What are the Different Ways to Improve Your Credit Score?

A few steps that will help you improve Credit score are: 

• Observe your credit report in detail: Going through your credit report in detail even though you might have a healthy credit score is essential. The credit report published by credit bureau is prone to errors and going through it thoroughly will help you identify those. For instance, a loan might still be shown as active in the credit report despite it being closed and payments made by the borrower. This might be the reason of an administrative error by the bureau. 

• Avoid payment delays: One of the main reasons as to why the credit score of a person decreases is defaulting in payments. Ensure that you make the payments on time. Making payments on time constitutes about one third of the total credit score of a person. Even a single late payment made by a person can bring his or her credit score down by a huge margin. Making payments on time will immediately positively impact your credit score.  

• Credit limit utilisation: Another way via which you can positively impact your credit score is to not utilise your credit limit to its maximum every time. It is advisable to not use more than 50% of your credit limit. For instance if your credit limit is Rs. 2 Lakh, ideally you should not be spending more than Rs.1 Lakh from your credit. Utilising your complete credit limit every time means indicates that you do not have spending discipline. It also means that you will have problems clearing your debt obligations. All these factors negatively affect your credit score.  

• Applying for multiple credit cards or loans is not advisable: It is not advisable to apply for multiple credit cards or loans in a short amount of time as it negatively affects your credit score. For instance, every credit card that you apply for, the credit card company will make an enquiry for your credit score to check whether you are an ideal candidate to be given the credit card or not. Applying for multiple credit cards or loans in a short amount of time indicates that you are credit hungry which is considered a good thing.  

On average, if these steps and good credit card habits are followed, the credit score can see a positive change in 4 to 12 months.