10 Easy Ways To Improve Your Credit Score

10 easy ways to improve your credit score in English

Credit scores are a numerical grade between 300 and 900 that an individual receives from credit bureaus based on the repayment behavior of their loan or credit card. The better your repayment history, the better your credit score. If you make timely repayment of your loan or credit card usage, it improves your credit score.

Generally, a credit rating is given between 300 and 900, a score below 700 is not considered good (below 650 for secured loans), 700 to 800 is considered good, 800 and above The score is considered excellent.

Most of the credit scores are calculated on the basis of certain aspects, which are shown below:-

  • Bill payment history (approximately 35% of the score)
  • Balance outstanding (approximately 30% of the score)
  • Length of credit history (about 25% of the score)
  • New financial loan activity (approximately 10% of the score)

You must be wondering why there is so much talk about credit score, then you should know that your credit score affects the way your personal finance works, especially when you are looking for a loan. This is why it is extremely important for you to maintain a good credit score. It helps to get India free credit card. Helps in quick loan approval. It helps in getting loans at relatively low interest rates.
It helps in paying the house rent in a hassle free manner. It helps you to enjoy essential services like electricity, telephone connection etc and for this you do not need any guarantor or pledge.

It seems to me that now that you understand the importance of these scores along with the nuances of credit scores, let us look at some of the ways that will help us build a good and strong credit history.

A total of 10 methods are mentioned below:-

Order a copy of your credit report

The key to solving any problem is to address it. The same applies to your personal finances. Get a copy of your report from any of the three major credit bureaus in India to understand where you stand on credit behavior. Since each bureau provides at least one report per year for free, you can order a copy every four months on average.

Thoroughly Check Your Credit Report

Mistakes happen from banks, credit card providers and even credit bureaus in India. Therefore, you should check your credit report carefully. If you find any inaccuracies, don’t hesitate to report it to the bank or credit card company. You all know, this simple effort on your part can help you increase your score by 50-100 points.

Pay your bills on regular schedule

Since your bill payment history is one of the most important factors in calculating your credit score, make sure you pay your bills within the due dates. Even if you have a poor record in this regard, your credit score will drop. For this, you can set reminders either on your smartphone or computer. If you take good care of it, you will be able to see an increase in your score within 3-4 months.

Pay your credit card bills first

Credit card usage is charged at exceptionally high interest rates ranging from 36 to 42%. Therefore, you should prioritize paying your credit card bills in full over all other payments. Furthermore, you should only use your card when you have a chance to take advantage of it, or when it is desperately needed. Reducing your credit card debt and making sure you don’t have any outstanding balance will help increase your score.

Avoid opening new credit accounts

When you open too many credit accounts, it becomes clear to the credit bureaus that the move is to get more loans because of your poor finances. In such a situation, it does not work in your interest and can hurt your credit score.

Do not delay payment after 30 days

Sometimes, you may fail to pay some bills on time. However, you don’t have to worry too much about the delay, as most creditors will not report it to the agencies. However, a delay of more than 60 days in payment can land you in trouble, as the chances of a default being reported are up to 100%.

maintain a good CUR

The ratio of your spending using a credit card is known as your credit limit to credit utilization ratio, or CUR. The lower your CUR, the better effect it will have on your credit score as agencies are confident that you are in control of your finances, and not rely on credit cards for your living expenses. Hence it is recommended that you use only up to 30% of your credit limit.

set auto pay

Due to today’s technological advances, it is now possible for you to take care of your bills without the blink of an eye. You need to take the help of e-wallets or your bank’s Autopay or Electronic Clearance Service (ECS) to automate all your monthly payments like monthly installments (EMIs), utility bills, rent, etc. Since bill payment history is an important part of credit score, this simple step can bring you a lot of benefits.

keep your credit cards open

You should understand that the longer you hold a credit card, the better your credit score, as it helps the bureaus to perceive you as a reliable debtor. Also, the combined credit limit of two or more cards can help you keep your overall CUR low, thus working to your advantage. So, unless you are paying exorbitant annual fees, it is advisable for you to keep your old cards open for as long as possible.

Deposit amount for emergency

For anyone with fixed monthly expenses, it is highly recommended that an emergency sum with six months’ salary is set aside to deal with unforeseen situations like medical emergencies, job switch or lay-off. Creating this fund will help you without the need of applying for a short term loan or credit card loan, helping you in a bad situation and thus maintaining a respectable credit score.

We hope you now know some of the most simple yet truly effective ways to improve your credit score. So, wait no more before putting these methods into practice, and enjoy the many benefits of a high credit score.

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