A strong credit score is necessary for accessing favourable loan terms, credit card offers, and other financial benefits. Your credit score reflects your creditworthiness and is influenced by how responsibly you manage credit. We’ve packed this post with smart tips to give your credit score a lift. Let’s get to them:
Pay Your Bills on Time
One of the most significant factors affecting your credit score is your payment history. Consistently paying your credit card bills on time shows lenders that you are reliable. Set up automatic payments or reminders so you never miss a due date. Even one late payment can negatively impact your score, so focus on timely payments.
Keep Your Credit Utilization Low
Credit utilization refers to the ratio of your outstanding credit card balances to your total credit limit. It's advisable to keep your credit utilization below 30%. For example, if your credit limit is ₹1,00,000, try to keep your balance under ₹30,000. High utilization can signal that you’re over-reliant on credit, which may harm your score.
Avoid Applying for Multiple Credit Cards at Once
Each time you apply for a new credit card, a hard inquiry is made on your credit report which can temporarily lower your score. Multiple applications in a short period can indicate financial stress. It’s better to space out credit card applications and only apply when necessary.
Regularly Monitor Your Credit Report
Keeping an eye on your credit report can help you identify any errors or discrepancies that might be affecting your score. You’re entitled to one free credit report from each of the three major credit bureaus annually. Reviewing your report regularly will help in making sure that all the information is accurate and up-to-date.
Maintain Older Credit Accounts
The length of your credit history contributes to your credit score. Closing old credit card accounts can reduce the average age of your credit history, which may negatively impact your score. If possible, keep older accounts open and in good standing to demonstrate a long and stable credit history.
Use Your Credit Card Wisely
Using your credit card for everyday purchases and paying off the balance in full each month can help build your credit score. Avoid maxing out your card or carrying a balance from month to month, as this can lead to high interest charges and a lower score.
Growing your credit card score takes time, but by applying these tips, you’ll be well on your way towards building a solid credit foundation.
October 22, 2024
