Credit ratings are a crucial parameter that checks your creditworthiness and ensures financial institutions that you are a responsible payer.
A good credit score is one of the most critical eligibility criteria that several Credit Card and loan providers consider before they approve your application and offer you a lucrative rate of interest. Thus, maintaining, reviewing, and constantly making efforts to enhance your credit score is a must.
Some Ways to Increase Your Credit Score
The top nine ways you can follow to increase your credit score are as follows:
1. Repay Your Debts
Repay outstanding debts and keep your debt minimal to prove yourself as a responsible payer. If you manage your debt prudently, the chances of increasing your credit score are the highest. Your credit rating reflects how well you can manage your debt, so repayments of debt are a great way to enhance and improve your credit ratings.
2. Don’t Miss Payments
One thing that is sure to harm your credit rating is missed or delayed payments. In this digital world, you have multiple ways in which you can auto-pay your Equated Monthly Instalments (EMIs) or Credit Card payments or set reminders that keep reminding you of your dues.
But despite making these efforts, if you still miss or delay a scheduled payment, it may have a severe effect on your credit rating. If it is accidental, it would still reflect on your report, which you can later challenge and plea for reversal. However, such discrepancies should be avoided in the first place.
3. Keep Your CUR Under 30%
CUR or Credit Utilisation Ratio refers to the percentage of the available credit limit on your Credit Card that you have consumed. The higher the CUR, the higher your dependency on credit, which leaves an inadequate impression of your financial health on financial institutions.
A high CUR also leads to a lower credit rating. Therefore, always try to pay your Credit Card bills in full to keep the CUR below 30%.
4. Don’t Apply for too Many Loans/Credit Cards
Filling out too many loans and Credit Cards applications can look like quite a lucrative opportunity for you. However, it is a burden that can lead to low credit ratings.
Besides, a single rejection on any application can lead to a dip in your credit rating. So be logical, and don’t randomly apply for any offer that comes your way.
5. Review Your Credit Rating Occasionally
Keeping a stringent check on your monthly credit ratings is of utmost relevance.
To learn how to check your credit scores, visit the official page of credit score checking platforms like OneScore, and access your monthly credit report ratings from TransUnion CIBIL and Experian.
6. Go for a Healthy Credit Mix
Having a bunch of unsecured loans in your debt mix isn’t very healthy and can hurt your credit rating. A decent mix of secured and unsecured loans or Credit Cards is a great way to increase and maintain your credit score.
7. Choose a Longer Loan Tenure
Choosing a longer loan tenure means you are promising to establish a long-term relationship with the financial institutions.
This means lower EMIs (a benefit for you) and higher interest charges (a benefit for the providers). Thus, the option for a longer tenure and optimally repaying your monthly EMIs is the best way to increase your credit score.
8. Avoid closing old accounts
Closing old credit accounts can seem like a good idea, but it can actually harm your credit score. Lengthy credit history is beneficial, so consider keeping older accounts open, particularly if they have a positive payment history.
9. Be patient and responsible
Building a good credit score takes time and consistent, responsible financial behaviour. By paying your bills on time, keeping balances low, and practising good credit habits, you can gradually improve your credit score over time.
If you have a credit score of 750 or above, you can easily opt for your desired loan or Credit Card that you want. Furthermore, the tips and techniques mentioned above will help you increase your credit score within a few months. It is also important to conduct thorough research and make a dedicated effort to achieve and maintain a good credit score. This will help you in making well-informed financial decisions in the long run.