How to Lift Your Low Credit Score
Did you ever face a loan application rejection owing to low credit score?
Were you ever denied the credit card you really needed because your credit score wasn’t good?
It feels bad, we know!
In today’s world, we know how important it is to always have a good credit score to expand your financial portfolio. A great credit score comes in handy to for approval for a credit card, personal loan, home loan, business loan, and almost every other credit instrument. While a credit score of 750+ is considered good to apply for loans and credit cards, a score below that needs to be improved as that can keep you out of some amazing deals and offers on credit instruments of all kinds.
If your credit score is low and you are planning to apply for a loan or credit card in some time, we suggest you start working to improve it. Here, we share some tips vetted by experts to increase your credit score. Read till the end to not miss out on anything.
Be Religious with Your Credit Payments
How you fare with your credit payment history, has a major impact on your credit score. if you want to build up, improve, and maintain your credit score, make sure you are always on time with your credit payments like loan EMI, credit card bills, and more. Even a single missed or delayed EMI can make your credit score dip.
You can achieve this by keeping your debt payments on priority always. Make sure you make a budget of your income and expenses and pay off the debt EMI first before anything else. This will prevent you from missing any EMI while keeping your credit score healthy.
Dispute any Credit Report Errors You See
Credit reports in India are managed by these credit bureaus – Equifax, TransUnion CIBIL, Experian and CRIF Highmark. Though most of the information is common with all the bureaus, there might be some gap in the report due to inaccurate reporting by the banks. Any piece of incorrect information you see on your credit report can drag your score down. It is advisable to check your credit report once every quarter to look for errors.
Check and verify that you held the credit accounts listed on your report and there is no case of identity theft. If you chance upon any errors, get them corrected right away. Checking your credit score periodically helps you spot and rectify any errors before they cause any damage to your credit score.
Don’t Borrow More Than Required
It is advised to have a mix of both types of credit – fixed and revolving; to improve your credit score and make your credit profile seem less risky to lenders. A mix of secured and unsecured loans is considered good but having too many unsecured loans can affect your credit profile as well. If the payments are not made on time or you missed some EMIs, it will bring down your credit score.
Also, the duration of both the loans have an impact on your credit score. if you want to keep your credit score healthy, make sure you opt for both shorter and longer tenor loan options to have a mix of both.
Keep Debt-to-Income Ratio in Check
Debt to income ratio is calculated based on your income and the amount of debt you have. This ratio has a direct impact on your credit score. If your debt-to-income ratio is higher, your score will be lower and vice versa.
Keeping your debt-to-income ratio down not just helps in increasing your credit score but also helps immensely when you apply for a personal loan or a home loan next time.
Don’t Close an Old Credit Card
One of the best advices anyone can give for improving credit score is to keep old credit cards running, unless they cost you an annual fee. The longer your credit history is, better is your credit score.
It’s because one of the weighted components of your credit score is the length of your oldest running credit account and the average length of all your credit accounts combined. So, think twice about closing your old credit cards and keep using them for making small purchases while paying the entire due amount in full.
As you start working on improving your credit score, you’ll realize it’s actually a matter of adopting some good financial habits to improve and maintain the score. Once you’re confident about your credit score, go ahead and reward yourself with an informed financial decision to take a personal loan.
Our personal loans are designed to meet a plethora of needs – an attractive rate of interest, flexible repayment tenor from 12 to 48 months, collateral-free, minimal documentation, ease of applying online, and promise a hassle-free process. Check your credit score and dive deeper into the world of infinite financial opportunities with our personal loans. Apply now!