Consumer Credit on Cards Increase – Delinquencies Drop – Tips for Healthy Score

CIBIL has released some interesting Statistics on the state of Credit Cards market in India. The number of credit cards has seen marginal increase YoY. However, the average balance of cardholder of Foreign Banks has risen from Rs 61,000 to Rs 82,000 and in case of domestic banks the average balance has risen from Rs 39,000 to Rs 47,000. So does the rise in balance pose an alarming situation as was the case of American Consumers during 2008 Financial Crisis ? Well, CIBIL has also released another interesting data point – The number of cardholders who have not met their payment obligation in 90 days has reduced from 2.82% to 1.62% in Q4-2011. [Failing for 90 days means, the bank has to start making provisions in their Balance Sheet and when they do so, they mark negative remark on consumer’s credit report]

How to Improve my CIBIL and Other Credit Bureaus’ Score ?
A Good Credit Score is a reflection of your financial discipline and Bankers love to transact with such consumers. Here are some tips to maintain Healthy Financial Credit Report and Score.

  • Don’t run away from credit cards. Have atleast one and use it regularly for Bill Payment at regular intervals and pay off in full. Regular usage and Payments is Big Positive.
  • The Number of Accounts like Car Loan, Credit Cards, etc with Big Positive can help you process big ticket loans like Home Loans or SME Loans faster, smoother and at better rate of interest.
  • Do not apply for many credit cards in short span. Every time you apply for a card, an inquiry is made by the Bank at Credit Bureau – CIBIL which stays on record for 24 months. So frequent applications to credit is viewed in Negative by Banks as they think you are Credit Hungry.
  • Any Credit Card or Loan Account Opened should be held for at-least 12 months to get a better score. Even though if you are not using the card, do not close it before 12 months. Frequent “Opening” and “Closing” of accounts is negative because lenders doubt your credit management ability
  • If you do not qualify for credit cards or loans, don’t lose heart as you can still Build Credit History by getting a Secured Credit Card, which is issued against Fixed Deposit. Use and Payment of this credit card will also be reflected in CIBIL and thus begins your journey towards healthy credit score.

You are welcome to write to us on any credit related issues in India as a consumer.

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