Active Stocks
Fri May 24 2024 15:59:27
  1. Tata Steel share price
  2. 174.80 -0.37%
  1. NTPC share price
  2. 374.85 0.68%
  1. State Bank Of India share price
  2. 828.60 -0.45%
  1. ITC share price
  2. 436.10 -1.16%
  1. Power Grid Corporation Of India share price
  2. 318.50 -0.39%
Business News/ Money / CIBIL: Financial crisis leaving you fearful? Follow these 7 strategies to protect your credit score
BackBack

CIBIL: Financial crisis leaving you fearful? Follow these 7 strategies to protect your credit score

To help safeguard your CIBIL score and minimise the impact of a financial crisis on your overall financial health, you need to communicate with your lender, prioritise your payments, and try to pay at least the minimum payment on your credit cards.

It is recommended to limit new credit applications during a financial crisis, as multiple inquiries within a short period can negatively impact your CIBIL score.Premium
It is recommended to limit new credit applications during a financial crisis, as multiple inquiries within a short period can negatively impact your CIBIL score.

Nobody likes to be amidst a financial crisis. But when it comes, it comes unannounced. It can affect everything from your fuel bills to credit card dues. And one thing comes as a collateral damage: impact on your credit score. 

Here we suggest a slew of ways to keep your credit score protected when you are amidst a financial crisis.

It is vital to remember that protecting your CIBIL score is imperative to maintain your financial stability

Here are 7 strategies to keep your CIBIL score protected during a financial crisis:

1. Make at least minimum payments: You should continue making at least the minimum payments on all your credit accounts, such as credit cards, and loans. Late payments can considerably impact your credit score.

2. Communicate with lenders: If you are facing some financial problems, you should contact your lenders to discuss options such as deferment, forbearance, or restructuring of payment plans. Many lenders are willing to work with customers during times of financial hardship.

3. Prioritise payments: If you’re still unable to make payments on all your debts, it is recommended to prioritise them based on their importance and consequences of non-payment. For instance, keeping up with mortgage or rent payments may take precedence over other debts.

4. Monitor your credit report: You should regularly check your credit report from all three major credit bureaus (e.g., Experian, CIBIL TransUnion and Equifax) to ensure accuracy and detect any unauthorised activity. 

ALSO READ: Can you improve your credit score while unemployed? These are 7 steps to follow

5. Utilise credit wisely: You should also limit new credit applications during a financial crisis, as multiple inquiries within a short period can negatively impact your credit score. Besides, avoid maxing out credit cards, as high credit utilisation can also lower your score.

6. Create a budget: Develop a realistic budget to manage your finances effectively during the crisis. Identify areas where you can reduce expenses and allocate funds towards essential payments.

7. Seek financial assistance: Explore available financial assistance programs, such as unemployment benefits, government aid, or community resources, to help alleviate financial strain.

At the same time, it is important to focus on rebuilding your financial stability for the long term while you navigate through the financial crisis. Establish an emergency fund, improve your financial literacy, and develop strategies to prevent future financial hardships.

Frequently Asked Questions:

Why is it important to protect yourself against identity theft?

One should guard their personal and financial information to prevent identity theft, which can lead to fraudulent activity on accounts and damage credit score. So, one should use strong passwords, secure online transactions, and monitor accounts regularly for any suspicious activity.

What is credit counselling?

If you are struggling to manage debt, you may consider seeking assistance from a reputable credit counselling agency. They can provide guidance on debt management strategies and negotiate with creditors on your behalf.

How often should you check your credit score?

Most experts recommend to check the credit score at least once a year. 

Can there be mistakes in credit reports?

It is not uncommon to spot mistakes on credit reports. So, regularly checking your credit score allows you to spot any errors, such as inaccuracies in personal information or incorrect reporting of accounts or payments.

Does applying for new loan impact the credit score?

Each time you apply for credit, it triggers a hard inquiry that can temporarily lower your credit score. So, it is advisable to limit new credit applications, particularly if you’re planning to take out a significant loan soon.

You are on Mint! India's #1 news destination (Source: Press Gazette). To learn more about our business coverage and market insights Click Here!

Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less
Published: 28 Mar 2024, 12:33 PM IST
Next Story footLogo
Recommended For You