Your adult life requires you to take care of your financial situation right from the start. Be it a small pocket money loan you took during your college time or a secured loan you had to take for home or car, you need to make your payments on time to maintain a good credit score.
Often, people are not equipped or not aware about how late payments affect their credit score or how multiple active credit accounts or small loan amounts can harm their future loan prospects. As they say, prevention is better than cure, one should never miss any payment and keep their credit enquiries at a minimum to maintain a good score.
But let’s just assume, you weren’t aware about the concept of credit score. You ended up defaulting various payments. What would you do? Even if you pay your debt amount at a later day to settle your dues, the damage has already been done. Your credit report will have details about each of them. Once these reports are accessed by the lenders, your application will be immediately rejected.
Don’t worry! If that’s the case, we can help you. Just go through our list of recommendations about how to improve credit score beneath.
Let’s get started!
Ways to improve credit score
Here are a few tried and tested ways to improve credit score and get easy loans and cheap interest rate:
Spot errors and rectify them immediately
Your credit report issued by credit bureaus have every single detail of your financial history. If there’s a discrepancy in your latest credit report, you should immediately raise the request to edit or update it.
It is a very big possibility that a completed loan payment or closure of an active credit account may not show up in your report. Therefore, your loan might get rejected and affect your credit score. Once you eliminate such discrepancies, your credit score will improve.
Never miss a payment
Payments are a high impact factor for your credit score. If you miss any payment, your credit score is affected to a large level. Every time you miss a payment, it will stay in your records for an entire lifetime.
Therefore, you need to make all postpaid payments, big or small, on time to maintain your creditworthiness.
If you have any pending dues, pay them right away to see a substantial hike in your credit rating. Remember, paying off debt improves credit score.
Always clear your due dates and put reminders to make all your payments on time. You can also set your payments at auto-debit for hassle-free payments. The Airtel Thanks app can help you with postpaid online payment with its auto-debit feature.
You could also use Thanks for a whole lot of other benefits. Electricity bill payments, DTH, broadband, FASTag and lots more – Airtel Thanks can help with all these.
Have different finds of credit
There are two types of credit – secured and unsecured. Remember to maintain a healthy mix of these to get a good credit score. This will also help you to improve credit score in the long run. Multiple unsecured loans like many credit cards with credit usage can affect your credit score.
Say no to multiple loans
Don’t take multiple loans from multiple sources. It will adversely affect your credit score. It is recommended to take only 1 loan at a time. Complete a loan and then go for another one.
Moreover, your credit utilization ratio should be just 20-30% of the total credit offered to you.
Long-term loans over short term ones
The interest rate on long term loans is lesser than short term loans. Moreover, the EMI amount will be smaller for you. Therefore, you never will face difficulty to pay your EMIs.
Keep and maintain your older credit cards
Rather than opening multiple new credit cards, you can just maintain a good and responsible relationship with one credit card. If you have a good relationship with a single card company with payments on time, it will get you a better credit score.
To give you a clearer picture, you should know what your credit score stands for.
What does a credit score indicate?
As you know, a credit score is a 3-digit number between 300 to 900. Here’s how your score is analyzed:
- 750 credit score and more: Excellent credit score indicates creditworthiness of an individual. Easier to get loans.
- 600-750 credit score: A few missed payments, high amount of debt, or not filing ITR can result in a score between 600 to 750. Harder to get loans and other forms of credit.
- Any score below 600: Absolutely poor credit score. Individuals with such credit score need to take all the necessary steps to improve credit score.
If you are wondering how long does it take for credit score to improve, the answer varies. Only consistent effort will get you results.