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The Ultimate Guide On How To Improve Your Credit Score

how to improve your credit score

When you require financial aid in order to get into study abroad universities, you resort to education loans. But would you let a lower credit score destroy your dreams of getting the best education? The answer is obviously a big NO. With the help of this ultimate guide to credit scores, you’ll get an idea of how to healthily balance your credit. You may raise your credit score by taking a few basic measures, such as opening accounts that report to credit agencies, keeping modest balances, and paying your payments on time. After you read this article on how to improve your credit score, you will be able to easily tackle this issue.

Firstly, What Is A Good Credit Score?

Credit scores are calculated based on the information on your credit reports which includes details like your payment history, the amount of debt you have, and the extent of your credit history. As you can see from the above chart, the value of a credit score lies between 300 – 850 where 300 is the poorest score and 850 is the best score. Now if your score lies in the lower range, do not feel discouraged. We will help you understand how to improve your CIBIL score quickly in this article.

What You Need To Know About CIBIL Scores

Credit Information Bureau India Limited (CIBIL) is a credit information company that authorizes loan approvals. They hold records of all the credit-related activities of companies as well as individuals including credit cards and loans. What a FICO score is in the US, a CIBIL score is in India. They are all credit scores in the end.

Best Ways To Improve Your Credit Score

Lenders and loan providers use credit scores to determine whether to give you credit or not. It is therefore recommended that you keep a tab on your credit card monthly payments and personal loan EMIs on a regular basis. It takes a bit of time and effort to understand how to increase credit scores quickly, but as you read along, you’ll get the hang of it.

Review Your Credit Scores

The first thing to do upon noticing a poor credit score would be to review your credit report. Check your shortcomings and take a look at what factors affected your score. Sometimes you can check your credit report for free and sometimes you’ll have to pay. But if you’re really keen on knowing how to improve your credit score in order to easily apply for a loan, there’s no harm in paying a small sum. This is how a typical credit report would look like:

Factors contributing to a good credit score include:

  1. A history of on-time payments
  2. Lower credit card balance
  3. A mix of different credit cards and loan accounts
  4. Older credit accounts, and
  5. Minimal enquiries for new credit

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Start Paying Your Bills On Time

One of the guaranteed ways to improve your CIBIL score would be to get a handle on your bill payments. Your payment history has the biggest impact on your credit score. If you have records of previously paid-off debts, retain them in your records so it works in your favour. Some of the simplest solutions to how to improve your credit score as regards bill payments are as follows:

  • Keep a track of your monthly bills
  • Set due-date alerts so you know when a bill is coming up
  • Charge your monthly bill payments to your credit card so you can avoid the hassle of paying interest

Customise Your Credit Limit

How much credit you utilize significantly impacts your credit score. Smart ways to improve your CIBIL score would include putting a restriction on your credit usage as per the allotted limit. Reaching or exceeding the limit is harmful to your score. You can get in touch with your lender and customize your credit limit based on your expenses.

Limit Your Requests For New Credits

If you keep applying for new credits, you give the impression that you are constantly in need of credit and that’s not what you want! You can deal with how to improve your credit score by applying for new credit only if you need it and can repay it within the time otherwise it may adversely affect your credit score.

Opt For A Longer Tenor

So when you take a loan, try choosing a longer tenor for repayment. This will ensure that your EMI is low and when your EMI is low, you will be able to make the payments on time. As mentioned above, automate your monthly payments to your bank accounts for timely payments. When you don’t delay or skip your payments, it will positively contribute to your CIBIL score.

A Maximum Of 30% Credit Utilization Is Enough

Try and avoid using your credit card for every purpose. To understand how to improve your credit score, it is recommended to keep your credit utilization ratio less than or up to 30 percent. Because of this, it’ll create a positive impact on the CIBIL score. Having your monthly balances low will display a good CIBIL score.

If you’re looking for assistance with borrowing student education loans, head to UniCreds and avail of their zero charge services.

Thank you for reading our blog on How To Improve Your Credit Score. If you need any further information or help, these blogs may be of use to you:

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how to improve your credit score

The Ultimate Guide On How To Improve Your Credit Score