4 credit management resolutions that you must make in this new year!

The first month of 2016 is about to get over and its time to look back and analyse your financial behaviour.

“Advent of 2016 signals new hopes and aspirations along with resolutions for fulfilling these aspirations. Here are 7 resolutions you must commit to if you want to enjoy credit happiness and easy access to finance in the New Year by maintaining a healthy credit report and high credit score,” says Harshala Chandorkar, COO, CIBIL.

Timely payment of loans

Ensure that you are paying of your EMIs and credit card bills on time. Always have enough balance in the bank in order to make timely disbursements.

“In case you are making payments through cheque each month ensure that the check is deposited in advance before the due date of the EMI payment. Similarly also make sure that you pay credit card bills on time each month. Try to make the credit card bill payments in full each month to avoid accumulation of debt and interest charges,” says Chandorkar.

If making full payments isn’t possible, it is suggested that one should at least make part payments in order to avoid default tag. “Missing any EMI or credit card bill payment will impact your credit report and lower your credit score,” she notes.

Restrict credit card limits:

“While increased spending on your credit cards may not necessarily negatively affect your CIBIL TransUnion Score, an increase in the current balance on the card over time is an indication of an increased repayment burden and may negatively impact your score. It’s always prudent to not use too much credit,” says Chandorkar.

Limit credit exposure

“The total size of your debt reflects on your credit report and has an impact on your CIBIL TransUnion Score. Having many loans or credit cards increases the total amount of debt you owe and increases your credit exposure. High credit exposure may impact your CIBIL TransUnion Score. If you have many loans running ensure that you close some of them so that your total credit exposure is reduced, before you apply for new loans,” she adds.

Monitor your co-signed, joint accounts

It is important to regularly monitor all your loan accounts which include co-signed, joint and the ones for which you have signed up as a guarantor. It is also important to understand that by pledging as a guarantor on the loan, you are also legally responsible towards the timely repayment of the loan. In case of defaults and delinquencies by the principal borrower, the CIBIL TransUnion Score of the guarantor will also get negatively impacted. Hence, it’s imperative that the guarantor on the loan should ensure that the borrower pays the EMIs regularly on the due date, month on month.

Know your CIBIL TransUnion Score

It is important to keep a tab on your credit history regularly in order to track your financial standing and be “loan ready” always. Remember responsible credit behavior is the cornerstone of financial independence. In order to enjoy financial freedom and access to credit you must ensure responsible credit behavior and due diligence.