Ready to boost your credit score? Here’s how to move from 600 to 750 | Mint

Once your credit score rises above 750, many financial benefits open to you by way of lower interest rates on loans and credit cards, better insurance rates, and more access to credit. If you are hovering around 600, this will serve as a good helper guide for achieving your goal.

Credit score

Credit score-or a number that indicates your standing with credit, in lieu of refunds-provides a figure as to how likely you are to repay a loan. High scores indicate reduced risk for lenders (on an arbitrary scale of 300 to 900). Having a very high score will bring better terms for the personal loan, better insurance rates, as well as a much easier time finding a rental place. A bad score can, on the other hand, deter lenders from giving you credit and make borrowing expensive for you.

Tips to increase credit score from 600 to 750

1. Lower amount owed: Financial stress is often accompanied by huge debts and will cause your credit score to weaken. Make minimum payments on your outstanding debts first, and then find ways to reduce your total debts gradually, such as prioritizing repaying debts with high interest rate.

2. Credit utilisation: It measures the extent of usage of your available credit lines. A utilization ratio that is less than 30 percent, thereby projecting on lenders that you are not too dependent on loans, will signify financial responsibility.

3. Timely payment of bills: Your actual payment history is the crux of your credit score. While timely payments help build a trustable reputation with lenders, late ones can damage your credit record.

4. Distribution of credit: A good mix of credit accounts, which may include unsecured loans like credit cards or personal loans and secured ones like home or auto loans, can help improve your score. This diversity shows lenders that you can responsibly manage different types of credit.

5. Regular credit check: Through active monitoring of your credit report, you can observe changes, detect inaccuracies, and perceive signs of identity theft and fraud.

Key factors that influence credit score

• Payment history: It is crucial to practice payment regularly, because while late payment will change your score negatively, an on-time payment will help raise it up.
• Credit utilization: Utilization should not exceed 30% to reflect responsible use of credit. Otherwise a higher utilization may drop your score and illustrates some reliance on credit.
• Credit mix: Varied credit with secured and unsecured being the mix represents financial stability.
• Credit inquiries: A new applicant for credit will undergo hard inquiries that might reduce the score for a limited time. As much as possible, limit useless credit applications in order to maintain stability.

How do credit scores work?

Your credit score is calculated based on various factors, including payment history, credit utilization, mix of accounts, inquiries made for credit, and some public records. Within these segments, credit utilization and payment history have the most weight.

In conclusion, though a longer period than you wished may seem to go by before your score reaches the heights beneficial to you-lower interest rates, business opportunities, and peace of mind-accentuated commitment to sound money management will ensure gradual improvement in your credit score.