Credit Score: If you have a good credit score, you can easily get loans and credit cards. But if the score is less than 700, then the bank can also reject the loan. In such a situation, you can increase your credit score quickly by taking some easy and sensible steps.
How to increase your credit score?
Nowadays, whether you want to take a loan, finance a car or get a premium credit card, banks and financial companies first check your credit score. If the score is good then you get lower interest rates and better offers, but a bad score can cost you heavily.
Let us know easy and effective ways to increase the score.
1. Make full payment on time
Your payment history is the biggest factor that determines your credit score . Even a single late payment can drag down your score drastically. Set up auto-debits to pay EMIs and credit card bills on time. Remember, credit card dues can go up to 30-40% annual interest.
2. Start with a small, secured loan
If the score is poor, it may be difficult to get a loan without guarantee. In such a situation, take a secured loan against fixed deposit or gold. By taking small loans and repaying them on time, the score starts improving in 6-9 months.
3. Use only 30-40% of your credit limit
Using more than the credit card limit indicates risk to the bank. Try not to spend more than one-third of the limit. If the limit on one card is getting exhausted, then divide the expenditure between different cards.
4. Don’t rely too much on EMI conversion
Frequently converting credit card bills into EMIs raises questions about your payment capacity. If necessary, take a personal loan , which comes at a lower interest rate and offers a fixed repayment schedule.
5. Deal with overdue loans wisely
It is wrong to take another loan to repay one loan. First repay the small and high-interest loans, then focus on the big loans. If needed, take the help of a credit counselor.
Improving your credit score is not an overnight task, but timely bill payments, responsible credit card usage, and low debt can help you reach a 750+ score. A good credit score means easier loans and a better financial future.