What Are the 7 Best Ways to Increase Your Credit Score [August, 2024]

A good credit score is essential, from taking out a loan to renting an apartment. However, it can take a lot of work to raise your credit score in a short amount of time. Fortunately, there are several strategies you can use to boost your credit score effectively_._

This blog post will discuss 7 tips for raising your credit score in record time. Read on to learn more about how to improve your cibil score and unlock new opportunities.

What is a Good Credit Score?

A good credit score is essential for accessing financial services in India, such as taking out a loan or applying for a credit card. A good credit score is also necessary to get the best interest rates and terms when accessing financial services.

So, what is a good credit score in India? Credit score ranges from 600 to 750 and above. Here is how credit can be determined:

• Excellent credit score: A credit score of 750 and above is considered ideal.
• Good credit score: 700 to 749 is considered to be good.
• Fair credit score: 650 to 699 is considered to be fair.
• Poor credit score: 600 to 649 is considered to be poor.

Note: It is crucial to remember that credit scores can vary between lenders.

Best Ways to Increase Your Credit Score

There are many different ways in case you are looking for ways on how to increase cibil score. Let’s take a brief overview of some of them.

1. Check Your Credit Report for Errors

Checking your credit report for errors is an effective way of improving your credit score. In India, CIBIL (Credit Information Bureau India Limited) offers free access to your credit report.

Check your report and dispute any mistakes that could negatively affect your score. If you find any, contact CIBIL immediately to get your score improved.

2. Make All Your Payments on Time

It is critical to make your payments on time to improve your credit score in India. The sooner you make your payments, the better your credit score will be. If you cannot make payments on time, you will be penalised, and your credit score will drop. Avoid penalties, set up automatic payments if possible, or create reminders for yourself, so you do not miss payments.

3. Reduce Your Credit Card Balances

Having too much credit card debt can drag down your credit score. Keeping your credit card balances low is vital to maintain a good credit score.

To reduce your credit card balances, follow a few tips:

Start by Making a Budget: Determine what you can afford each month and prioritise paying off your credit cards with the highest interest rates first.

Transferring Your Credit Card Balance: You can also consolidate your credit card debt or transfer your balance to a low-interest credit card, saving you money on interest payments and making it easier to pay off your debt.

Keep Track of Your Spending: Keep track of how much you spend on your credit cards. Use cash or debit cards whenever possible to avoid racking up debt on your credit cards. Once you get your balances under control, your credit score should improve over time.

4. Have a Mix of Different Types of Credit

If you have a question regarding how to increase your credit score in India, one of the ways to do so is by combining different types of credit. This means having a combination of secured and unsecured loans and a mixture of credit cards and other financial means.

Different types of credit include revolving credit, such as credit cards and store cards; instalment credit, such as student loans and auto loans; and service credit, such as utility bills and cell phone bills. Having multiple forms of credit can improve your credit score by demonstrating that you can responsibly manage various types of debt.

5. Don’t Open New Credit Cards Unnecessarily

Another critical thing to consider when trying to find an answer to how to improve credit score is avoiding the temptation to open new credit cards unnecessarily. Credit cards can be tempting, especially if they offer lucrative rewards programs or low-interest rates. However, applying for too many cards and not managing them can adversely affect your credit score.

6. Keep Old Accounts Open

Another way to increase your credit score in India is to keep your old accounts open. This may sound unreasonable, but it is a great way to show lenders that you have consistently been responsible with your finances. When you keep an old account open, it shows lenders that you have a long history of making timely payments. It also demonstrates that you have had a positive relationship with creditors for some time, which can help boost your credit score.

7. Use Credit Counseling Services

Credit counselling services can help you manage your finances better, provide advice on how to increase cibil score, and assist you in navigating the process of improving your score. Counselling services can help you create a budget, give you tips on how to manage your debt and credit cards more efficiently, and help you improve your financial literacy.

When selecting a credit counselling service, it is essential to research and choose a reputable one. Research the organisation to ensure it is accredited and has experience in providing credit counselling services. Once you have selected the organisation, schedule an appointment with a counsellor who will assess your situation and advise you on how to increase your credit score.

Wrapping Up

How to improve cibil score in India can seem a daunting question, but it doesn’t have to be. You can quickly and easily improve your credit score with the right strategies and effort. You can achieve a better credit score by consistently paying bills on time, reducing the debt you owe, keeping credit utilisation low, and monitoring your credit report for errors.

If you use these tips to understand how to improve your credit score, you can take the necessary steps to secure a better financial future.

FAQs

Q. What is the average time it takes to build credit from 500 to 700?

Ans. Fortunately, improving a low credit score can take between 12 and 18 months of responsible credit habits.

Q. Is there a credit loophole?

Ans. 609 Dispute Letters are often referred to as a credit repair trick or legal loophole because they enable you to have negative items removed from your credit reports.

Q. What is the ideal number of credit cards to have?

Ans. In addition to other types of credit, two to three credit cards are generally recommended if you want to improve your credit mix so that your credit score can improve.

Q. Which mistake kills credit the most?

Ans. Paying your bills late is one of the most common ways your credit score is negatively affected.

Q. Is it bad for your credit score if you don’t use a credit card?

Ans. Your score is not affected by not using your credit card. However, your issuer might eventually close the account because of inactivity, lowering your overall credit available.