Credit score: If you are planning to take a loan anytime soon or apply for a credit card, it is imperative for you to be aware of your credit score, which is a key indicator of your creditworthiness.
And if you happen to discover that this score is too low to fetch you anything, then you need to take some concrete steps to improve this. Those steps may not be too radical. You can even take small steps to fix it. These are some of the small steps one can take.
Improve credit score: Small steps to take
I. Regularly check your credit report: You should obtain your credit report from a credit bureau (CRIF High Mark or CIBIL) at least once a year. You can get a free report annually from each bureau.
II. Clear bills on time: Payment history is a key factor of your creditworthiness. Ensure timely payment of credit card bills, loan EMIs, and other dues
III. Reduce credit utilisation ratio: Keep your credit utilisation ratio around or lower than 30 per cent. For instance, if your credit card limit is ₹1,00,000, you should try to keep it below ₹30,000.
IV. Refrain from sending multiple loan applications: Each loan or credit card application leads to a hard inquiry that can temporarily lower your score. Read more about hard inquiry here.
V. Maintain a healthy credit mix: It is recommended to keep a mix of secured (home or auto loans) and unsecured loans (including credit cards and personal loans) which can positively impact your score.
VI. Clear your dues: It is recommended to pay off any overdue amounts, including penalties or fees because these can radically hurt your score.
VII. Keep old credit accounts active: The length of your credit history matters. Avoid closing old credit card accounts, as they contribute to a longer credit history, which boosts your score.
Disclaimer: Mint has a tie-up with fintechs for providing credit, you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
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