Credit score: A good credit history for a secured future

Express Money

How it works

Typically, credit information firms have a network of member banks and financial institutions, that send transaction details to it regularly — in some cases credit card companies send it on a cycle basis, while banks prefer to send the data on a monthly basis.

Credit information companies then use the data to create financial histories of consumers, which can be tapped into by member banks. Individuals too can access their credit reports by logging on to the website of these firms and ordering their report that comes at a nominal fee ranging from Rs 148 to Rs 470.

In case of any errors in their reports, individuals can write to the credit information companies to get it rectified. Under law, banks are given a 30-day timeframe to correct their records. But the main objective behind allowing individual consumers to tap into their credit reports is to enable them to understand their own financial history and work on areas of improvement. And given time and effort, it is possible for anyone to enhance their credit score and polish up their credit report.

How to improve your Credit Score

Be punctual: Always, always pay your loan EMIs on time. If you have more than one loan, maintain a calendar of the due date for each payment and if possible, consolidate all loans in a single account. This will ensure that the payment process becomes easier for you.

Be prudent: Never lag behind on credit card payments as it is a revolving credit and is sharply reflected on your credit score. It is always best to make full payments on your credit card each time, but if you are running short of cash in a particular month, do ensure to pay the minimum due. Also if you have two credit cards, instead of using the maximum limit in one card, try to break it down and use both cards equally for payments.

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