How to improve your credit score in 3 months? A proven step-by-step plan | Mint

Boosting your credit score is key to getting the best loan rates and financial products. A credit score is nothing but a representation of an individual’s credit profile. The higher your credit score is, the better it is. Therefore, if you want to enhance your credit score in three months, follow the step-by-step guide below:

Step 1: Review your credit report

Start with ordering your credit report copy from your respective credit bureau. This will help you in understanding your credit health. Go through it properly for errors or inaccuracies, such as erroneous personal details or illegal requests. 

In the event you find any discrepancies, bring this to the notice of the bureau to correct them. Mistakes rectified may lead to a score raise immediately. Further, never leave anything to chance or doubt. Always speak to your credit bureau’s customer service team for any clarifications.

Step 2: Always focus on timely repayments

Your payment history is one of the most important parameters that fix your credit score. Timely pay all your credit card dues and loan EMIs carefully. Fix reminders or set up auto-payments to never miss a payment deadline. Even during a financial crisis, make it a point to pay the minimum by the due date to maintain a healthy payment history. A healthy payment history stays with you for decades. That is why one error in payment might stay with your credit profile for years to come. Always remember this simple fact.

Step 3: Reduce credit utilization

Maintain your credit utilization ratio at less than 30% of your total available credit. Excessive use indicates financial instability and weak finances to lenders and hurts your credit score and dampens your credit profile. Where possible, settle outstanding credit card charges promptly or ask for a rise in your credit limit to enhance this ratio. A credit utilization ratio of more than 30% should be considered as a red sign by you.

Step 4: Minimize new credit applications

Don’t apply for new credit accounts or lines of credit during this time, as each application triggers a hard inquiry against your credit report, temporarily lowering your score. Instead, responsibly pay off your current accounts. Further, always keep in mind that a hard inquiry stays on your credit profile for a while. That is why it is always sensible to avoid many credit applications which in turn prevent a hard inquiry.

Step 5: Diversify your credit mix

If your credit record is poor, obtain a small personal loan or a secured credit card. Keeping all types of credit in order will raise your score over the years. Simple example: If you build a history of consistently paying back the borrowed funds. This will keep your credit score healthy. It will also ensure you are able to meet the obligations comfortably.

Hence, to conclude, improving your credit score takes effort and discipline. By doing the following: correcting errors in your report, making timely payments, keeping utilization low, keeping too many inquiries to a minimum, and maintaining a mix of credit, you can notice improvement within three months. Remember that it is always important to follow good money habits in order to have a healthy credit score in the long run.