Banks and NBFCs like it when you improve your credit score because it shows that you are careful with money and that lending to you is safe.
When it comes to money, experts tell you how to raise your credit score so that the sun shines on you.
“A clean payment history is the most important thing for a good credit score,” says CRIF High Mark’s Managing Director, Sanjeet Dawar. Plan to pay your Equated Monthly Instalments (EMIs) and at least the minimum payment on your credit cards on time
A person’s credit score also takes into account the length of time they were late on their payments. The most recent failures are seen as worse than the older ones. So, if you don’t pay your debts on time, you need to build a good credit repayment past after the fact to raise your credit score over time.
Chief Marketing Officer at Home Credit India, Ashish Tiwari, says, “Pay off your credit card debt as quickly and fully as you can.” It’s okay if you can’t pay the full amount every month. Just make sure you pay the minimum amount on time.
When you get the money, pay off the amount right away. Overusing your credit limit and having a lot of debt on your credit cards or other ongoing loans for long periods will hurt your credit score.
You should never use up all of your credit cards or open credit lines. Tiwari says it’s best to keep the average amount of credit usage at about 50%. Let’s say you have a credit card with a ₹100,000 limit. If you use ₹80,000 in one month and ₹20,000 in the next, your average usage for two months is 50%.
Please be careful about how fast you borrow money. If you borrow money a lot, your credit debt will grow quickly, which can be a sign of too much leverage.
On the other hand, a steady or quick drop in balances shows that the borrower is paying less in interest. Experts say that you should pay off your loans early or collect on them whenever you can.
Next, keep an eye on how many credit lines you have open. Having too many credit cards or rolling credit lines can hurt your credit score. Credit card experts say you should have one or two.
Also, be careful when you ask for new credit, such as personal loans, credit cards, or EMI cards. If you apply for too many loans in a short amount of time, your credit score will go down because each application adds a hard inquiry to your report, and too many inquiries show that you don’t have enough money.
Also, check your credit record often and dispute any mistakes you find, since mistakes can hurt your score.
You should be careful because some e-commerce sites give customers instant credit without telling them or giving them a chance to say no. This can show up on your credit record. Tiwari says, “That’s why it’s important to regularly check your credit reports and open accounts, and if you find any errors, you should report them to the credit bureau so that your overall score doesn’t go down.”
A lot of inquiries in a short amount of time could mean that someone is looking for loans or is having money problems. Dawar says, “It is important to plan and choose a lending institution that is right for your needs. Don’t send the same request to multiple lenders.”
