How to Maintain A Good Cibil Score If You Are An Impulsive Spender

The last decade or so has witnessed a rise in credit access in our country, especially the millennials and Gen Z coming up and availing of loans and credit cards to support their lifestyle. And more often than not, it’s the motto of living life in the present and not relying on the future is that leads many youngsters towards impulsive spending, which gradually becomes a pattern or rather a behaviour.

For all such people, even though they may be disciplined in credit repayments, it’s important to know their cibil score calculation so that they can maintain a strong credit score, which otherwise can often become a tedious task due to their impulsive lifestyle and failure to find cibil score. If you, too, are amongst such impulsive spenders, here are some financial tips to help you sort your finances and maintain a good credit score as well.

Stay away from impulsive credit card spending.

Given that credit cards as a payment mode offer instant access to credit, many impulsive spenders often get caught in a debt trap upon careless usage, especially those who are not adequately aware of their cibil score calculation. Whether credit cards lead you to a debt trap or prove beneficial to your financial health depends totally upon the way you handle and repay them. Often, it’s the impulsive spenders’ unhealthy financial habits that land them into deep trouble in the form of the debt trap. A simple & easy way of avoiding that is to stop treating credit cards as an additional or extra source of income. It’s only a mode of payment that offers you credit access, which you need to timely repay back to the issuer through bill payment.

Remember that, as credit cards involve hefty interest rate charges, which may shoot up to 40%-48% p.a., ensure you use them diligently and always pay your monthly credit card payments timely and in full, besides knowing all the factors that are included in your cibil score calculation. If used wisely and diligently, credit cards certainly boost your credit health by assisting in building a good credit score, along with various benefits such as cash backs, rewards, discounts etc.

Always automate monthly credit card bills and other payments.

Going for automation of the monthly payment of your bills, loan EMIs, investments and credit cards can greatly help in staying financially disciplined. This is because your bank will auto-debit the various payments from your linked bank account as and when the due date arrives. This habit will provide you with dual benefits. One, you won’t miss out or delay your payments and two, it enables you to strictly follow a disciplined approach towards managing your finances each month, without going overboard or indulging in impulsive spending.

But in case you don’t provide standing instructions to your bank and continue managing your payments and investments manually, chances of financial indiscipline or payment default are always higher, more so if you don’t know what financial habits impact your cibil score calculation.

Moreover, in case that you are wondering how to find cibil score, you can do so by visiting online financial portals or the credit bureau’s website to fetch your cibil credit report, which includes a cibil score as well.

Factor in your risk appetite before decision making

For those who don’t know, risk appetite is your ability to take the risk, with the degree of risk depending upon factors such as investor’s financial condition, existing liabilities, age, source and frequency of income, and a number of financial dependents. You must invest in line with your risk appetite so that you don’t end up hurting your finances due to a mismatch between risk appetite and investment portfolio. This can also lead to unmanageable debt, both in loan and credit card form, due to poor handling of finances, which can even harm your credit score when you visit cibil’s website or any other online financial portal to find cibil score.

Usually, impulsive spenders tend to be aggressive to invest and building a higher risk-oriented portfolio. This can, at worst, result in big losses if the market crashes and you urgently need those funds, hence leading to withdrawing your invested money when your portfolio is bleeding red.

For those who have a really higher risk appetite, it’s still wiser to build a balanced, i.e. moderate risk portfolio to ensure your risk-reward balance remains intact.

Not only does a balanced portfolio help during market ups and downs, but it offers stable returns as well. Such a portfolio generally includes investment in balanced mutual funds, which include both debt funds (for short term goals) and equity funds (for medium to long term goals). Those looking to invest in low-risk instruments may opt for fixed deposits or savings accounts (up to 7% interest) or even debt mutual funds.

Go for disciplined and regular investments through SIP.

Besides following all the above-mentioned steps, including being aware of your cibil score calculation process, factors and habits that affect it, and the importance of developing the habit to find cibil score, another equally important step for impulsive spenders is to begin regular and disciplined investing through mutual fund SIPs, which enable you to invest a predetermined amount at a preset date and at a preset frequency, like monthly, quarterly etc.

While doing so, don’t base your decisions upon hearsay or biased opinions. Even if you need advice, opt for a financial planner or advisor instead of forming an opinion based on family or friends’ views. With their expertise, financial advisors would be the suitable source to anchor your investment decisions, especially due to the presence of adequate skills and knowledge to guide you financially throughout the journey.

Stick to a realistic budget every month

Many people love spending and buying everything they like, right? After all, we think that life is too short of having regrets! But that’s exactly where you must know where to apply the brakes and control. The best way to do so is by making a budget every month. Budgeting not only makes you financially disciplined but also inculcates the habit of saving before spending, which is touted as one of the best habits for impulsive spenders to remain in control.

And while creating your monthly budget, ensure that it’s a realistic one, i.e. a budget that you would practically be able to follow and not just let it remain a piece of paper. And to safeguard your budget and finances from life’s uncertainties and exigencies, it’s first important to build an emergency fund.

This rainy day fund’s amount would only be utilized in times of financial exigencies, like sudden job loss or accident or severe illness. Make sure to find cibil score as well besides developing the habit of creating as well as maintaining an appropriate emergency fund amounting to at least 6 times your monthly expenses, especially due to a current pandemic is driven uncertainties.