If you are finding a quick fix for your credit score then you should understand that the credit score is not going to fix overnight. Getting a good credit score requires discipline and understanding the options available to improve your credit score.
Every lender uses different parameters while issuing a loan to borrower.
The Reserve Bank of India has mandated that all banks should check CIBIL scores while approving loans or credit cards.
Firstly, start by checking your credit score online and simply focus on the factors that are impacting your credit score and take conscious measures to improve it. If you keep at it, you can improve your credit score easily.
Also Read: Get Free CIBIL Score Check-Up Here
Credit card utilization ratio and payment history are Certain credit card factors that are way more important than others, and together they can even represent up to 70% of credit score.
The better your score, you may get quicker loan and credit card approvals, low-interest rates on loans, better car insurance rates, higher limit credit card approval, and a lot more.
Focusing on the below actions can help you to improve your credit score over time.
1. Pay Your Dues
Missed EMI? Delayed your credit card payment? then you should get organized and set reminders for your payments. Settling your outstanding debts can have a considerable impact on your credit score.
Delay EMIS will not only let you pay penalty but also lower your credit score. When lenders request a credit score for you, they’re interested in how reliable you are in paying your bills on time. Past payment performance is the prediction of your future performance.
You can easily influence your credit score by just paying the dues on time, not just your credit card bills but also loans like rent, utilities, auto loans, phone, or student loans.
Currently, your missed or late payments appear as negative information for seven-year on your credit card report. Their impact declines over time.
Moreover, you can enroll for autopayments through your bank or lender to get payments done.
Get your creditworthiness intact by timely payments.
2. Lengthen Credit History
The age of credit history matters, if you have old credit cards, and you can continue to maintain and pay your bill then continue doing it, this will help and build a lengthy credit history which results in a good credit score.
Closing an account may increase your credit utilization ratio. Owing the same amount and having fewer open accounts can lower your credit score.
Don’t open unnecessary accounts just to get a better credit mix, this will definitely not help you increase your credit score. Unneseccary credit can harm your credit score in history.
Also Read: Benefits Of Good Credit Score
3. Fix Credit Utilization Ratio
The credit utilization ratio is another factor that can boost your credit score, it is calculated by adding all your credit card balance and diving it with the credit limit. For example, if your total credit limit is $20,000 and you charge 4000 each month then your credit utilization ratio is 20%.
Lender typically looks if your credit utilization ratio is 30% or less. People with good credit utilization often have an excellent credit score. Low credit utilization reflects that to know how to manage credit and you haven’t maxed out your credit cards
4. Avoid Taking Too Much Debt
Don’t let your credit score from crashing, sometimes you repay one loan and take another one. Avoid taking too much debt at one time. The number of loans you should apply for should be minimal, if you go for multiple loans then it reflects that you are unforgiving cycled with insufficient funds. That will decrease the credit score.
5. Healthy Credit Mix
It is better that you have a combination of unsecured loans( personal loans, credit cards) secured loans(home loans, auto loans) of a long tenor to build an excellent credit history. Too many unsecured loans can give a negative impact on your credit score.
6. Strong Credit Age
Having no history at all. Wondering what can be good average credit age? If you have no history at all, then it might take around 6 months to see any activity being reported on your credit report. Good average credit age is more than 5 years.
The longer your positive credit history is the better the credit score. One way to get credit history is to make a small purchase using a credit card that you can repay and pay the balance full in every month
7. Review Credit History
Review your credit history throughout the year to check for any inconsistencies. You can check your credit score on ( TransUnion, Equifax, and Experian) incorrect information on your credit report can drag your credit score down.
Verify the account on reports if there is any error, dispute the information, and get it rectified instantly. Monitoring your credit regularly can help you spot inaccuracies before they do damage to your credit score.