A low credit score can have negative effects, especially when applying for new credit cards or loans.Even individuals with a goodcredit history must regularly check their credit reports to maintain a good credit score. Here are some essential tips to improve your credit score.
9 proven ways to boost your credit score
1. Timely payments
Ensure that repayments, be it for loans or credit card EMIs, are never delayed. Choose auto-pay options, set up reminders, and organize monthly task sheets to avoid late payments that can directly harm your credit score.
ALSO READ: How to remove late payment from your credit report
2. Review your credit report
Regularly review your credit report for inaccuracies or misinformation. If you spot any discrepancies, promptly raise a dispute with the concerned credit rating agency to rectify the issues.
3. Keep credit utilization ratio low
Maintain a credit utilization ratio below 30% of your total available credit limit. Distribute your expenditures across various credit products to achieve this. Avoid crossing the 80% credit utilization threshold to show responsible credit behavior and increase the chances of credit approval.
4. Maintain a healthy credit mix
While unsecured loans can impact your credit score, maintaining a mix of credit types can be beneficial. Go for a combination of unsecured loans like personal or business loans and secured loans like home or auto loans to balance risk factors and boost your credit score.
5. Limit credit inquiries
Applying for multiple credits simultaneously signals credit hunger to lenders. Frequent loan applications create a negative impression and increase the chances of loan rejection. Only apply for new credit when genuinely needed.
ALSO READ: Does applying for a personal loan hurt your credit score?
6. Don’t max out your credit limit
Resist the temptation to exhaust your credit limit fully. Doing so increases your credit utilization ratio, leading to a lower credit score. If expenses strain your existing credit line, consider requesting a credit limit increase from your bank or lender.
7. Preserve old accounts
Closing old accounts or credit cards adversely affects your credit score. These accounts showcase your long-standing relationship with the bank and contribute positively to your credit history. Avoid nullifying this history by keeping old accounts active.
8. Monitor co-signed loans
Regularly check the status of loans you have co-signed. Unforeseen financial emergencies may lead the primary borrower to miss payments, impacting your credit score. Stay informed about co-signed loans to protect your credit standing.
9. Secure at least one credit product
Individuals with no credit history face challenges in obtaining loans. Acquiring at least one credit product, such as a credit card, can help establish a credit history and boost your credit score, opening doors to better financial opportunities.
ALSO READ: How to get your first credit card
In conclusion, taking a proactive approach to these strategies can significantly improve your credit health and pave the way for a more secure financial future.