Establishing a good credit score through deliberate strategy and disciplined financial habits – S Ravi BSE, Former Chairman

A credit score is a numerical measure of your creditworthiness, or ability to manage credit responsibly. A higher score (300 to 850) suggests a lesser credit risk. In today’s financial landscape, a high credit score is essential for many facets of your financial life. Whether you’re asking for a mortgage, a car loan, or a credit card, your credit score is critical in evaluating your eligibility and the interest rates you’ll receive. S Ravi, former BSE Chairman speaks about how building and maintaining a good credit score necessitates a deliberate strategy and disciplined spending habits.

According to S Ravi BSE, Former Chairman, “building a strong credit score is a gradual process that requires discipline and financial responsibility. Your credit score is a powerful financial tool that can shape your financial future and a good credit score can open relevant doors”.

S Ravi BSE, details that the average credit score for Indians last year was 715 as per a credit monitoring platform. While this number may be considered decent there is a lot of scope for improvement. “One needs to understand clearly that your credit score is more than just a number; it’s a financial passport that opens doors to a world of opportunities or can easily constrain your financial journey too”, he explains.

S Ravi, former BSE Chairman elucidates the different factors that will influence the trajectory of your credit score, including your payment history. Making timely payments on credit cards, loans, and other financial commitments can dramatically improve your credit score. Paying bills on time indicates good financial behaviour. Second, credit utilisation, which is the ratio of your credit card balances to your credit limits, is an important aspect. Maintaining this percentage below 30% demonstrates responsible credit management.

According to the information shared by S Ravi BSE, Former Chairman the longer your credit history, the more information lenders have to assess your creditworthiness. Keeping older accounts open positively influences this aspect of your credit score. Even a wide mix of credit accounts, such as credit cards, instillment loans, and retail accounts, might help boost your credit score. However, it is critical to handle these accounts appropriately. However, it is important to be aware that creating many credit accounts in a short period of time might have a negative impact on your credit score. Avoid making excessive credit queries and only apply for new credit when necessary.

Developing a good credit score is a proactive process that needs due investigation and effective financial planning. S Ravi informs the public to begin by setting a budget and living within your means. To minimise missed due dates, make sure to pay bills on time and set up automatic reminders; otherwise, credit responsibilities might swallow you quickly. As per the views of the expert, one can also request and review their credit reports from major bureaus on a regular basis to check for discrepancies. Dispute any inaccuracies as soon as possible because they might have a negative impact on your credit. To prevent incurring interest, maintain credit card balances below 30% of your credit limits and try to pay them off in full each month. S Ravi, former BSE chairman also advices the people to apply for new credit with caution, as many queries in a short period will temporarily reduce your credit score.