As you might know, every late payment you make can affect your Credit Score. Others include huge balances on your Credit Card and closing old Credit Cards. But do you know that there are simple ways in which you can boost your Credit Score, almost immediately? Yes. It’s true. Read on to find out.
- Paying off your Credit Card balance
This is one of the simplest ways in which you can increase your Credit Score quickly. Your payment history makes up 35% of your Credit Score (that’s the biggest one!). Under this head, the way you use credit plays a major part. If you use minimal credit, then you get a high score. Credit Bureaus don’t bother about whether you have a high credit limit or a low one. They take into account how much of that credit you use. This will be your credit utilisation ratio. This is the ratio of the amount of credit you use when compared to the credit available to you. For instance, if you have a credit limit of Rs. 75,000 and your Credit Card balance is Rs.40,000, your credit utilisation ratio will be 53%, which is considered high. Typically, experts recommend that you maintain a ratio of less than 25%. Now, if you can bring this down to zero, then your Credit Score will improve drastically. Even if you will not be able to pay the whole balance, try to pay off at least 20-30% and your Credit Score is sure to improve immediately.
Tip: Split up your Credit Card bill and pay it twice a month. That way credit bureaus will know that you have every intention of paying your Credit Card dues and your Credit utilisation ratio also goes down.
- Get A New Credit Card
Contrary to popular belief, getting a new Credit Card doesn’t lower your score. It actually helps improve your score. The fact that lenders are willing to give you new credit is good for your Credit Score. There are two other reasons why a new Credit Card will help.
- Higher Credit Limit – Taking a new card increases your Credit Limit and reduces your Credit utilisation ratio. The more credit you are offered, the more trustworthy you look to other lending institutions.
Tip: Choose cards with benefits such as Cashback Credit Cards, so that you can earn the money that you spend right back.
Additional Reading: Advantages Of A Second Credit Card
- Try Balance Transfer – You can transfer your existing balance on your Credit Card to the new one. So, essentially while increasing your overall Credit Limit, you can also pay down your balance.
Tip: Find a Credit Card that comes with no or low interest rate. This way you pay back your balance without shelling out a lot of interest.
Additional Reading: Balance Transfer Between Credit Cards: Things To Consider
- Fix The Errors – Get your Credit Report and find out if there are any errors in it. Every error can lower your Credit Score and fixing them will definitely improve your Score. People have detected errors such as false late payment reports by lenders and loan accounts that you didn’t open at all. You can get your Credit Report from any of the Credit bureaus such as CIBIL and Equifax. Look over the whole report for errors. Follow instructions on the credit bureaus website for fixing the errors. You might need to submit some documents to get them fixed.
Tip: Errors such as wrong address and false employment details can also affect your Credit Score. Look at them too.
Check This: How to resolve Credit Report Errors
You can also improve your Score by asking your existing Credit Card issuer to increase the Credit Limit for your Card. However, note that banks don’t do this unless you have held the card for many years. Also, having different types of credit or loans in your name is good for your score. But don’t open too many loan accounts at the same time.
Try out some of these if you are worried about your low score and follow some of the best practices to keep your score on the higher side.