How to maintain a healthy credit profile?
A credit profile is a document containing information about a person’s or a company’s credit history. A credit report shows how an individual or business has used or is using credit. In the credit profile, four major areas are covered: identification information, credit history, public records regarding disputes, and credit inquiries.
Lending institutions prefer good credit profiles with a timely repayment history. A good credit profile also puts a company in a good position to raise the necessary capital from credit institutions. An individual gets the same benefits in the form of loans with lower interest rate and faster disbursement time. “The bargaining power of a borrower with a good credit profile is greater than that of someone with a weaker credit profile. Therefore, maintaining a good credit profile is a must for anyone for a healthy financial future,” says Sanjeev Dahiwadkar, Founder and CEO of Moringa Techsolv, a software products company in regulatory compliance technology.
Steps to maintain a healthy credit profile
Good financial habits are essential to maintaining a healthy credit profile. What can you do? Among other things, avoid late payments, maintain a good credit mix, and don’t exhaust available credit limits on credit cards.
“Don’t try to borrow frequently and inquire frequently. This will negatively affect the credit profile. Maintain healthy credit utilization with a balance between secured and unsecured loans. If someone has co-signed a loan, monitor it regularly,” adds Dahiwadkar.
Pay attention to access to credit with a low rate of credit utilization. Limit the number of credit facilities you have at different financial institutions. “Timely payment and regular monitoring of credit scores will go a long way to ensuring a better credit profile over time,” says Dahiwadkar.
In addition to not applying for loans or credit cards frequently, avoid applying for accounts you may not need. If you have too many cards, choose one or two and close the others. Consolidate your spending on selected cards.
A healthy credit profile stems from healthy financial habits. Spending within your means, keeping your expenses low and tracking them are some of the ways to build a healthy financial future. Have clearly defined financial goals. This will help you save with discipline and manage your spending accordingly.