Here are some handy tips for fixing your poor credit score

credit score

Credit Score is very important to get the best loans and credit cards in India. If your credit score is low, you will have difficulty getting the best loans and credit cards in the market. This is because the lenders consider your credit score when deciding whether to lend to you or not. Your credit score is a number that expresses how reliable you are as a borrower. It is calculated from your credit history and is used by lenders to determine your eligibility for loans and credit cards.

Your credit score is a 3-digit number between 300 and 900, and it gives a simple insight into your potential as a borrower. This number is used to determine how likely you are to repay a loan or credit card.

A credit score of less than 600 is considered poor and borrowers with such a poor credit score may have a hard time getting any kind of credit from banks and other financial institutions. So we have put together this handy guide to help you improve your credit score.

#1 Pay Off High-Interest Loans First

The first thing you need to do is to pay off your high-interest loans. You can do this by making extra payments or by paying the entire amount in one go. The earlier you pay off your high-interest loan, the better it is for your credit score. Our guide on ‘5 Easy Tips To Pay Off Your Loan Amount With Ease’ will be of help to you here.

#2 Ensure To Pay Off Your Credit Card Balances In Full Every Month

The next thing you need to do is to ensure that you pay off your credit card balances in full every month. This helps build a good credit history and shows that you are a responsible borrower. You can pay off the entire credit card balance in one go or you can make extra payments to avoid paying interest on the entire balance. However, it is better to pay off the entire credit card balance in one go to avoid paying interest charges every month.

#3 Never Miss A Payment

You need to make at least the minimum payment on time every month. If you fail to pay the entire amount by the due date, your credit score will take a hit. However, if you are able to pay the entire amount by the due date, your credit score will improve. This is because late payments indicate that you are a poor financial planner and are unable to manage your finances.

#4 Do Not Apply For Multiple Credits At The Same Time

This will make it difficult for you to manage your finances and will lead to missed payments. So the best thing you can do is to apply for a small number of credit cards or loans and ensure that you meet your minimum monthly repayment obligations on time. This will help build a good credit history and improve your credit score.

#5 Improve Your Credit Mix

Your credit “mix,” which refers to the various types of credit on your report, contributes to around 10% of your credit score. When your credit report only includes one type of credit, such as credit cards, your credit score is likely to decrease as a result of the missing information. The more types of credit that are included in your report, the better it is for your credit score. You should try to have a good mix of credit cards, installment loans (such as car loans), and credit cards as this will help to improve your credit score.

#5 Lower Your Credit Utilization Ratio

To improve your credit score further, it is also necessary to ensure that your credit utilization ratio is low. The credit utilization ratio is the amount of your credit limit divided by the amount of your total credit. It is advisable to keep your credit utilization ratio below 30% to ensure that your credit score remains high. You can achieve this by making extra payments or by paying off your credit card balances in full every month, and ensuring that you do not apply for additional credit at the same time. You should also consider having a good credit mix so that your credit utilization ratio is lower.

#6 Don’t Be Afraid To Seek Professional Assistance If You Need It

If you find it difficult to manage your finances and improve your credit score, then you should consider seeking professional assistance. There are various credit repair services available online that will help you to improve your credit score and manage your finances better. CreditMantri can help you to improve your credit score effectively, build a good credit history and improve your credit score.

Conclusion:

Building a good credit history starts with ensuring that you manage your finances well and improve your credit score. Credit is a vital part of one’s financial well-being and having a poor credit score can make it difficult for you to secure loans and credit cards in the market.

Fixing a poor credit score is not impossible. However, it requires a lot of hard work and dedication. You need to ensure that you take the right steps to improve your credit score and that you manage your finances well. You should also consider seeking professional assistance if you find it difficult to manage your finances and improve your credit score.