Want better credit score? Here are 7 key tips to help you get there | Mint
Source: Live Mint
To be considered eligible for any financial need like home loans and credit cards, one has to have an elevated credit score. To keep and elevate a good credit score requires preparation and a sense of initiative, too. Here, we will include seven practical suggestions to enable you to work on bettering your credit score in an effort to secure an economically safer future.
Understanding credit score
Your credit score is the numeric value of your creditworthiness based on variables that include your payment history, credit utilisation, and the kinds of credit you have used. A better loan offer and financial option lies ahead with a better score, which means lesser risk, as lenders use your credit score to determine your ability to repay a loan.
What is a good credit score?
Generally, the credit score range between 300 and 900, with 300 representing the lowest score and 900 the highest. In general, a score of 750 or higher is excellent and increases your likelihood of getting a loan on favourable terms and lower interest rates.
How to improve credit score?
1. Review your credit report often: Get a copy of your credit report, then review it. There should be some defaults and late payments which are currently reducing your credit score. Periodic checks make it easy to monitor your financial health and improve it.
2. Address errors promptly: Your score can be dropped unfairly because of mistakes on your credit report. You should note any inaccuracies or unauthorised charges immediately. Most credit reporting agencies provide you with a 30-day window of opportunity to dispute and correct errors, which, when done, can improve your score.
3. Credit utilisation ratio: The ideal credit utilisation ratio is less than 30%. It refers to the percentage of available credit that you are using. A high utilisation will decrease your score and implies an over dependence on borrowing. Never use all of your credit cards simultaneously and spread out your purchases.
4. Never reapply after denial: Do not apply again when your credit application is rejected. You could damage your credit score if you apply more than once as lenders may consider this as a sign of financial distress. Instead, work on the reasons why your credit application was rejected.
5. Pay loans on time: Paying back on time is essential if you have outstanding balances to pay. It always reflects in the lenders’ books that you are reliable and therefore, increases your credit score gradually.
6. Do not settle credit card or loan balances: Although debt settlement may be seen as a solution, this could negatively affect your credit rating. Settlements deter lenders from advancing your loans in future because they are indicated in your credit report.
7. Boundaries taking out loans: Your credit score may depreciate if you apply frequently for loans or if it’s approaching a credit limit. You must ensure the proper management of your credit and avoid loan applications whenever there is a redundant need for them.
In conclusion, it takes time, and patience, and responsible finances to raise your credit score. You can build a stable credit profile and unlock good loans and financial growth when you put these seven recommendations in action. Remember that such a high credit score can be a step toward the completion of your financial goals, and securing a brighter future, not just a score.
