Looking for exciting Diwali offers? Don't ruin your credit score by rushing through them; these 10 steps will save you from losses...

The arrival of Diwali brings a festive atmosphere. Markets are decorated, and offers and discounts abound. In this atmosphere, people often lose control of their expenses and resort to excessive use of credit cards or personal loans. Consequently, their credit scores deteriorate after Diwali, and financial stress increases.

If you want to maintain happiness and a clean credit report this festive season, you need to keep some basic but crucial things in mind. A little discipline, a little planning, and a dash of smart shopping are all it takes to maintain a healthy score.

1. Keep a separate festive budget

Create a separate Diwali budget from the rest of the month. Set pre-set limits for gifts, decorations, and shopping. Separate “essential” and “desired” expenses on your list. Complete essential expenses first, then consider the rest. Use a mix of cash, UPI, and credit cards to avoid depleting your credit limit quickly. If your monthly income is ₹50,000, try to limit your total Diwali spending to no more than 20-25% (₹10,000–₹12,500).

2. Shop “smart,” not just “big.”
Not every offer is genuine. If something says 50% off, first check its actual price and the price on other websites. Buy expensive items like mobile phones and laptops only if you have a clear repayment plan for EMI or credit card payments. Avoid buying unnecessary items for the sake of discounts. If you have a credit limit of ₹1 lakh, don't spend more than 30% of your monthly balance, or ₹30,000. This improves your credit score.

3. Pay your credit card bills on time
After Diwali, people often think, "I'll pay it next month," but this carelessness causes the biggest loss. Never choose the "Minimum Payment Due" option; always pay the full bill. Turn on auto-deduction to avoid missing payment dates. Late payments not only increase interest but also lower your score.

4. Pay all EMIs on time
Missing even one EMI on your home loan, car loan, or personal loan can immediately lower your CIBIL score. Maintain a sufficient balance in your account before the EMI due date. If desired, set SMS or app notification alerts to ensure you don't miss the EMI due date.

5. Check your credit report regularly
Frauds increase during the festive season. Sometimes, transactions can occur without your knowledge, or incorrect reports can be filed. Download your report from CIBIL or Experian once a month. If you notice any errors, immediately apply for corrections.

6. Don't apply for multiple new loans or cards at once.
Banks and NBFCs offer many offers during Diwali, but taking out a new loan or card every time harms your score. Each application is subject to a "hard inquiry," which can lower your score. Make only one or two applications at a time, and carefully consider them.

7. Don't close old credit cards.
Many people think that closing old cards will reduce their responsibilities, but doing so shortens their credit history and can lower their score. If there are no charges on the card, keep it active. Make small transactions from time to time and make clear payments.

8. Use your festive bonus wisely
Instead of spending your entire Diwali bonus, use a portion of it to pay EMIs or clear outstanding bills. This will improve your debt-to-income ratio and positively impact your score.

9. Avoid excessive co-borrowing or guarantees
If a friend or relative is taking out a loan and asking you to be their guarantor, think carefully beforehand. One mistake could damage your score. Avoid such situations unless you have complete confidence.

10. Don't neglect financial planning
Diwali isn't just about spending, but also about thoughtful financial planning. Prioritize savings over spending. Use credit cards only when necessary. Consider SIPs, FDs, or other investments for future goals.

Conclusion: Celebrate Diwali wisely, maintain a strong score
Spending on Diwali isn't wrong, but spending recklessly certainly is. If you exercise a little prudence, make payments on time, and keep your budget in check, Diwali joy will increase, and your credit score will also improve.

Frequently Asked Questions (FAQs)
This is your loan repayment ability score, which ranges from 300 to 900.

A score above 750 is considered good.

It is usually updated monthly.

Yes, closing an old card may result in a slight decrease in your score.

Make the payment immediately and inform the bank so that reporting can be improved.

Disclaimer: This content has been sourced and edited from Zee Business. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.