spending and savings habits and can be improved, especially if you are serious about getting that loan. However, having a single credit form is not sufficient to improve your scored. Ensure that your financial dealings range from home loans, car loans as well as different credit cards to create a healthy and active credit score.