Decoding credit score calculation

A good credit score makes it easier to secure a loan. You might even be able to negotiate for better rates in some loans

Dos and don'ts for improving credit score

DOs

• Make payments on time. If there are overdue payments, settle these by working with the lender concerned. Even if you miss the payment, try repaying within 90 days of due date
   
• Monitor your co-signed, joint accounts monthly
   
• Monitor the loan accounts for which you have stood as a 'guarantor'
   
• Review your credit score and history frequently
   
• Have a good credit mix of secured (home, auto) plus unsecured loans (personal, credit card)
   
• Update all contact information with all lenders. This will ensure that your credit bills and key notifications are addressed to your current address. This will also enable banks to send your latest details to bureaus and generate an accurate credit report for you
   
• Close unused credit cards, as they are viewed as
   
• Existing possible debt. Keep only those cards used frequently

DON'Ts

• Don't have high dues on credit card
   
• Don't move around debt instead of paying it off
   
• Do not avail multiple credit at the same time
   
• Do not exhaust credit limit regularly on your cards. Pay your card debts first, at least the minimum due
   
• Too frequent credit shopping over 12 months
   
• Don't be 'credit hungry'. If you have made many applications for loans or have recently been sanctioned new credit facilities, a lender is likely to view your application with caution