Mr. Sethurathnam Ravi shares guide to building and understanding your credit score. According to him, your credit score is a powerful financial tool that can shape your financial future and a good credit score can open relevant doors. Building a strong credit score is a gradual process that requires discipline and financial responsibility. Therefore, S Ravi, former BSE Chairman inform the public on how you can achieve this.
S Ravi BSE Former Chairman ,shares reports from a credit monitoring platform. According to them, the average credit score for Indians last year was 715. While this figure may be deemed adequate, there is still room for improvement. One must understand that one’s credit score is more than simply a number; it is a financial passport that may either open doors to a world of opportunities or easily confine one’s financial path.
A credit score is a numerical representation of your creditworthiness, a snapshot of your ability to manage credit responsibly. Ranging from 300 to 850, a higher score indicates a lower credit risk. In today’s financial landscape, having a strong credit score is crucial for various aspects of your financial life. Whether you’re applying for a mortgage, car loan, or even a credit card, your credit score plays a pivotal role in determining your eligibility and the interest rates you’ll be offered. As per S Ravi’s views, building and maintaining a strong credit score requires a strategic approach and disciplined financial habits.
S Ravi BSE, former chairman talks about the several factors that will influence the trajectory of your credit score and some of key components include factors like your payment history. On-time payments on credit cards, loans, and other financial responsibilities improve your credit score greatly. Paying bills on time every time indicates appropriate financial behaviour. Second, credit utilisation, which is the ratio of your credit card balances to your credit limits, is an important consideration. Keeping this percentage under 30% suggests prudent credit management.
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. The former BSE Chairman S Ravi explains that even a diverse mix of credit accounts, such as credit cards, installment loans, and retail accounts, contributes positively to your credit score. However, it’s crucial to manage these accounts responsibly. S Ravi alerts people to be vigilant that opening multiple credit accounts within a short period can negatively impact your credit score. Be cautious about unnecessary credit inquiries and only apply for new credit when necessary.
Building a strong credit score is a proactive process that requires diligence and strategic financial planning. Therefore, S Ravi, former BSE Chairman asserts people to start by creating a budget and living within your means. Ensure timely payments of bills and set up automatic reminders to avoid missed due dates, else it is very easy to get consumed by credit burdens.