A healthy credit score is of great significance when it comes to accessing credit facilities and achieving financial goals. Your creditworthiness is typically assessed based on your credit score and Experian is one of the major credit bureaus in India, alongside Equifax and TransUnion CIBIL offering credit scores. In this article, we will explore some practical tips that can help you elevate your credit score, irrespective of the credit scoring model and take charge of your financial future.
Know your current score
Before you embark on a journey to enhance your credit score, it is crucial to know where you stand. Request a copy of your credit report from the credit bureau concerned to gain insights into your current financial standing. Review the report carefully for any discrepancies or errors that might be impacting your score. If you find any inaccuracies, make sure to rectify them with the credit bureau as soon as possible.
Pay your bills on time
One of the most influential factors in calculating your credit score is your payment history. Timely repayment of credit card bills, loan EMIs and other outstanding debts is essential. Setting up reminders or automating payments can help you avoid missing due dates and maintain a positive credit history.
Reduce credit utilisation
Credit utilisation is the percentage of your available credit that you are currently using. A high credit utilisation ratio can negatively impact your credit score. Aim to keep your credit utilisation below 30% of your total credit limit. For instance, if your credit card limit is Rs. 50,000, try to keep your outstanding balance below Rs. 15,000.
Diversify your credit mix
Having a healthy mix of different credit types, such as credit cards, collateral-free personal loans, or a secured car loan, can demonstrate your ability to manage various financial responsibilities. However, only take on new credit when necessary, as applying for multiple credit accounts within a short period can lower your score temporarily.
Avoid frequent credit applications
Each time you apply for credit, a hard enquiry is generated on your credit report, which can have a negative impact on your score. Only apply for credit when you genuinely need it and be cautious about multiple applications within a short span.
Keep old accounts open
The age of your credit accounts contributes to your credit score. Therefore, avoid closing old credit card accounts, especially if they have a positive repayment history. Keeping these accounts open shows a longer credit history and helps improve your creditworthiness.
Regularly monitor your credit report
Check your credit report for any changes or updates on a regular basis. Monitoring your credit report enables you to identify potential issues early and take corrective measures promptly.
Remember, building and maintaining a strong credit score is a gradual process that requires discipline and financial responsibility. By following these tips, you can improve your credit score over time and unlock better financial opportunities.
Additionally, Bajaj Finserv Credit Pass offers a great tool to build a good credit score. By using Credit Pass, you can access your personalised dashboard that allows you to monitor all your credit accounts and the factors that impact them from one place, in real-time. You also get monthly CIBIL Score checks and interactive tools to make your credit-building journey a more systematic endeavour.
So, take control of your financial destiny today by implementing these strategies and watch your credit score soar!
