Love Keeping Scores? Boost Your Credit Score

If you love keeping scores, then there’s one score that you really should concentrate on – the coveted Credit Score! Read this article to know how to boost your Credit Score.

A bad Credit Score is every potential borrower’s nightmare. Lenders often hesitate to provide financial assistance to anyone who has a poor Credit Score. Your Credit Score, basically, determines your financial ability.

In short, your credit report and score establishes your creditworthiness as an individual. The Reserve Bank of India has mandated that all banks use this as a guideline before granting individuals with financial products like Credit Cards and loans.

Additional Reading: The Importance And Benefits Of A Good Credit Score

If for any reason your Credit Score has taken a beating, then you must know that there are ways to boost your Credit Score. We’ll tell you all about it in this article. Read on.

What is a credit report?

Your credit report is a database of all your past financial behaviour. It is a track record of your past credit history and contains information on all your previous loans and Credit Cards. It also monitors your repayments, default on repayments and the like.

Now, this data is used by banks to run a background check on your financials before offering you a new loan or Credit Card. Banks can simply extrapolate this information and estimate your creditworthiness.

What is a Credit Score?

In a nutshell, Credit Score is basically a number between 300 and 900. It is based on the information in your credit report and acts as a gauge for lenders to determine your creditworthiness. A 750+ score is considered good, making it easy for you to get loan and Credit Card approvals.

Additional Reading: Credit Score – Frequently Asked Questions

How to boost your Credit Score

If your Credit Score has taken a beating lately, there is no need to panic. Follow the tips below and you’ll soon be blessed with a good Credit Score.

Clear all outstanding debt on loans or Credit Cards

First things first, have you skipped a payment on your Personal Loan or Credit Card? If yes, then it’s time to start making your payments on time and without fail. Often times, your Credit Score takes a beating when you miss even a single payment on your loans like Personal Loan, Car Loan, Home Loan or Credit Card.

Also, making minimum payments, although an easier way out than paying the entire outstanding, on your Credit Card bills isn’t healthy for your Credit Score. Read the article below for more info.

Additional Reading: Paying Just The Minimum Due? Here Is How It Could Harm You!

Check for errors in your credit report

To err is human, they say! And likewise, your credit report may have some erroneous entries in it. It’s best to check your Credit Score regularly and report any incorrect information. Perhaps, a Car Loan that you closed months back may not reflect on your credit report. It could still show as an outstanding debt, thereby bringing down your Credit Score.

Make timely repayments on all open loans and Credit Cards

If you’re looking to boost your Credit Score, you should know that being diligent on all your existing loans and Credit Cards is very important. You should consider setting up a standing instruction on these payments in case you’re one among the forgetful lot.

It’s an open secret – when you make timely repayments on your loans and Credit Cards, you help build your score. So, don’t delay payments.

Lower your credit usage

Credit usage is nothing but your credit utilisation. Let’s assume you have a Credit Card with a spending limit of Rs. 1 lakh. Say your monthly expenditure on this card is Rs. 50,000. You are basically using 50% of your available credit.

When you’re on the higher side of credit utilisation, there are chances that your score can drop. You must always try to stick to using only 20% – 30% of your available credit limit. In case you aren’t satisfied with the credit limit on your Credit Card, you can request your bank to increase it. This way, it’ll be easier for you to keep your credit utilisation in check.

Additional Reading: The Pros And Cons Of Increasing The Credit Limit On Your Credit Card

Hang on to old Credit Cards or loans

Does this sound absurd? Even if it does, it’s actually true. Having a long-term credit account does wonders for your Credit Score. Why, you ask? Because it goes to show that you have taken responsibility and repaid your dues on time.

It, also, sets the right tone to your creditworthiness and reflects well on you as a potential borrower too. It helps to boost your Credit Score, thereby fetching you amazing deals and offers on financial products!

Get a new Credit Card or Loan

As ironic as it sounds, you need to have a credit account to maintain a credit history. Which means, you either need to apply for a loan or maintain a Credit Card. If you don’t hold a Credit Card or a loan, you won’t have any credit history, and thereby you won’t have a Credit Score. So, we’d say that you get yourself a Credit Card or take a loan, make timely payments and you’ll be blessed with an excellent Credit Score.

Haven’t checked your Credit Score ever? Check it now for FREE! Just click the link below.