Is your credit score holding you back? Try THESE 6 game-changing tips | Mint
Source: Live Mint
In the current financial environment, it is more important than ever to have a good credit score. It affects everything from your ability to rent an apartment to credit card offers and loan interest rates. Here we explain the basics of credit scores and provide helpful advice on how to build your credit history, increase your creditworthiness, and make better financial decisions.
Credit score
Your credit score is a three-digit figure that reflects your creditworthiness. It gives an indication of the likelihood of repayment of personal loans in due time and represents your credit history in a number.
What is a good credit score?
A good credit score falls in a range of 650–749. It gives a low likelihood of default in loans and is characterized by the responsible behaviour exhibited in credit. This offers better rental deals, credit cards with higher classes and richly rewarding features, and also allows for the minimal interest on borrowed loans.
Tips and tricks to boost your credit score
1. Configure bill payments automatically
Maintaining a high credit score depends on you never missing a payment deadline, which is ensured by automating your monthly payments. To prevent overdrafts, simply make sure your checking account has enough money to cover each payment.
2. Balances due
Before paying lower-interest debts such as federal student loans or auto loans, focus on paying off high-interest credit card balances. This can lead to long-term financial savings and a better credit utilization ratio.
3. Maintain old accounts open
An old credit card open and unused still benefits your credit score. This is because of a longer credit history and more total credit limit, which are positively influencing factors in the calculation of your credit score.
4. Monitor your credit score
Monitoring your credit score will allow you to take prompt action to rectify problems. Consider possible causes such as high balances, late payments, or an excessive number of recent hard enquiries if your score drops.
5. Using credit cards sensibly
Do not use your credit card to its limit every month. In addition, unless you receive a (NOC) from your credit provider, do not shut a credit card account abruptly.
6. Balance of unsecured and secured loans
Since secured loans are used to accumulate assets, such as mortgages or auto loans, they may increase your credit score. Like personal loans, unsecured loans can have more devastating effects. Minimize the outstanding amount of unsecured debt in your credit report.
In conclusion, it takes time and effort to raise your credit score. You can take charge of your financial well-being by putting the advice in this guide into practice. Make timely bill payments, keep a close eye on your credit report, and use credit sensibly. In addition to improving your credit score, persistent work will increase your financial stability and open up more favourable financial options.
