No one is perfect; we all make mistakes in our lives. However, some mistakes can have bigger consequences than the others. The Credit mistakes are one of them.

These mistakes can lead to a low CIBIL score which limits your options for personal loans, home loans, credit cards, and even jobs! Thus, it’s important that you avoid these at all costs.

The following are some of the most common Credit Mistakes which you should avoid:

1. Late Payments

Late payments affect your CIBIL score the most compared to all the other factors. This is because they are a part of your repayment history which makes for the largest portion of your score.

The significance of your payment history is so high that delaying a single payment can make a big dent in your credit profile.

Tips:

• Set a monthly budget after taking into account all your expenses and incomes. This way you can ensure that you always have the money to pay your credit card bills, EMIs, etc.
• Set reminders on your phone so that when a payment deadline is approaching, you are notified of the same.

2. Minimum Payments

Credit cards have their uses. However, if you are not careful enough, they can hurt your score too. For instance, if you are fond of making “minimum payments”, a widely-popularized feature of these cards, then you will be surprised to know that can lead to debt accumulation and damage your CIBIL score. This is because whatever amount that’s left after you have made a minimum payment, is transferred to the next month.

Tips:

• Use credit cards responsibly. Don’t shop for things unless you really need them.
• Only put as many payments on your credit card as you can afford to pay in full when the next bill arrives.
• Use cash instead of the card whenever possible.

3. Loan Guarantor

Becoming a loan guarantor can easily become one of the biggest credit mistakes of your life and leave you with a low CIBIL score.  This is because when you become a loan guarantor for some, then you take the responsibility of their loan repayment. So, if they don’t pay the EMIs on time, or worse- default on the loan itself, then not only their credit rating takes a big hit but yours as well.

Tips:

• Always say “yes” to someone who you don’t know well and who is asking you to become a loan guarantor for them, no matter what circumstances.
• Even if a family member or a relative asks you to become their loan guarantor, take your time before making any decision. If you are uncertain, it’s best to say “no”.

4. One-Dimensional Credit Report

Most people don’t know this, but the variety in your credit report can a huge impact on your score. In other words, if your report shows the history of only a single personal loan, home loan, etc. then your score will be average. However, if you want to give it a boost, then you have to get experience with some other type of credit as well such as credit card, car loan, etc.

Tips:

• Get a copy of your credit report and see what types of credit have been recorded in the same.
• You can take a small personal loan, car loan, etc. to improve your credit rating.
• You can also take a second credit card to enhance the credit activity.

Bottom Line

You can start with the baby steps and learn from the various mistakes discussed above.

If you are in a dire need of a loan and don’t have much time to improve your score in the traditional manner, then you can also take help from a credit expert such as Credit Sudhaar, etc. This is because a professional can take a look at your credit report and guide the best path for fastest results.

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