How to maintain a good Credit Score

How to maintain a good Credit Score

Feb 5, 2024 | Personal Finance | 0 comments

Credit scores play a vital role in getting a loan sanction, and would also impact the interest rates at which the loan shall be sanctioned.

Hence if you are looking to take up a loan or your personal business finances depend on short term loans then one must keep a good credit score. There are several measures one could take to keep his credit score high.

What is a credit score?

What is a credit score? and how to maintain it over time.

A credit score ranges from 300 to 900. Credit score between 750 to 800 is a good credit score. People with a credit score above 600 usually get a loan sanctioned however if you lie below 700 then your interest rate would be high.

If you fall between 700 to 800, you will get the loan at competitive interest rates and if your credit scores are above 800 then all lenders would prefer giving you loans without any sort of hassles.

Know your credit score

To start with, you would first like to know where you stand, hence find out your current credit score. There are many websites which provide you assistance in calculating your credit scores.

Some of them provide this service for free and others help you with a minimum cost.

Factors that affect credit score

These are the factors that affects your credit score.

  • Payment History
  • Amount Owed
  • Credit Lenght
  • Types of Credit
  • New Credit

Payment History

Payment history consists of the records regarding your repayment of the loan amount that you had taken in the past. The simple logic behind this is that if you had paid your loan in time in the past then you would be capable of repaying the amount of the new loan in future also.

Out of all other factors, more emphasis is given to the payment history. Total of your credit score factors, payment history score consist of 35% of portion.

Amount Owed

If you have had utilized less percentage of your total credit limit, then chances of you getting the new loan are higher. This indicates that you have spent the borrowed money responsibly and only when it was really needed.

The less the percentage of the utilization of the borrowed amount, the more are the chances of you scoring a good credit score. This factor consists of 30% of the total factors.

Credit Lenght

It consists of 15% of the overall proportion of the factors. You can score greatly if you have an old account that is still open.

Even if your open account’s age is not much, still it’s okay to score well only if you have had kept good records of loan repayments on time. If you close your old accounts, then your credit score will also start getting low.

Types of Credit

This consist of 10% of the percentage amongst the other determining factors of the credit score. Types of credit mean how many types of loans you have taken. The types can be of mortgage loans, credit cards, students loans, etc.

This is checked to see whether you can handle repayments of the different types of loans or not. This proportion is not that important, so don’t just open a new account, just because you want more accounts. 

New Credit

Here it is checked how many new accounts of the same category you have. It also checks how many times you have applied for the new accounts. It checks the time duration between the old account and the new account.

Remember the number of times your application for the new account is rejected by the lenders, the number of times your credit score will get hampered. 10% score is allocated to this factor.

How to maintain a good Credit Score

Maintain your Credit History

Credit history plays an important role in building your credit score. CIBIL usually may put people with no credit history at a credit score of below 300. Hence one would like to build and maintain a credit history.

Hence keep your old credit cards and don’t close them. As they tend to provide a credit history of a longer period for you in case you are looking up for a loan and will help you improve your credit score.

Though credit history is not the only parameter in your loan decision, but it is one of the major deciding factors.

How to deal with your credit cards?

Another major component that decides your credit score is the mix of debts you have and how you are paying them. It’s important to know that your credit cards are also part of your debts and are a form of unsecured loans which come at high-interest rates.

One must try to keep his credit card debts below 30% of its credit limit and should not wait for paying it over months. If possible payout the debt before it shows on your due payments.

You already get one month to pay your credit card bills before any kind of interests gets levied over them. In case you are not able to pay off your credit card dues, just pay the minimum due on them or else they shall also levy late payment fees on your dues.

Try to limit your number of credit cards and close off all the nuisance balances that are due on various cards. The one mantra to keep your credit score high is timely payments of your debt’s dues.

Make timely payments

Not only your debts but your bills also form a part of your credit score. In case you have long-overdue bills that you ought to pay, then that also tend to bring down your credit scores.

credit score measures your 360-degree payment capacity and financial control. Hence one must pay his or her bills on time, pay his due payments on time.

This not only helps improve your credit score but also help you avoid late payment charges and overdue interest charges that make it even more difficult for you to pay off your debts.

If you have cash crunch, then one must pay off their most expensive debt first and at least pay minimum due on another type of payments to avoid late payment fees.

Avoid making too many loan or credit inquiries

In case you make too many loan or credit inquiries, this shows that you are in dire need of cash and hence tends to have a negative impact on your credit score.

This is especially important when your loan request gets rejected and may raise a red flag on the creditor’s mind. Also, one could install a credit monitoring app which will help you know the status of your credit score and also it helps to avoid any kind of identity fraud which may result in a sudden dip in your credit score.

Another thing which one can do is check his or her credit report and look for any kind of mismatch of information in contrast to reality. Sometimes it may happen that your credit score report is not displaying your current situation.

In such a case one must raise an inquiry with credit scoring entity and get it corrected as soon as possible.


The easy three-step process of maintaining good credit score is timely and consistent payments of your dues, constrict your spending and do not overspend than your limits.

You can install a habit of making a budget of your assets and liabilities for a month and this way you will do mindful spending as you know what your limits are and how much you can spend without stretching yourself. Then the third and most important part of maintaining a good credit score is to pay all your bills of time.

A credit score is not a permanent thing and it can be improved over time with consistent efforts.

It just reflects how you are positioned financially and what are your strengths to pay off any new loan. Avoid applying for a new credit card, keep an eye on your credit report and try to eliminate your present debts before you move on with a new one.

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