So far we have discussed how your transactions impact your Credit Score. There are quite a few variables that come together to make your Credit Score what it is. Knowledge of these variables will help you maintain a good score. However, just following a few simple rules in your daily life can also help you maintain a good score.
We are talking about rules that make life easier – simple things like being responsible and timely. If you apply the same rules to your credit payments consistently, from the beginning to the end of your credit cycle, you will be a responsible loan taker.
Rule 1: Spend what you earn
This is something that is ingrained in us even as children. And, loans don’t fall outside the purview of this bit of wisdom. If you take a loan, make sure it is an amount that you can repay with your income over time. If not, applying for a loan will put you in a situation where you cannot repay the loan – impacting your score.
Rule 2: Timeliness
Paying your dues on time is hassle free. One missed payment will entail a lot of to and fro with lenders – wasting time and resources for you and the company- with negative effect on your score. Delays in payments also puts your creditworthiness in doubt.
Rule 3: Finish what you started
Be sure to tie-up all the ends so your credit history is neat. For e.g. If you have closed a loan the loan closure document you should have the loan closure document with you.
Rule 4: Plan ahead
Track your score to avoid surprises like errors in your score or unknown transactions. This will allow you to apply for loans in the future without any roadblocks.
These mantras are drawn from your daily life and are quite simple to implement, without worrying about all the credit transactions that affect your Credit Score. The idea is that if you are responsible in your daily life, you will be responsible with credit too. So be a responsible loan taker and look forward to a better future.
Rule 5: Borrow only when you need
Taking a loan or borrowing money always for all your financial needs is not the solution that is suggested. Find or look for all other alternatives before you look to take out a loan. Cut your daily spends, plan your monthly budget, avoid unnecessary spends. This will help you downsize the risk of borrowing money or taking a loan.
Rule 6: Make your payments on time
If and when you take out a loan, make sure you repay them on timely installments. For any reason you are not able to pay your monthly installments then it is responsible to have an open communication with your lender. This will make you responsible and help you build trust.
Rule 7: Don’t borrow more than you need
This is the basic rule of being a responsible loan taker. Never borrow money to fulfill your personal needs. If you follow this rule, then you will be miles ahead in your financial planning which in turn will shape your and your family future.
Being a responsible loan taker helps you build a good credit score along with a good reputation with your lending partner.The biggest advantage is that It will never take over your peaceful life.