Smart credit practices every borrower should know

Industry leaders say many people do not realise how closely lenders watch borrowing behaviour

• Maintain a credit score above 750 for better loan approvals
• Keep EMIs within 30-40 percent of monthly income
• Limit loan applications and check credit reports often

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Smart credit habits can make a big difference to a borrower’s financial life, especially at a time when loans and credit products are easy to access. Using credit wisely is not only about repaying on time but also about how often and why people borrow, say experts.

Here are some steps to follow to maintain good credit practices.

Maintain healthy credit usage

Borrowers must treat their credit score as a reflection of financial credibility. A score above 750 is widely considered strong and helps unlock better interest rates and faster approvals. Consistent, on-time payments are the most effective way to build a healthy credit profile.

"Responsible borrowing is integral to long-term financial resilience. With credit options more accessible, the mindset must shift from merely 'getting approved' to 'borrowing with discipline,'" BASIC Home Loan CEO and co-founder Atul Monga said.

"It is equally important to avoid over-leveraging. Meaning, your EMIs should stay within 30-40 percent of your monthly income to preserve liquidity and withstand rate cycle changes."

Use credit option smartly

Many borrowers make the mistake of treating credit as a resource to use only in emergencies. Kuldeep Yudhuvanshi, Business Head at Rupee112, said, “One of the smartest credit practices borrowers can follow is to be deliberate about how they use credit, not just when a financial need arises. Credit works best when it is approached as a long-term habit rather than a quick fix. Repeated applications within short periods, borrowing without clearly defining the need, or casually checking eligibility across platforms can quietly weaken a borrower’s profile over time,” he said.

According to Yudhuvanshi, slowing down before applying for a loan can protect future options. “Borrowers who slow down, assess their real requirement, and approach credit with intention tend to preserve flexibility and face fewer obstacles when credit truly matters,” he said.

Lenders watch borrowing behaviour

Industry leaders say many people do not realise how closely lenders watch borrowing behaviour. Shakti Shekhawat, Business Head at BharatLoan, said credit records reflect more than missed payments or defaults. “Many borrowers underestimate how closely their credit behaviour is observed over time. Credit records don’t just capture major events but they reflect consistency, discipline, and patterns,” he said.

Even small actions can leave a lasting impact, Shekhawat said, “Even small lapses or irregular behaviour can influence future borrowing opportunities long after the immediate issue has passed. Borrowers who stay aware of their credit standing, review their records periodically and maintain steady repayment behaviour are far better positioned to keep credit working as a support system rather than a source of stress,” he said.

Avoid multiple inquiries

Experts also advise borrowers to avoid applying for multiple loans at once, as each application can leave a mark on their credit record. Setting reminders for repayments, keeping credit use within limits and checking credit reports regularly are simple but effective habits.

"Maintain a balanced credit mix and avoid multiple loan applications within a short period... (to) uphold creditworthiness. Review credit reports annually to detect and correct discrepancies," Monga said.

These practices can help borrowers gradually strengthen their credit profiles. Experts emphasise that with mindfulness, patience, and consistency, credit can become a valuable tool for wealth-building when managed responsibly, transforming it from a potential financial burden into a helpful resource.