A Complete Guide to Improve Credit Score!
It is an undeniable fact that credit scores play a major role in our financial well-being. Whenever you apply for a new loan or credit, the first thing that potential lenders check for is your credit scores to determine your creditworthiness. Therefore, it can be said that this three-digit number, ranging from 300 to 900, is a reflection of how financially responsible you’re. Higher the scores, better are the loan approval chances.
However, not everyone is well aware of what factors contribute to these scores and thus, often lacks to maintain a healthy credit score. They hardly even realize that this petty ignorance costs heavy to their financial lifestyle. So, before it gets too late to rectify the mistake, let’s pay heed to improve credit score and focus on factors to keep the scores intact in excellent range.
Pay your dues on time – It is easy to get a new loan or credit card, but at the same time it is also important to understand that every loan or credit comes with a huge financial responsibility as well. Notably, your payment history accounts for 30% of your credit scores and therefore, it is significant to ensure timely repayments of loan EMIs and credit card dues. Skipping even a single repayment could adversely hit the scores by some 40 to 50 points. Besides this, default payments also invite certain penalty charges, which can also put financial burden upon you. Hence, if you really want to improve credit score, make sure to pay off the dues on time.
Keep an eye on credit utilization – Though it is exciting to have a credit card, it is also important to keep an eye on credit utilization. Most of the credit cardholders don’t pay much attention to their utilization ratio and carries heavy outstanding for subsequent months without realizing that this will badly hit their credit score. Therefore, to safeguard your credit score from crashing down, it is significant to keep the credit utilization below 30%. To do so, it is advised to keep a track of monthly statements that will give you a fair idea about where most of your money goes to. Initially, it may sound challenging, but once you adopt a habit of tracking your spending, it won’t be much difficult for you to keep the utilization under 30% of available credit limit.
Review your credit report frequently – Often people make a common mistake of overlooking the importance of credit report check. However, little did they realize that if they’re looking for ways to improve credit score, the first thing they need to pay attention to is checking credit report thoroughly. It might be possible that your credit report is carrying misinformation or incomplete details, which could be draining your scores. Hence, make sure to review the credit report at regular intervals in order to figure out any errors and get them rectified at the earliest.