If you are a regular salaried employee, chances are that sooner or later, you will need to take a big loan. Most probably, it will be for real estate purchases. At that time, you will know how important it is to have a good credit score. Since you future loan approvals depend on you credit score, you need to put some effort to keep your score good.

Now assuming that you already have a personal loan and credit card outstandings, how can you ensure that your credit score does not deteriorate?

The very first thing to do is to pay all your personal loan EMIs and credit card dues on time. This is the simplest and most effective thing to for you to do. Skipping or delaying repayments can lower your score.

Next you should objectively assess your credit card outstandings. If its large and you are unable to repay them at one go, it means you are paying a lot of interest on these card dues (as credit card rates are very high). Just imagine that for each rupee of outstanding, credit car companies can take 40% as interest in annual terms! So what you can do is to consider taking one personal loan to clear off both credit card dues and existing personal loan.

Now its understandable that one cannot control a lot of things. One doesn’t take a loan without a reason. There are situations when the only option to get money is to take loan.

All this is true. But if you are smart about managing your money, you will ensure that your interest costs are minimum. This can be done by having loans that are of low interest rates. If you have a credit card, try to avoid using it to the full limit. Higher utilization of unsecured loans like credit card debt is seen as having a negative impact on your score.  And that is something that you don’t want.

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