Credit bureaus calculate and assign credit scores, which are three-digit numbers that assess individuals’ creditworthiness. In India, four credit bureaus serve individual customers: TransUnion CIBIL, Experian, Equifax, and CRIF High Mark. A good credit score makes you more likely to be approved for higher credit limits on credit cards and lines of credit. This can increase financial flexibility and purchasing power.
Improving your credit score is an important step toward financial stability and increased credit opportunities. It demonstrates financial responsibility and can make achieving your financial goals easier.
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Check your credit report on Regular Basis-Make a habit of reviewing your credit report. Checking your credit history and credit scores will help you better understand your current credit situation.
Payment of Bills on Time- Always pay your bills on time, as late payments can severely damage your credit score. Your payment history is an important factor in determining your creditworthiness.
Reduce credit card Balances- Try to keep your credit card balances below your credit limits. Even if you pay on time, high balances can lower your credit score.
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Increase your credit limit- Asking for a credit limit increase can help you improve your credit utilisation ratio, which is the percentage of credit you use compared to your total limit. Lowering this ratio can help your credit score.
Diversify Your Credit Mix- Having a variety of credit accounts, such as credit cards, loans, and mortgages, can improve your credit score. Just make sure you can handle new credit responsibly.
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Don’t open too many accounts-Opening too many new credit accounts in a short period of time can make you appear risky to lenders, lowering your credit score. Only create new accounts if you need them.
Use wisely credit- Only apply for credit when you need it, and make sure you can afford to repay it. Lenders prefer to see that you are responsible with your credit.
Keep Old accounts open-Do not close old credit accounts because this can shorten your credit history and make your accounts appear newer. Even if you’re not using them, it’s best to leave them open.
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Correct Errors on Your Credit Report-If you find any errors on your credit report, such as incorrect account information or fraudulent activity, report them to the credit bureaus so they can be corrected.
Maintain patience and persistence-Don’t give up on improving your credit score; it takes time and effort. Continue to practice good credit habits, and you will see your score improve over time.
