If you have credit problems and seek a quick remedy for your credit scores, know that there isn’t one. Getting your credit scores in shape necessitates self-discipline as well as education about the various choices accessible.
What is considered a good credit score?
The CIBIL score is a three-figure number that runs from 300 to 900. Your credit score will improve as it gets closer to 900. A credit score of 750 is regarded as optimum for obtaining a low-interest instant loan. If you have a score that isn’t ideal, you should take steps to enhance it.
So, how can you raise your credit score in India? Develop the following 12 healthy practices to help you boost your credit score:
Review Your Credit Report for Accuracy
It’s critical to double-check that all of the information on your credit report is correct. A mistake or inconsistency in your credit report might have a negative influence on your credit score.
Four-credit bureaus in India provide credit scores:
- Credit Information Bureau India Limited (CIBIL), Equifax, CRIF High Mark, and Experian.
- Examine the credit reports from all four credit reporting organizations to ensure that the information they contain is accurate.
- If you find any erroneous, outdated, or missing data, raise a dispute with the credit reporting agency and your lender.
This is the closest thing to a quick credit repair you can get.
Keep in mind that pulling your credit report has no bearing on your credit score.
Set up Settlement Reminders to Pay Your Dues on Time
Paying your bills on time regularly can improve your credit score in a matter of months. Conversely, a single late or missed payment can have a significant influence on your credit score. Write down payment dates for each account in a planner or calendar, and set up online reminders to make sure you pay your money on time.
You could also enroll in automatic payments with your lender or bank to deduct your expenses directly from your account.
Fix Your Credit Utilization Ratio
It’s a red signal if your credit card account balances exceed 30% of your credit limits every month because your credit score is falling. Even if you pay off your accounts in full on the due date every month, your credit report may show them as outstanding because your creditor only submits information to the credit agency once a month, and the date could be before your due date. As a result, it’s a good idea to try paying a portion of the debt before the due date to stay above the 30% line each month.
Debt Consolidation can help you convert high-interest debt into EMIs.
Convert your many debts into EMIs by paying them off with a low-interest personal loan through debt consolidation if you’re having problems making payments due to high-interest loan rates on credit cards and other loans. Then, depending on your monetary situation, you can set your repayment schedule and pay back the loan amount in manageable EMIs. In addition, the interest rate on a personal loan to pay off existing debt is approximately half that of credit card interest rates, which is a significant benefit.
In a billing cycle, you can pay more than once
Making payments once a month is beneficial for your credit score, but it’s not ideal for your CIBIL score. Every month, your creditors report balances to the credit bureaus. So you may be overusing your credit if you have significant quantities.
If your financial situation is favorable, the most significant thing you can do is make multiple monthly payments. It consolidates your debt, lowers your credit utilization ratio, and raises your credit score (CIBIL Score).
Pay Down “Maxed Out” Cards First
When using multiple credit cards, it’s best to pay off the card with the highest credit limit. This technique will assist you in lowering your credit utilization ratio and improving your credit score.
Build a Strong Credit Age
More than five years would be a good average credit age. The longer you have good credit, the higher your credit score will be.
It isn’t much you can do if your credit history is limited. One alternative is to piggyback on a family member or friend’s credit card as an authorized user if they have an excellent and lengthy credit history. It’s easier said than done, though, because finding someone willing to add you as an authorized user can be difficult. In addition, any changes you make on the credit card would be their responsibility. Another alternative is to exercise patience and refrain from closing any accounts.
If you have no credit report, it could take three to six months from the start date for any activity to appear on your credit reports. Using a credit card to make small purchases that you can afford to repay and paying the debt in full every month is one way to build a credit history.
Always remember to use your credit card responsibly. Otherwise, rather than assisting you in establishing a credit history, a credit card can trap you in a debt trap.
Keep older credit cards open and don’t close ones you don’t use
The age of your credit history, as noted in point 7, has a substantial impact on your credit score. It displays your credit management experience. If you have old credit cards, you must keep them in good working order and pay your bills timely and in full every month. Even if you aren’t utilizing them anymore, don’t close them. Close the newer ones if you must finish.
Maintaining your previous credit cards allows you to establish a long and healthy credit history, which improves your credit score.
Open New Credit Cards Only If You Need It
Consider whether you need to open any more credit card accounts. If you strive to increase your credit score, having a lot of open tabs that you aren’t utilizing will incur costs and give you no other substantial advantage.
Applying for credit multiple times or too frequently is not a good idea.
The lender pulls your credit record every time you apply for a new credit account. Every pull is treated as a hard inquiry, which might momentarily damage your score. Avoid using multiple loans or credit cards in a short period by searching, comparing offers, and then applying with the lender that offers you the best deal.
Choose a term that allows you to pay your EMIs comfortably
Regular and timely payments, as noted in point 2, boost credit scores. When taking out a credit, it’s always a good idea to go for a lengthier repayment period. This provides a reduced EMI that you can readily pay, reducing your possibilities of defaulting, deferring, or missing EMIs.
Remember to choose a shorter term if you can afford higher EMIs. You’ll pay off the loan faster and save money on interest if you do it this way.
Be Patient
Improving one’s credit score does not happen overnight. It takes time, but you must continually improve your credit practices to raise your credit score. All of the following are intelligent credit habits to cultivate to improve your credit score.
In brief, if you want to raise your credit score, concentrate on lowering your large outstanding balances and keeping a positive credit history by making timely payments and managing your credit accounts responsibly. You may not be able to repair your credit right away, but you will eventually succeed with persistence and a little support from Everyday Loan India.
