Did you know that a good credit score will help you get loans and other credit products? Let’s talk about what a credit score is, and how you can improve your score.
Credit score is a number between 300 and 900 that measures an individual’s creditworthiness. Put simply, your credit score defines how well you manage your credit, and how capable you are of paying off debt in time. You can look up your credit score for free at CIBIL’s official website.
The higher the credit score, the better your creditworthiness. Higher scores make you more likely to get loans and faster approvals on Credit Card applications. Any score above 750 is usually considered good. You should always aim to improve your credit score by paying your bills on time.
While approving loans or Credit Card, most banks and financial institutions consider your credit score. If your credit score is below 700, or if you do not have a credit history, your application is likely to be rejected.
You may be wondering if you can improve your credit score. Most certainly you can! We’ll tell you how. Here are 5 ways to improve your credit score:
1. Pay your bills on time:
Make it a habit to pay your Credit Card bill every month before the due date. If the due amount is large, pay the minimum amount due to avoid any extra charge. Late payment fees can lead to a drop in your credit score. It is best to set alarms to keep track of your due dates.
2. Convert to EMI:
If your credit card expenses are mounting, it is a good idea to convert the outstanding amount into EMIs. This will help you manage your costs, as well as improve your credit score.
3. Review your credit report:
Check your credit score frequently, and keep track of the pattern it follows. If your credit score is on a downward spiral, your CIBIL report will give you insights into the reasons behind that. Identify the problem areas and try to fix them.
4. Monitor credit usage:
Credit utilisation is a measure of the amount of credit you use. It’s the ratio of your Credit Card bills to the total credit available to you. It is advisable to keep your credit utilization at an optimum level. The lower it is, the better it is for your credit score. Credit utilisation below 30% is considered to be ideal. Try to restrict your expenses, and take care to not use more than 30% of your total available credit limit.
Apart from Credit Cards, even loan accounts have an impact on your credit score. Make sure to pay your loan EMIs on time. Prevent any loan or Credit Card defaults to maintain a good credit score.
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