Low Credit Score giving you sleepless nights? Don’t worry! Here are 4 simple ways to boost your Credit Score in a jiffy. Read on.
A Credit Score is a three-digit number that decides whether or not you will be eligible for any type of credit – Personal Loan, Home Loan, Credit Card, etc. It ranges between 300 – 900 points. A Credit Score of 750 and above is usually considered good and makes you eligible for more loan and Credit Card offers.
If you have a poor Credit Score, lenders may not necessarily avoid you, but they’ll let you borrow money at a higher interest rate than the rate paid by somebody who has a better Credit Score.
So, if you are struggling to get a loan or Credit Card offer because of your low Credit Score, here are 4 simple ways to improve your Credit Score quickly:
People with scores over 750 have an excellent payment history. This means that they haven’t missed any loan or Credit Card payment which directly reflects in their Credit Scores.
Any missed or late payments tend to stay on your credit report for a long time and lower your score drastically. Therefore, in order to get your Credit Score in good shape, take stock of your payment history and start paying every bill on time from now on. If you have any active loan, make sure to pay the EMIs on time. This will not only boost your Credit Score but will also increase your chances of getting a loan or Credit Card offer.
Additional Reading: How to Build a Credit History If You Don’t Have Any Existing Loans
Credit utilisation plays an important role in determining your Credit Score. Studies have shown that people with an excellent Credit Score have a low credit utilisation ratio. It is the ratio of your outstanding Credit Card balances to your credit limit.
At a time when credit is readily accessible to us, we tend to go overboard and use more credit than we could easily repay. Also, applying for too many loans and Credit Cards in a short period of time can make you look credit hungry to lenders. This can reduce your chances of getting credit in the future and can put a dent on your Credit Score too.
So, going by the rule of thumb, you should not use your Credit Card balance above 30% of your credit limit at any time in order to maintain a good Credit Score.
Additional Reading: How To Maintain A Low Credit Utilisation Ratio
Healthy credit mix:
Credit mix refers to the ratio of your secured and unsecured debt. Lenders, as well as credit bureaus like Experian and CIBIL, usually prefer those who have a higher percentage of secured loans like Home Loans. On the other hand, if you have a high share of unsecured loans like Personal Loans or Education Loans, lenders might not consider you as a “preferred borrower”.
Keeping a healthy credit mix of loans will show that you can handle multiple loans efficiently and thus make you eligible for better loan and Credit Card offers.
Review your credit report:
Last, but not the least, reviewing your credit report regularly can provide a big Credit Score boost. Sometimes there can be mistakes such as errors in date of payment, account status or wrong data entry that can lower your score radically.
If you find any mistakes in your report, inform the credit bureau immediately and wait for it to reflect in your credit report. Once the errors are fixed, your score will increase.
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