How to improve your credit score?

Your credit score indicates your financial well-being. A good credit rating assures lenders of your responsible lending habit and motivates them to offer you instant loans at attractive interest rates. You can easily take large debt securities such as super premium credit cards and large amounts of instant personal loans.

On the contrary, people with low credit scores have to make do with limited choices in debt offers. Also, they may have to pay higher interest rates for the loans. Therefore, it is always a good idea to improve your credit score before applying for a loan. Here’s what you can do:

How to improve your credit score?

  1. Never miss an EMI and always repay your loan fees on time. At the most basic level, a good credit rating indicates that you are a reliable borrower and will pay your dues on time and in full. Even missing a single EMI can negatively impact your credit score. So, always be disciplined regarding your EMI payments.
  2. Never use too much of your debt eligibility. Let’s take a credit card as an example: you get a limit on your card and as you spend money and make payments, your limit continues to be locked and released. From now on, you must not use more than 30% of your borrowing potential. Using too much credit will hurt your credit score.
  3. Do not seek loans regularly. While one or two inquiries on your credit score in a quarter is no big deal, if there are multiple loan inquiries on your credit report month after month, it will start to impact your credit score. credit. An inquiry may occur when you apply for a credit card or a loan of any kind. Borrow from a loan application may not lead to the validation of your credit score, so remember to check beforehand.
  4. Check your credit report regularly for any inconsistencies. Sometimes your credit report may reflect details of bad loans taken out by other people. Remember that credit scores are generated based on information submitted by different financial institutions, which leaves room for disparities affecting your credit score. If you spot a loan or default on your credit report, you can report it immediately to the credit bureau.
  5. Choose different types of credit to maintain a healthy credit report. Make sure you have a good mix of secured and unsecured debt. If you have a home loan and want cash for another urgent need, consider taking out an instant personal loan, or if you have a balance on several credit card debts, take out a loan from a loan app to pay your credit card balance.
  6. Always take advantage of credit limit increase offers when available, even if you are not using this debt instrument. Let’s say you take out a line of credit or an OD account with a lender. After some time they offer to upgrade your credit limit, you should accept the offer as it will increase your overall credit limit and reduce your credit utilization percentage.
  7. Make sure debts with a strong repayment history stay on file. For example, many people close their old credit cards when they get a new one with better deals. Don’t do this even if you don’t intend to use the old card, because if you close the old card, its repayment history won’t be reflected in your credit history and it may reduce your overall credit score.
  8. Never renew your credit. Some people think of using a cash advance on a credit card as a way to pay off another debt commitment. This is called “revolving credit”. Simply put, it’s borrowing from Peter to pay Paul. Since all banks report credit transactions to the credit bureau, their scoring algorithms will identify revolving credit and mark it as risky activity, lowering your credit score.

Finally, it is very important to be patient. Anyone who says they can improve your credit score quickly is either lying or trying to trick you. Building a credit score takes months, sometimes even years, and the only way to do it is with great discipline.

Never fall for shortcut promises to build great credit. The fact is that there is none. The only way is to make regular payments and follow the rules.