Financial knowledge is the need of the hour for all. It’s our duty to be informed about current events in the market. As compared to the past decade, we’ve been pumping more money in the mutual fund market. People now understand the importance of SIP (Systematic Investment Plan) and its benefits after 3-5 years. Many want to invest in stock market for longer period and many want to invest in real estate. We now understand the importance of life and medical insurance.

Hence the average person today is informed, actively looks for more investment options and ways to strengthen their financial profile. We might consider closing our old accounts and credit cards that are not being used today. Let me tell you why that’s a bad choice.

Your credit score is calculated for a long time and takes time to improve or fall. This credit score includes history of all the loans you took using old accounts and credit cards. When you plan to close your old account or credit card, you need to understand that your credit score will reduce. Yes, when the account is closed, your credit history for that entire active period is wiped out. Hence if you had a good score, that will fall and you will have to begin building your score from scratch.

The same applies for your old credit card. If you close your old credit card because the new one has better benefits etc then the credit history attached to that card will be wiped out. Hence it’s very important to use and maintain your old accounts in case you plan to take a new loan/debt. In conclusion I’d like to tell you that it’s best to think wisely, pay your bills due, pay loan EMI’s without defaulting and that will help you maintain a strong financial profile.

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It’s 2018 and everyone here in India is finally showing a lot of interest into the financial markets. Yes, there is a steady rise in the investments by domestic investors. Who knew that investing in mutual funds can also give us good returns like fixed and recurring deposits do.

How Informed is today’s investor?

The average investor today is well informed about the current trends. Gone were the days when we listened to where Mr.Sharma or Mr.Verma were investing and followed them like sheep. Today, a customer knows what his /her financial goals are. They know what an “SIP” stands for and also know the importance of Insurance. “Kitna Deti Hai?” is what a customer today will ask not only to know the mileage of a car but also to understand the returns a mutual fund provides.

Importance of Credit Score:

There is something else that also needs our immediate attention i.e. CREDIT SCORE. Yes, you must be seeing the term “credit score” almost everywhere online. A credit score helps the Banks and NBFC’s in the market to understand the credit worthiness of a person. The scores range from 300-900. The mantra here is “Higher the better”. In India any score above 750+ is considered to be a good credit score.

How can you increase your credit score?

Firstly, your credit score takes time to build up and hence a person with at least 6 months of credit history can find out his/her credit rating. You can avail the services of a credit card or a personal loan.

Using a credit card with a lower utilization ratio and paying off the bills on time completely can increase your credit score with time.

When you take a personal loan and repay the EMI’s on time without defaulting even once, it is considered as disciplined borrowing by the lender.

It is very important to have a good credit score today as a score above 800 shows that you are a disciplined borrower. The lenders can provide you loans at a lower rate of interest. There is also a possibility that they might waive off certain fees like processing charges and prepayment penalty. But if your score is lower than 700, it can get tough to get a loan from any Bank/NBFC as you are not credible as per the lender. A low score means that you might default on payments or might not be able to repay off the loan. Hence in these cases, the lender will impose a high rate of interest on your loan.

Hence, be wise and save yourself from this trouble. Use a credit card wisely and pay off your loans on time. This will help you in the present and also in the future.

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