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7 Effective Ways To Repair Your Credit Score

Clix July 2, 2021

 

A credit score is a 3-digit number in your credit report, which is assigned to you based on your credit history and repayment behaviour. It plays a crucial role when you apply for a loan, as your lenders determine your creditworthiness largely based on this score. Having a bad credit score can result in loan application rejection and a high interest rate on your loans or credit cards. The higher score you have, the easier it will become for you to apply for a loan and get approval with better terms and conditions.

Most lenders ask for a credit score of 725 or above to approve your loan application. Check your credit score here.

If you find that your credit score is lower than expected, these 7 ways to repair your credit score can help

1.    Check Your Credit Report Regularly to check for errors

Request your credit report and check the number of credit accounts in your name. In this section, if you notice any accounts that you are not aware of or if any accounts are shown with incorrect status, contact the credit bureau to get the issue fixed.

2.    Dispute Any Negative Marks

If you identify any errors in your credit report, raise a dispute to get them resolved through the credit bureau’s website. Once you inform the bureau about the dispute, it may take a few days to investigate and resolve it. It is worth spending this much time because once resolved, you will see an instant improvement in your credit score.

3.    Make a Plan for Your Credit

Many people with bad credit scores struggle with financial planning.

For instance, if you use too many credit cards intending to increase your credit limit, paying all of their bills on time will become a challenge for you. As a result, you may end up having a significant due amount and a record of delayed payments in your credit report.

Applying for a loan without checking the lender’s eligibility criteria or opting for a loan term without considering your repayment capacity may leave you with a bad credit score. Therefore, it is crucial to plan your credit well and apply for a loan or credit card only when you absolutely require it. Also, keep a balance between your income and expenses and choose a loan term with EMIs that you can easily afford.

4.    Monitor Your Payment History

Always pay your credit card bills and loan EMIs on time. Whenever you delay or miss a payment, your credit score takes a hit by a few points. If you have had a default on your payments, try to manage your budget to prioritise the EMIs and bills first. Also, check any written-off or settled accounts in your report as they are often seen in a negative light. You may inform the credit bureau if your account has been tagged incorrectly.

5.    Be Regular with Your Payments

Your credit score may reduce every time you delay or miss a payment. From the day you take a loan, prioritise paying your EMIs over everything else. If you are facing a financial crunch and are not able to pay all your bills, you need to consider Paying your EMIs on time will prove your creditworthiness and improve your credit score.

6.    Make Pre-Payments Whenever Possible

When you take a loan with a long tenure, you also have the option to pre-pay it when possible. If you got a bonus, gift, or investment return, use that amount to pre-pay your loan. Although pre-payments may not repair your credit score, they may make payments in the future more manageable.

7.    Increase Your Credit Limit

Individuals who have a high credit limit and who keep their expenses in control are usually the ones who have a high credit score. When you have a high credit limit, you keep your credit utilisation ratio low even after paying for all your expenses. You can keep this ratio down by increasing your credit limit without increasing your expenses. You must also retain your old accounts to retain their credit limit even if you are not using them anymore.

So, these are some effortless ways that can repair your credit score and increase your creditworthiness. Once you reach a credit score of 725 or above, you become eligible to apply for a home loan, personal loan, or small business loan from Clix Capital. Apply here now and have your expenses met with our streamlined loan process.

For any queries, find us on Facebook, Instagram, LinkedIn, Twitter, or WhatsApp

You can also reach out to us at hello@clix.capital or call us at 1800 200 9898

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