A high credit score is important for the customers to negotiate better loan conditions with the lender including lower interest rate, long tenure and high amont, among other factors.
There are occasions when an investor is regular in making his credit card bill payments on time, still struggles to improve the score. Additionally, there could be times when improving the score is totally unrelated to default in payment. Here we give some valuable tips, which are nothing short of masterstrokes, that can help you improve your credit score:
Improve your credit score: Follow these masterstrokes
I. Maintain a healthy credit mix: First and foremost, you must make sure to maintain a healthy credit mix. This means rather than depending on one form of borrowing, say credit card, you could maintain a healthy credit mix i.e., loan, credit card and overdraft, and others.
However, it is vital to note that taking a loan should be a last resort and not the first option.
II. Use less of your card: There is another masterstroke of sorts – using less than 30 percent of credit limit to maintain a good credit score. Remember that the ideal CUR (credit utilisation ratio) is 30 percent.
III. Are there any errors? Another important point to remember is to spot any errors in your credit report so that you can get them rectified. There could be some mistakes in your credit report which you were unaware of. It is important to get them rectified.
IV. Keep a spare credit card: Keeping a spare credit card – even if you do not use it helps you push your credit limit higher, and credit utilisation lower. However, make sure that it does not have a high processing fee.
V. Say ‘no’ to minimum pay: Some credit card users find it tempting to make the minimum payment of credit card bill. If you want to maintain a good credit score, you should avoid this practice of making minimum payment of your bill.
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.
