If you are one of those struggling with credit woes and looking for an instant fix for your score, then understand it – there are zero quick fixes for credit scores. To get a good credit score, you must be disciplined.
What is a strong credit score?
A credit score is a three-digit numerical expression ranging between 300 and 900. The closer your credit score is to 900, the better your score. A credit score equaling 750 is considered ideal for availing of a loan on suitable terms. If you have a credit score that is less than ideal, you are required to take appropriate measures to ameliorate it. So, how to ameliorate your credit score? Instill these good habits to improve your credit score:
For accuracy, assess your credit report
It is very important to ensure all info or details on your report are accurate. Discrepancy or mistake that is reflected in your report can negatively affect your credit score. There are four credit bureaus in India that calculate your credit score: CIBIL (Credit Information Bureau India Limited), Experian, CRIF High Mark, and Equifax. Review your credit reports from all four agencies for information accuracy carefully. If you view any outdated info, inaccurate info, or missing info, ensure to raise the dispute with the credit rating agencies and lenders. Note that pulling your credit report does not affect your credit score.
Set payment reminders to repay your dues within the time
Constantly repaying your bills within time can raise your credit score in a few months. Any late or missed payment can have a considerably negative impact on your credit score. To make sure you repay your dues timely, write down payment deadlines for every bill in the calendar or planner and set reminders online.
Also, you can consider enrolling for auto payments via your bank or lender to get your payment debited directly from your savings bank account.
Keep your CUR (credit utilization ratio) under 30 percent
If your balances on credit cards surpass 30 percent of your credit card limit each month, it is a red flag as your score is suffering. Also, if you are repaying your balances in full each month by the due date, it might reflect as an outstanding in your report as your creditor reports info to the bureau once every month. Thus, it is a good idea you prepay some of your balances before the due date to keep yourself over the 30 percent mark each month.
Convert your high-interest loan into EMIs via debt consolidation
If you are facing any trouble making payments due to high-interest debt on loans and credit card accounts, you have the option to convert your numerous debts into low-interest EMIs through the debt consolidation option. Then, you can select your repayment schedule as per your financial potential and repay the borrowed sum in the form of affordable EMIs. The benefit of availing of a personal loan to pay your existing debt is the availability of a low-cost interest rate, which is almost half of a credit card’s rate.
Clearing those balances and reducing your credit utilization directly improves your credit score, making you a more appealing candidate to lenders and opening doors to better borrowing opportunities. Finding the proper assistance from debt relief companies is easier than you might expect, no matter where you reside. For example, if you’re in Austin, numerous debt relief programs in Texas are available to guide you on your journey to financial success.
Pay first for the maxed-out cards
When you use multiple credit cards, it is recommended that you pay down cards that are about to max out. This tactic will assist you to lower your CUR (credit utilization ratio) and give a good boost to your score.
Form a strong credit age
Good average credit age will be over five years. The longer your positive credit history, the better your score. In case you have a short credit history, there is not much that you can do. The only choice you have is to be patient and avoid closing any accounts.
If you have zero histories, it might take 3 to 6 months from the starting date to view any activity being mentioned on your report. One option through which you can establish your credit history is by taking a credit card, making small purchases that you easily can afford to repay through it, and paying the balance completely every month.
Maintain your older credit cards and do not close those you are unable to use
As mentioned previously, credit history age has a considerable impact on your score. It reflects your experience in managing your credit. If you have old credit cards, it is crucial for you to maintain them and continue paying bills by the due date in full each month. Avoid closing them, even if you do not use them. If you are looking to close, ensure to close the latest ones.
Keeping your old credit cards open assists you in forming a healthy and long credit history and thus improves your score.
Open the latest credit cards just if you need it
Think deeply if you want to open an additional card account at all. Opening many accounts that you are not using will just accrue charges while endowing you with no other edge if you are looking to ameliorate your credit score.
Avoid submitting an application for credit several times, very frequently
Each time you place a new credit account application, the lender pulls your credit report. Each pull is looked upon as a hard inquiry, which brings down your credit score temporarily. Abstain from applying for various credit cards or loans within a very short duration. Keep your hard inquiries to a minimum by comparing offers, shopping around, and applying to a lender offering the best deal.
Select the repayment tenure that you can repay comfortably in EMIs
As mentioned, timely and regular repayments ameliorate your credit score. So, when borrowing funds, it is always safe to select a higher repayment tenure. It ensures lower loan EMI, which you comfortably can repay, lowering your chances of delay, default, and skipping your loan EMIs. Note that if you can afford to repay huge EMIs, select a shorter repayment tenure. By doing this, you will pay the borrowed funds faster and save considerable money on the interest.
Be extremely patient
Credit score improvement is not a thing that can be improved overnight. It takes a lot of time, but you require constantly improving your credit habits if you are looking to improve your score. All points stated above are nothing but good credit habits; you must develop a strong credit score.
Remember that when availing of a personal loan or any other loan, having a good CIBIL score is important. For SBI personal loans, the CIBIL score is an important parameter considered. Thus, to avail loan through SBI, a CIBIL score check is important.