A good Credit Score improves your chances of getting your loan application approved. A credit score is a three-digit numeric expression that tells about an individuals’ credit worthiness. A score of 750 or above is considered to be healthy. It is not that hard to keep your credit score healthy if you maintain discipline with respect to your finances.
Here are few tips to improve your credit score.
Always Keep A Tab On Your Credit Report: You must scrutinise your credit report regularly to find out if any incorrect or false information has been posted. If you find any discrepancy, report it to the concerned authorities to get it resolved immediately. You may also find accounts that do not belong to you and are wrongly listed in your credit report. If so, check for any accounts that have wrong dates and incorrect credit limit mentioned. Do note that even small variations in your credit report can affect your credit score drastically.
Pay Card Dues On Time: You must exercise discipline and pay your Credit Card dues on time. Do ensure there is no outstanding due to be cleared. Paying bills on time will reflect favourably on your credit report and hence, it will improve your credit score. If you are struggling with finances, you can set up auto payment for minimum due amount and pay the rest whenever you are able to.
Do Not Avoid Credit: It’s a misconception that to improve your credit score, you need to avoid taking credit altogether. In fact, it’s a good practice to take credit, make timely repayments as this will reflect on your credit discipline. It will help improve your credit score. You can go for a secured Credit Card, make small purchases off it every month and pay the bills on time and in full every month. A good credit spending will boost your credit score.
Use 0 percent balance transfer: It is important to pay off your Credit Card debt to improve your credit score. For example a credit card balance will attract a higher interest rate than a Home Loan or a Personal Loan. Hence, you must clear your credit card debt. An easy way to pay it off is 0 per cent balance transfer offer or a personal loan that has lower interest rate as compared to on your credit card.
Contact Your Creditors For Payment Plan: If you are really struggling with your finances, you can contact your creditors for help. Creditors have temporary hardship programme and it can help reduce your monthly payment to a great deal to an amount that you can easily pay off. It can reflect favourably on your credit report and help you improve your credit score.
Do Not Touch Good Debt On Your Credit Report: Another misconception is that you should not have old debt on your credit report. But if the old debt has been dealt with well, paid off on time, then it’s a good debt for you and it makes sense to keep it on your credit report as long as possible. This will reflect favourably on your credit report and help you improve your credit score.
Avoid Multiple Hard Inquiries In A Short Span Of Time: Refrain from doing multiple hard inquiries in a short span of time as it has the potential to affect your credit score greatly. When you are looking for credit, you tend to look everywhere for the finances. But this practice will be recorded as hard inquiries in your credit report and can lower your credit score. An alternative is to zero down the best financial institution to get credit and even if you make multiple credit inquiries for different loans from the same company, it would not affect your credit score greatly.
The writer is CEO, BankBazaar.