Often people are worried about increasing their credit score, but there are some secret ways by which credit score can be increased easily. These secrets are adopted by bank experts, but common people do not know much about them. So, today we will learn about 6 such infallible secrets, which will help in improving your credit score, if not overnight, then definitely.
How to improve credit score
A good credit score is very important to get a personal loan and credit card. However, it cannot be made good overnight. For this, it is necessary to adopt regularity and right financial habits. In this article, we will learn how to improve your credit score and how to build a strong credit profile, so that loans and credit cards can be easily obtained in the future.
Start smart
If you are building your credit score for the first time, it is important to start right. You can start with a secured credit card (linked to a fixed deposit), a student credit card, or a basic entry-level card. This is a safe and easy way to gradually improve your credit score and become eligible for a loan or credit card in the future. Remember, starting small can make a big difference.
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Spend only 30-40% of your credit limit
It is very important to pay the entire bill on time every month. Late payments negatively impact your credit score and may make it difficult to get a loan or credit card. Always set up auto-pay or put a reminder so that you never forget an EMI or credit card payment. Also, always spend only 30-40% of your credit card limit. This shows that you handle your credit responsibly.
Take small loans and repay on time
If you want to strengthen your credit profile, taking a small personal loan or a consumer durable loan can be a good option. It improves your credit mix even more. Most importantly – never miss an EMI and make every payment on time to keep your credit score strong. This shows banks that you are a reliable borrower.
Keep credit utilization low
Credit utilization shows how much you have spent out of your total credit limit. If your credit limit is ₹10 lakh and you use ₹5 lahks, there will be 50% utilization, which can impact the score. For a better credit score, always utilize less than 30% of the credit and repay on time. This is a sign of financial discipline.
Do not apply for loans frequently
Every time you apply for a loan, the bank checks your credit score. If you apply for loans repeatedly in a short period, the score may drop and you may be considered credit-hungry. So, take loans only when necessary and protect your credit score. Every application leaves a mark on your credit report.
Use old credit cards
The older your credit history, the stronger your score. If you have an old credit card, use it for small expenses instead of closing it and making timely payments. Closing old accounts can shorten your credit history, which can hurt your credit score. Maintain your credit history, it is a mirror of your financial health.
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