Ways to improve your credit score

 Ways to improve your credit score

Loan history & payment habits help determine your creditworthiness.

CREDIT SCORES DEPICT the creditworthiness of a person, and lenders generally prefer customers with a score of 750 and above. However, the time to reach a credit score of 750 will depend on several factors, including your current credit score, credit history, payment habits, and overall credit utilization.

If your score is between 650 and 700, you have consistent payment history and low credit utilization; it may take only a few months to reach a score of 750. However, if you have a poor credit score, missed payments, high credit utilization, and derogatory marks on your credit report, it could take several years. Improving your credit score requires a consistent effort to pay your bills on time, reduce credit utilization, and address any negative marks on your credit report. However, with disciplined credit habits and a focus on building good credit, you can gradually raise your credit score.

“The widely acceptable benchmark of a good credit score is 750. If you score beyond that, lenders will like you. They will reserve the best loan offers, ones with the lowest interest rates, for you. If your score is low, you will pay a higher rate of interest. If your score is very low, your credit application may be rejected and you may not be able to take a new loan or credit card” 

How a high credit score help

Loan approval: Banks and credit card companies use your credit score to evaluate your creditworthiness. A high credit score can increase your chances of getting a loan.

Lower interest rates: A high credit score can help you qualify for loans with lower interest rates. Often, those with higher credit score of 750 and above are considered less risky and find it easy to get loans.

Steps to reach a score of 750

It does not happen overnight. It is a process and you must follow financial discipline to reach a score of 750. Delays and defaults are big no if you want to achieve a good credit score.

Check your credit report : Obtain a copy of your credit report from one of the four credit bureasus CIBIL, Experian, Equifax, or CRIF High Mark. Review the report for any errors and take them up with the bureau.

Pay your bills on time: Payment history is the most important factor in your credit score. Make sure you pay your bills on time, every time. Set automatic payments or reminders to help you stay on track.

Reduce your credit utilization: Credit utilization ratio (CUR) is the amount of credit you are using compared to your credit limit. Keep your credit utilization below 30% to avoid negative impact on your credit score.

Maintain a mix of credit: Having a mix of credit such as a credit card, personal loan or home loan can improve your credit score.

Avoid applying for too much credit: Applying for multiple loans or credit cards within a short period of time can hurt your credit score.

Don’t close old credit accounts: closing old credit card accounts can lower your credit score, especially if they have a long credit history. Keep your old accounts open and active, even if you don’t use them often.

Avoid defaulting on loans: Defaulting or a loan or credit card can severely damage your credit score. If you’re struggling to make your payment, talk to your lender about your options, such as a payment plan or debt consolidation.

REACHING 750

The widely acceptable benchmark of a good credit score is 750.

People with this score are considered to be more credit worthy.

Payment history is the most important factor. Delays and defaults in payments are a big no.

Closing old credit card accounts can lower your credit score.

For More Details: Pooja Manoj Gupta, visit www.giia26.com
Email: pmgiia26.com Mobile 9868944340