Introduction
A loan is the most significant way to overcome financial needs and emergencies. However, to obtain a loan, one should need to fulfill the eligibility criteria laid by the banks. A good credit score is one of the essential criteria for getting credit from banks or other financial institutions. A credit score is a three-digit number that indicates the creditworthiness of a person.
The calculation of a credit score is done by using the credit history of a person. A person’s credit history contains information like his payment history, number of credit cards and loans used by him, etc. A credit score ranges from 300-900 points, and a score of more than 750 is ideal for obtaining a loan. A high score can increase your chance, while a low score can decrease your chance of getting a loan. As we are a provider of debt collection service india, here is our take on how you can boost your credit score.
5 ways to boost your credit score
1. Pay your outstanding bills on time
Your due payment of outstanding bills can significantly impact your credit scores. Credit history with the late payment of bills & EMIs can seriously endanger your credit score. If you want to maintain a good credit score, then do try to repay your bills and EMIs on time. It will be more beneficial if you make a habit of paying the full bill instead of the minimum due amount to keep the outstanding amount low.
2. Customize your credit limit
Another important aspect that greatly impacts your credit score is your credit utilization ratio. Banks or any other financial institutions decide certain credit limits for you. If you over-utilize the credit limit available to you beyond a specific limit will adversely impact your credit scores. However, if you can restrict your credit usage below a particular limit, then it will significantly improve your credit score. You can manage this situation more efficiently by customizing your credit limit according to your past expenses.
3. Check your credit report to avoid mistakes
The essential thing you must do to improve your credit score is to make regular checks on your credit report. It will effectively help you to detect errors in your credit report and gives you a chance to get them rectified. Thus, the calculation of your credit score is based on the credit report. It means you must ensure that your credit report is free from mistakes.
4. Never try to remove your old accounts from the report
People have this misconception that removing old accounts or accounts with negative history from credit reports will increase their scores. Negative remarks are bad for the credit score, but they will be automatically removed from your report after some time. If you try to remove your old accounts, it may harm your credit score. The reason is along with negative remarks, there might be a good repayment history connected with those accounts. It can effectively improve your credit score.
5. Consolidate your debt
This technique can prove to be beneficial if too many debts burden you. In this technique, you will obtain a debt consolidation loan from your bank and pay off your other debts. Due to this strategy, you only have to make one payment. Besides, one single debt will considerably decrease the interest rate so that you can pay off the loan faster. It will fairly improve your credit report and increase your credit score.
