Here are five straightforward strategies to boost your credit score effectively:
1. Check your credit report for errors
Start by obtaining a soft copy of your credit report from major credit bureaus. CIBIL, CRIF High Mark, Equifax, and Experian are the leading credit bureaus in the nation. You can access your credit report through them. Upon the same, scrutinize it for any mistakes or inaccuracies such as wrong personal details, open loans, account details that don’t belong to you, or incorrect late payments. In all such cases, you should dispute errors promptly as they can bring down your credit score unnecessarily.
2. Pay down existing debt
High credit utilization negatively impacts your credit score. Aim to reduce your outstanding balances, especially on credit cards, to below 30% of your credit limit. This can be done by making credit card bill payments on time. This demonstrates responsible credit management and positively affects your credit score.
3. Avoid new credit inquiries
In case you are having trouble with debt management, then ensure that you don’t apply for new personal loans, credit cards, or any other credit instruments. As every hard inquiry can lower your credit score slightly. You should be even more careful in case you have missed any personal loan EMIs or credit card bill payments recently. A stable credit profile reassures lenders about your financial discipline.
4. Timely bill payments
Be very particular and careful about on-time bill payments, irrespective of the kind of credit you have availed. For example, you might have applied for a personal loan or a home loan; in all such cases, be clear from the beginning about your repayment plan. This plan should be developed with the help of a financial planner. Do set up auto-debit instructions to ensure that you never miss any payments. Payment history constitutes a significant portion of your credit score calculation.
5. Maintain older credit accounts
The length of your credit history plays a vital role in deciding the kind of borrower you are. That is why keeping older credit accounts active, such as credit cards, even with minimal usage, can positively influence the average age of your credit accounts, thereby boosting your credit score. The idea is to showcase to lenders your sincerity in making on-time repayments. Here, your repayment is directly linked with your integrity; it becomes a part of you. That is why if you fumble, it reflects on your credit profile for years.
Hence, by incorporating these simple ideas, you can enhance your creditworthiness, making your loan application more attractive to lenders. Do keep in mind that credit improvement is a slow and gradual process, so start early for the best outcomes.
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Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards, and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
