How To Improve Your Credit Score?
A borrower’s credit score is one of the most influential factors in determining their creditworthiness. The credit score serves as an indicator of eligibility for many types of financial products, services, and loans, including mortgages, loans, and credit cards. By improving your credit score, you can reduce your interest rates and access more funds. Here are a few practical steps borrowers can take to improve their credit score abhay bhutada md.
Getting to Know Your Credit Score
To improve one’s creditworthiness, one must understand how one’s credit score is calculated. Credit bureaus in India, such as CIBIL and Experian, as well as Equifax, evaluate creditworthiness. The score is calculated based on the payment history, credit utilization, credit duration, credit mix, and number of recent credit inquiries abhay bhutada poonawalla fincorp
According to finance leaders like Abhay Bhutada, MD of Poonawalla Fincorp, and Navin Chandani, President of Issuing Business by Pine Labs, a credit score above 700 indicates responsible credit behavior. A good credit score will improve your chances of getting a better interest rate.
Take a look at your credit report
Your first step in reviewing your credit report is to get a copy from one of the credit bureaus, such as CIBIL or Experian, or Equifax. Make sure that the information in your credit report is accurate and current. Examine it for any inaccuracies, misstatements, or fraudulent activity.
Make sure you pay your bills on time
It is very important to pay your bills on time in order to improve your credit score. If you fail to pay your bills on time, it can damage your credit rating, so you should make sure you are paying your bills on time. You can accomplish this by setting reminders, automating payments, or using payment apps.
Balances on credit cards should be reduced
An individual’s credit score can be negatively impacted by debt on a credit card. The best way to maintain a low credit card utilization ratio is to pay off each balance on a monthly basis. If that is not possible, minimize outstanding balances.
Open only one credit account at a time
Your credit score may suffer if you apply for multiple credit accounts within a short period of time. Each application creates a hard inquiry on your credit report, so only request credit when you really need it.
Keep a mix of credit cards
You can improve your credit score by having a variety of credit accounts, such as credit cards, loans, and mortgages. However, it is important to manage these accounts responsibly and not overextend yourself.
Personal Loans
You will be more creditworthy and improve your credit score if you have a long credit history because you have been able to maintain your credit needs over time. You will not have a credit history if you haven’t taken out a loan yet. Poonawalla Fincorp’s MD, Abhay Bhutada, suggests taking out a personal loan to build one.
Credit limit for new accounts
The CEO of BCT Digital, Jaya Vaidhyanathan, advises people to use credit cards responsibly in order to build their credit score.
Be cautious when considering new credit and avoid unnecessary applications to decrease the average age of your credit history.
Don’t close old credit accounts
Even if you no longer use a particular credit card, keeping the account open can contribute positively to your overall credit history.
Monitor your credit score regularly
Make sure you monitor your credit regularly. Review your credit report annually and keep an eye out for any suspicious activity or signs of identity theft. Promptly reporting any issues can help prevent your credit score from being negatively affected.
In conclusion
If you follow these principles, you will be able to consistently improve your credit score. It takes patience and effort to improve your credit score, but the rewards are worth it. The key, however, is to maintain responsible financial habits as well as take a proactive approach. You can open a world of financial opportunities if you take control of your credit health today.
