In today’s world, your credit score has become a reflection of your financial credibility. Banks and NBFCs prioritize your credit score before granting any type of loan. A low score increases the chances of loan rejection, higher interest rates, or receiving a lower loan amount. Therefore, improving your credit score should be the first step towards achieving your financial goals in the new year.

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How balanced credit card usage improves your score

Overusing your credit card can harm your score. According to experts, it’s best to spend only a limited portion of your credit limit. When you use a small portion of your limit, it shows that you know how to manage credit responsibly. This gradually strengthens your CIBIL score and increases the likelihood of receiving better credit offers in the future.

Timely payments build a trustworthy image

Paying loan EMIs, credit card bills, and other liabilities on time is considered the most effective way to improve your credit score. Late payments or paying only the minimum amount can negatively impact your score. Regular and full payments prove that you are a responsible borrower, which increases banks’ trust in you.

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Why checking your credit report is essential

Sometimes, technical or data-related errors are recorded in credit reports, which directly affect your score. Issues such as closed accounts appearing as active or incorrect outstanding balances are common. It is crucial to check your credit report at least once a year and correct these errors promptly.