Managing Credit Rating | Credit Help India


Your credit rating which is popularly known as CMR Rating ( CIBIL MSME RATING) is a big part of your financial identity. It is the most necessary to determine whether you will get a loan and the way a lot of it will value you. Your credit rating ( CMR ) is a number that helps to check how much f a risk it is to lend you money. It shows how accountable or irresponsible you are along with your finances. When it is good, it will assist you to get access to the lowest rates that permit you to borrow for each short-run emergencies and longer-term wants. That is why falling behind on your mortgage payments, car loans or credit card bills is not a wise move. It may harm your future ability to borrow cash.
Bad credit can affect you in areas of your life you would not even expect. For example, take employers and landlords. They may look at your credit score to decide whether you will get the job and the house for rent. There are many ways to reach a good credit score. This article focuses on how you can manage your debts and how you can reach a good credit score.

Managing debt

If you have ever been in debt, you know how pressured it feels. Every month you pay a little to this loan, a little to that credit facility , and, you feel like you have gotten somewhere. But later you feel like you have gotten nowhere. But that will not happen if you have a debt payment strategy. A plan that is realistic enough to follow. Stick to the plan and before you know it, you will be moving in the right direction.

1. Snowball method: First, make a list of all your credit balances from lowest amount to highest. If two balances are similar, focus on the card facility with the higher interest rate. Then take any more money you have available and put it towards the debt with the smallest balance. Do this each month until you have paid off all your debt. When you pay it off, do not use that account again until your debt is cleared up.
The next step is, to take the money you are paying towards that bill and apply it to the next smallest balance on your list. As you continue moving down your list, the amount you can pay to each balance continues to grow to create a snowball effect.

2. High-rate method: Again, make a list of all your debts, but this time arranges them according to their interest rates. Put the highest interest rate debt at the top. Using this method, you will also pay the smallest amount due. Then you would focus on sending as much as you can afford to the account with the highest interest rate. Keep doing that until it is paid off. Start paying off the card facility that has the next highest rate and so on.

Steps to build a good credit score

1 Payment history: First is your payment history. That goes for all your bills on your credit report and not your credit cards. This is important because it makes up a decent part of your score. Creditors want to know that you pay on time every time, even if it is the least. So, pay your bills on time.

2 How much you owe: : It is a good rule of thumb to keep your total debt lower than the credit available to you. The lower the better. It is because, if you get too close to your limit, creditors may think that you are incapable of paying debts on time. So, a lower debt to credit ratio is always better and preferred.

3 Credit history: Creditors want to see that you have been managing credit for a long time. Your credit history shows how long you have been using credit. It also shows how you have handled that responsibility and how responsible you have been. Establishing a good long history means you are an old pro at borrowing or managing money. You are then likely to repay what you borrow and can be trusted.


Q1. Does my Credit Rating get affected by credit history?

Ans- Yes, your Credit Rating will degrade if you will not maintain a good credit history.

Q2. What are the benefits of a good Credit Rating ?

Ans- You can have a lot of advantages for maintaining a good Credit Rating. You are likely to be approved when you apply for a new credit line with easy terms and conditions if you have a good Credit Rating.

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