How To Improve Your Credit Score: 7 Doable Tips
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By following these 7 easy and doable tips, you can easily take your score to new heights.
While a bad credit score can surely destroy your chances of getting a loan, be it for your new house or business or a car, the situation is bad but it can be repaired if you do certain consistently.
Don’t expect your scores to increase in just a month of following these tips, it may take you a couple of months before you see results but I can guarantee you that by sticking to these 7 tips, anyone can go from super bad credit score to super awesome credit score in just a few months.
The credit report includes your personal information along with employment history, credit limits on various credit cards, any loans, contact information, and much more.
This score determines a lot of things, one of them being availing loans and advances whenever necessary. So to ensure you get maximum benefits, you need to start working on your credit score today.
How To Improve Your Credit Score: 7 Doable Tips
1. Get a copy of your credit report
The first thing you need to do is to take a copy of your credit/CIBIL report. Analyzing your credit report will help you understand quite some things which will help you increase your credit score fast.
Your credit report will tell you all your loans and credit card debt payments that are in default or going in that direction.
Few factors which affect your credit score are a history of timely payment, multiple credit cards and loan account details, low balances on credit cards, missed payments, high credit card balances can drop the credit score drastically.
Your credit report also provides you with a lot of information about your score. If you find discrepancies in the report, you can always approach the bank and CIBIL to correct your score.
So before you get all tensed up about your low credit score, take a copy of your credit report and analyze it in detail.
2. Avoid new credit card purchases
One factor in determining your credit score is your credit card!
If you have multiple credit cards and aren’t able to keep track of each and pay the dues on time or don’t use that card at all, these factors can lead to a reduction in your overall score.
First of all, you don’t need to use a credit card. A credit card is an instrument that puts you away from your goal to financial independence.
It encourages you to spend more, which reduces your savings and your money for investments. But if you need a credit card, stick to one or two cards only.
3. Pay off all past balances
If you have any past debt pending that you haven’t yet paid off, do it now. The more you delay that payment, the more problems you’ll face in your creditworthiness and yes your credit score will reduce.
It’s okay if you didn’t pay it earlier, what’s happened has happened, make sure you start paying all past dues immediately so that you don’t have a financial burden on your shoulders.
4. Negotiate any inaccuracies
If while checking your credit report (which you should) if you find any inaccuracies, feel free to go to www.CIBIL.com. While doing data entry work, the credit company can make errors while calculating your credit report.
This may be the reason your score looks so bad. By informing them about their mistakes, once they rectify, your score will be as good as before. Give CIBIL at most 30 days and your score will be renewed.
Note: Never apply for new credit without resolving old credit issues. This may affect your scores.
5. Pay your EMI on time
By far, the most effective way to increase your credit score is by paying your EMI on time. One major reason for bad scores maybe your lack of timely payments.
Banks look closely at your EMI payments when they want to provide loans. This shows the bank that you have signs of being a defaulter and no bank likes it. Let’s say you lend some money to your best friend and he promises to pay you back in installments, the first day of each month.
He pays you the initial installment and then delays each payment. I’m sure you won’t be happy about this!
Similarly, banks start losing trust in you if you don’t pay on time. You may have to squeeze your budget, cut expenses and make room for debt payments but trust me, you need to get rid of debt as soon as possible.
Note: Your Credit Score is the single most important factor when it comes to availing of a loan.
6. Increase your credit limit
Don’t be under the impression that by raising the credit limit, you can spend more. Just because you ask the bank for an increase in your credit limit, that doesn’t mean you should overspend.
A higher credit limit can have numerous benefits on your credit score. One major benefits being, it reduces your credit utilization percentage which leads to a higher credit score.
Additionally, it is cheaper to get loans and additional credit as your creditworthiness increases along with higher credit limits.
During emergencies, when you need sudden cash, a higher credit limit means more money to take on credit, which can help you during emergencies.
7. Double down on payments
Okay maybe you’ve had a rough five months, paying your loans wasn’t easy and you couldn’t finish a few payments on time.
Right now your credit score is surely fallen, so to come up in the game, double down on your loan payment. First set your budgeting strategy.
If you aren’t budgeting yet, I recommend you grab my free budget template, write down your expenses and income, then cut all unnecessary expenses and start paying twice the amount you used to pay earlier.
This will show the bank that you can do payments and the bank will start gaining trust in you once again. Plus it will help you get rid of debt faster making you financially free of debt way earlier than you thought.
If you don’t have money to pay towards loans, try adding a source of income, start a side hustle that makes your money.
Why Your Credit Score is so Important?
We live in such times where to make money you need money. I don’t have abundant wealth right now the best option for you is to take a loan. Now if you have bad credit, banks will hesitate to finance your project.
Yes, banks are opening new locations in every city of India which should mean they are willing to give more loans right? Yes but if you don’t have a good credit history, don’t keep your hopes up high.
That’s why a good credit score is the first step you need to take to make money.
A person who manages his finances well won’t ever face a bad credit score. The first fundamental rule is to make sure your finances are set correctly. Then everything will fall in place.
Don’t be sad if you’ve had a bad score, follow these 7 principles and you’re surely going to see great results in your credit score.
How is your credit score? Planning to improve it? Share your thoughts in the comments below.
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