If you are struggling enormously with your credit woes and want to get an instantaneous resolution, then note there is no quick solution. Holding a good credit score requires financial discipline and in-depth knowledge regarding distinct available options to ameliorate it.
What is known as a good credit score, and why credit score check is necessary?
A credit score is a three-digit numerical expression, which ranges anywhere between 300 and 900. The closer your credit score is to 900, the better your score is. A credit score of 750 and above is considered an ideal score for availing of loans and different credit options at favourable terms. In case your credit score is less than the ideal limit, you require to take crucial measures to improve it.
You can fetch your credit report to review your credit score from any of the four credit bureaus – CIBIL, Equifax, CRIF Highmark and Experian. Out of all the four bureaus, the CIBIL report receives the highest importance from credit issuers and lenders. Conducting a periodical credit score check can help you understand where you stand. Note that once you are on the CIBIL’s site, you require visiting the option ‘CIBIL check free report‘ if you are fetching your report for the first time in a year. Remember, if you wish to fetch more credit reports, then you will require paying a charge on the CIBIL site for such report fetches.
Alternatively, you may even visit any of the financial markets online to get your CIBIL score report online monthly with regular updates.
Thus, the main question is how you can improve your credit score. Ensure to adopt all the habits listed below to ameliorate your credit score.
Check your credit report periodically for accuracy.
It is necessary to ensure that all the details on your credit report are accurate. Any kind of mistake or discrepancy on your credit report can have a negative impact on your credit score. As stated above, there are 4 major credit bureaus that compute your credit score – Experian, CIBIL, Equifax and CRIF HighMark. A thorough assessment of your report from all 4 credit bureaus for accurate info is crucial. In case you see any inaccurate info, outdated details, or any missing information, you must raise a concern instantly with the credit agency and lender. It is one of the best ways to quickly fix your credit score.
Set up the payment reminders for making repayments timely
Continuously repaying your credit card bills and loan EMIs on time can increase your credit score. However, any late or missed repayment holds a high potential of having a negative impact on your credit score. To ensure that you timely repay your dues on time, make sure to write their repayment deadlines for each bill in a planner or calendar and online set reminders for them. Even you must consider going for the auto payment mode through a lender or bank to get your repayments debited directly from your account.
Do not go over 30 per cent of your CUR or credit utilization ratio.
In the scenarios, if your credit card account balances go over 30 % of your credit limit every month, this is a red alert indicating your credit score may suffer. Even though you repay your full balances every month on time, it may still mean you are an irresponsible individual who cannot manage your credit properly. Lenders and credit bureaus, because of your overutilization of credit limit, may look upon you as a credit-hungry person prone to default in the future. Thus, it’s best for you to ask your credit card issuer to enhance your credit card limit or if this is not possible, go for an additional credit card to increase your thorough credit card limit.
If you have high-interest loans, convert this into manageable EMIs through the debt consolidation option.
In the scenario you are witnessing issues in making your repayments on time due to the high rate of interest charges on the credit options, then this means you hold a high probability of defaulting in the future during financial exigencies. Ensure to be prepared for this from before for such scenarios and hence select to convert your numerous multiple outstanding loan debts into EMIs by timely repaying them via low-interest personal loans. Upon choosing the personal loan, you even get the choice to choose your schedule for making repayments according to your repayment potential. The benefit of opting for a personal loan to make the repayment of your existing loan debts is the finance charges levied on credit cards are twice more than on personal loans.
Repay all your maxed-out credit cards
When using multiple credit cards, it is advised to make repayments of those credit cards that might be maxed out. The strategic tactic here is to lower your credit utilization ratio to enhance your credit score.
Build a pragmatically strong credit age
A good credit age majorly denotes an age of more than five years. Longer your credit history with positive repayments, the better your credit score. If your credit history is short, then for this, you cannot do much. You only require being patient and following all good credit habits. In case you have no credit history, it may take around three to six months from the beginning date to see if any activity has been addressed on your credit reports. A great way to build a strong credit history is to opt for a credit card and make all your purchases through it as per your repayment capacity. Also, ensure to make the payment of the credit card bills in full and on time.
Maintain all your older credit cards
As stated above, your credit age plays an important role in deciding your credit score. This means that if you have long-term experience in managing your credit accounts, then the lenders will also be confident in lending you and your credit bureaus will also consider you as a credit-responsible individual worthy of having a good credit score.
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