The Journey to Excellent Credit: Steps to Take for a High Credit Score

New Delhi: A credit score is very important in getting your loan approved. It is the first thing that lender checks when assessing your loan and credit card application. A high credit score can help you in getting loans at low interest rates and easy terms. You can get a free credit score online by filling in some basic details about you. 

Significance Of a Good Credit Score

A high credit score means a good credit score. A credit score of 750 and higher than that is a good credit score. With this score, it becomes easy for you to get loans. Whereas a low credit score of 550 and below makes it tough for you to get loans. It indicates that you are not good at managing your debts.

In India, TransUnion Cibil is the top preferred credit organisation for credit reports. The credit score generated by TransUnion ranges from 300 to 900. There are various factors responsible for your credit score repayment history, age of accounts, total debt, credit mix etc. You can easily get a free credit score online by giving some basic details.

Steps to Improve Your Credit Score

It's always advisable to have a good credit score. It reflects your good financial health. You can improve your credit score by following the below-mentioned steps: -

1. Assess Your Credit Report

In the process to achieve a high credit score the first thing you need to do is get a credit report. The credit report will have details about loans taken by you, repayment history etc. Through this report, you will be able to know if any default payments made in past are affecting your credit score.

Apart from this, you would also be able to know if any discrepancies in your report. At times information recorded in the report may not be correct. In such cases, you can highlight the same to the credit bureau and get it rectified.

2. Clear All Your Dues on Time

Repayment history plays a big role in determining your credit score. So, take care that you don’t miss out on your EMI payments and Credit card bills. Making timely payments of loans and credit card dues will improve your credit score.

You can set payment reminders or automate the payments so that you don’t miss out on the payments. Also, avoid paying just the minimum due amount on credit card bills. Because the pending dues will add interest and penalty for late payment which will affect your credit score.

3. Don’t Close Old Credit Cards

A long and healthy credit history is very good for your credit score. So, if you have had a credit card for a long time don’t close it. In fact, closing the credit card can impact your credit score. Moreover, the older the credit account, the more genuine you appear to lenders.

4. Take Loans for Longer Tenure

Loan tenure can be decided by the borrower. So, when you opt for any loan in future keep the loan tenure longer. Due to longer tenure, you will have a lower EMI which will prevent you from missing out on EMI payments. You can improve your credit score by regular EMI payments.

5. Limit Your Credit Utilisation Ratio

Credit Utilisation Ratio (CUR) is a ratio determining your credit limit usage. Never utilise too much of your credit limit. Restrict your credit utilisation ratio below 30%. If it goes above this then lenders may feel that you are too much relying on debt.

In addition to this Credit utilisation also has a huge impact on your credit score. Also, you can get your credit limit increased to limit your credit utilisation.

Conclusion

A high credit score is an indication of your good financial health. So always try to maintain a high credit score. This will also help you in getting faster loan approval at low interest rates. Have a check on your credit score on a regular basis. You can get a free credit score online easily.