It takes a long period of dedicated effort to improve your Credit Score. But how long is the question? This article will offer some insight into the situation.
It’s a well-established fact that you need a good Credit Score to get a loan or Credit Card approved by a bank. A good Credit Score is not the only deciding factor behind the approval of your application, but it is a key requirement among other eligibility requirements like your income, age etc.
Your Credit Score can make or break your application, considering you meet all the other eligibility requirements. It’s precisely due to this reason we insist that you check your Credit Score regularly before submitting your application for credit to the bank. Banks and financial companies often have a different Credit Score bracket for different products. But generally, a Credit Score of 750+ is considered good.
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If you have an average or low score, we suggest you withhold your application and improve your score first. People with a poor Credit Score risk facing rejection of their application or might have to agree to difficult terms like a high-interest rate and shorter repayment tenure in order to avail a credit facility.
In such a case, improving your Credit Score becomes important and yet it cannot be done in haste. It takes a minimum of 12 to 18 months to get it to a level that’ll give banks confidence in you. It is important to note that the quantum of damage acts as a factor for the time it’ll take to improve your Credit Score.
So, without further ado, let’s look at some of the things you can do to reverse the downward trajectory of your Credit Score.
It goes without saying that you need to start clearing all your bills that are due. It also means that while you are clearing your backlog, you need to make sure that you pay your existing and upcoming dues before or on the due date. There is no way you can get your score up without a good repayment history.
If you have loans with high-interest rates then clear them first to reduce the burden of interest. If you don’t then high-interest rates will further hamper your ability to repay dues, which in turn will lower your Credit Score even more. Hence, it is always a good idea to opt for a mix of secured and unsecured loans.
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If you want to kick your debt burden then you have to stop accumulating more of it. Use the plastic card but a different one, the debit kind. It is essential to start knowing how much money you can actually spend. A Debit Card will help you stem your expenses. Start using your Debit Card more regularly and keep your Credit Card only for emergencies.
Each Credit Card or loan application lowers your Credit Score. So stop the barrage of applications till your score gets better.
It is good to know about financial products. You can learn all about Credit Cards and loans and their features by going online. Online research will give you all the information you need. It is best to do it online where you can find out all about a particular Credit Card as much as you want without having to submit an application.
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Balance out your budget and prioritise things that you need to purchase and want to purchase. Stick to the list that you need to purchase and try to keep it short.
Your Credit Card may have a fancy upper limit but you don’t have to make full use of it. Keep your credit utilisation under 30%. It is best if you are able to save some money in your account to show higher savings over time. A good Credit Score and a good Savings Account balance will tilt the odds in your favour when you apply for credit.
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Do not borrow more to pay for loans and bills unless absolutely necessary. You can, however, apply for a Personal Loan to consolidate your debts under a single rate of interest.
It’s not possible to accurately predict the time it’ll take to improve your Credit Score. We can only draw an estimate. Credit improvement is, however, not too difficult if the effort is consistent over a long period of time. The main deal with improving your Credit Score is getting control of the factors that affect it.
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And it all begins with knowing your Credit Score. Click the link to check your Experian Credit Score for free!