Improve Your Credit Score With These Important Tips!
In case you are struggling with credit woes and looking to find an instant fix for your credit score, then ensure to understand this – credit score has no quick fix. Getting your score in the right order requires both discipline and proper education about the options available. It is the credit policy of banks to check your score before approving your credit application. Holding a poor score either lowers your loan application eligibility or allows you to avail of it at a higher interest rate.
What is considered an excellent credit score?
A credit score is a three-digit numerical expression that ranges between 300 and 900. The closer your credit score is to 900, the better it is. A credit score of 750 and above is thought to be best for availing of loans on suitable terms. In case you have a credit score that is below the ideal limit, you must take some measures to ameliorate it. Ensure to keep a note of your credit score by conducting regular credit history checks. A constant credit history check allows you to know where you stand. Besides this, there are other good habits you must adopt.
So, here’s how you can ameliorate your credit score? Develop top good habits that are going to assist you in ameliorating your credit score –
∙ Assess your credit report accurately
It is crucial for you to ensure all your info on your report is 100 percent accurate. Any discrepancy or mistake that is reflected in your report can negatively affect your score. In India, there are four credit bureaus that offer credit reports. They are CRIF HighMark, CIBIL, Experian and Equifax. Ensure to carefully review your credit reports from all four bureaus for accuracy of the info. In case you notice any type of inaccurate info, outdated info, or any missing info, ensure to raise a dispute with the agency and the lender. It is the closest you can get for a quick credit fix.
Note that pulling your own credit report doesn’t impact your score
∙ Set up your payment reminders to repay your dues timely
Constant payment of your bills by the due date can raise your credit score in a few months. Any missed, or late payment can considerably have a negative impact on your score. To make sure you repay your dues by the due date, write down your payment deadlines for every bill on the calendar or planner and set up the reminders online. You also can consider enrolling for the auto payment via lender or bank for your payments to be debited directly from the bank account.
∙ Fix your CUR (credit utilization ratio)
In case your credit card balance surpasses the 30 percent mark of your credit card limit every month, it is a red flag as your score is negatively impacted. Even if you are repaying your balances in totality every month by the due date, it might reflect as outstanding due in your report as your creditor states the info to the bureau once every month, and the date can be before your repayment due date. So, it is a great idea to consider prepayment of a few of your balances before the due date. So, it is a great idea to consider prepaying a few of the balances by the due date to keep yourself below the 30 percent mark every month.
∙ Convert your high interest debt into EMIs by opting for the debt consolidation option
In case you are having problems making payments owing to high interest rates on your credit card account and loan accounts, convert your debts into EMIs by repaying them off using the low interest online personal loan via debt consolidation option. You can then select the repayment schedule as per your financial capability and repay the borrowed amount via affordable EMIs. The benefit of availing of a personal loan to repay your existing debt is the availability of a lower interest rate. The available interest rate is nearly half of the card interest rate.
∙ Form a strong credit age
Strong average credit age is often more than five years. If your credit history is positive and long, the better this is for your score. If your history is short, you cannot do much. The only choice is to be patient and avoid closing your accounts. If you have zero histories, it might take three to six months from the starting date to view any activity that is reported on the credit report. One of the options to establish a good credit history is to opt for a credit card, make purchases through the card and repay the balance in full each month.
∙ Maintain older credit cards and do not close those you are not using
As mentioned before, the credit history age has a considerable impact on your score. It shows your experience in handling the credit. If you have old credit cards, it is crucial that you maintain them and keep paying all your bills on time in totality every month. Avoid closing them, even if you are not daily using them. If you want to close, ensure to close the relatively newer credit cards. Ensure to keep all your old credit cards open as this assists in forming a long as well as healthy credit history, which improves your score.
∙ Open new credit cards just if you require it
Just give a thought to whether you require opening additional card accounts. Having various accounts that you are not using just accrues charges while endowing you with no other edge if you are working towards improving your credit score.
∙ Do not apply for credit numerous times
Each time you place an application for a new loan, the lender fetches your credit report. Refrain from applying for credit cards or loans in a short time span. Ensure to keep all your hard inquiries to the minimum by comparing amongst offers and then placing an application with the lender providing the best deal.
∙ Select the repayment tenure which you can repay comfortably
As mentioned above, timely and regular payments ameliorate your credit score. So, when you borrow a loan, it is always best to select a higher repayment tenure. Doing so ensures lower EMI, which you can repay comfortably, which on the whole, lowers your default chances.