How to improve your credit payment history, secure better financial terms

Use mobile apps or calendar reminders to ensure you pay your bills on time; automating loan payments will help too

Credit payment history is crucial in shaping your economic opportunities. If you are planning to buy a home loan, start a business, or ensure financial stability, a strong credit payment history can open doors and provide you with better financial terms.

 

What is credit payment history

 

Credit payment history is a record of your previous payments on credit accounts such as loans and credit cards. It tracks whether payments were made on time, missed, or defaulted. This history shapes your credit score calculation, as it indicates how responsibly you handle credit obligations. A strong payment history can improve your credit score, while late or missed payments may negatively affect it.

 

“Having a good credit history has various benefits and users can enjoy lower interest rates, higher credit limits and loan amounts. To improve their re-payment history, users could consider scheduling payments which also lets them reap the benefits of an interest free credit period. Users should also consider a credit limit based on their expenditure patterns to ensure best returns,” said Prashant Kumar, founder of Kredit.pe.

 

To improve your credit payment history, take these steps:

 

Pay bills on time: Ensure you pay all your credit card bills, loan EMIs, and utility bills before the due date.

 

Set up automatic payments: Use auto-debit facilities for regular payments to avoid missing due dates.

 

Maintain credit utilisation below 30 per cent: Keep your card balance well below the limit, ideally under 30 per cent of your total available credit.

 

Don't apply for multiple loans or credit cards: Too many credit inquiries in a short period can affect your score.

 

Keep old accounts active: Maintain long-standing credit accounts as they contribute positively to your credit history.

 

Check your CIBIL score regularly: Monitor your credit report for errors and dispute any inaccuracies promptly.

 

Avoid defaulting on payments: If you are facing financial difficulties, communicate with your lenders to explore options like loan restructuring.

 

Use credit mix wisely: Having a mix of secured (like home loans) and unsecured (like credit cards) credit can positively impact your score.

 

Be cautious with co-signing: Avoid co-signing loans for others unless absolutely necessary, as their payment behaviour can affect your credit score.