How Do I Increase My Credit Score Quickly? A credit score is probably the most important 3-digit number for the one seeking a bank loan or a credit card. A score below 700 finds it difficult to cut across the lenders and convince them to give you a goodly loan. If your credit score is below the standard range, it might be due to various reasons. It could be that you have just started building a credit history or you may not have been very vigilant about maintaining your score in spite of having a long credit history - whatever the reason be, if you are asking yourself “how do I improve my credit score quickly” then here’s what you need to do. 1. Make timely payments of your bills & dues: Whenever you make a purchase using your credit card, make sure you pay the EMIs on time. Delays in paying EMI can not only result in a penalty but also lowers your credit score. Same way, a continuous streak of timely repayment improves the health of your credit score. It is also a good practice to pay your other bills on time besides just the credit card bills or any loans you may have, such as auto loans or student loans. You never know where your ‘good’ financial deed may reflect somewhere and contribute to your score. 2. Regulate your credit utilization ratio: Your credit utilisation ratio significantly affects your credit score. It is calculated by adding all your credit card balances at any given time and dividing that amount by your total credit limit. For example, if you typically spend about Rs. 50,000 each month and the total credit limit across all your cards is 10,00,000, your credit utilization ratio is 20%. Try to keep the spending ratio below 30% for an improved credit score. 3. Avoid holding too many loans at a time: Limit your loans to a bare minimum. Always try to repay one loan before you take another to help sustain your credit score. Having multiple loans at the same time indicates that you are short of funds at various levels and are not a good saver. This image will lead to a crash of credit score. On the other hand, taking a loan and repaying it promptly will boost your score. 4. Include different forms of credit: Having a healthy mix of credits such as secured loans, unsecured loans, long tenure, short tenure, etc. improves your credit portfolio. This will help you build your credit score for personal loan and access loan with lower interest rates. 5. Don't Close Unused Credit Cards: As long as you don’t have to shell out a significant amount to maintain an old credit card, let it stay with you. This is so because it adds to the credit utilization ratio of your account without you having to spend much. On the other hand, owing the same amount but having fewer accounts may lower your credit scores. 6. Download your credit report periodically: A credit report gives a detailed account of all your financial history. This means you get to see for yourself the spendings from different accounts in one place. This helps you understand your pattern and make amends if required. On the other hand, performing a credit check is a good way to check whether your report contains unknown or incorrect information. This could also be a sign of identity fraud, which when found, should be reported immediately to the credit bureaus. If you are downloading for the first time, then make sure you download your free credit report from CRIF - an RBI recognised credit bureau in India.
Following the above 6 steps can help you restore your credit score to its former glory!