A credit score is expressed as a three-digit number ranging from 300 to 900. It is a representation of an individual’s creditworthiness. Lenders refer to your credit score before approving your loan application. A good credit score is sure to be a winner in every loan or loan application. A good credit score is 750 points or higher. Generally, a good credit score comes with responsible borrowing behavior. Here are some tips that can help you improve your credit score:
Tips to Improve your credit score:
Consistent Repayment: Credit score calculations give almost 35% weightage to your payment history. If you want to maintain a good credit score forever, your repayment record should be 100% positive. For this, care must carry not to miss repayments.
Low credit utilization: Experts suggest that keeping your credit card utilization ratio below 30% can help you also get a good Credit score over time. This indicates that you are not credit-hungry. Exceeding your credit card limit or defaulting on bill payments can work against a good credit score. So, use your credit card only when necessary or when you can’t pay in cash.
Avoid multiple credit applications:
Sometimes, you may apply for multiple credit cards or loans in hopes of getting a good offer. However, this can work against your credit score. Every time you apply for credit, a difficult inquiry is raising the lender. Too many such hard inquiries can also negatively affect your Credit score. If your loan application is rejected, lenders will not grant you a loan facility in the future. So avoid applying for multiple loan options to maintain a good credit score.
Avoid paying only the minimum balance:
Most credit card issuers allow a minimum balance of 5% to 10% of the outstanding balance. This way, you can also avoid late payments or defaults. The balance will carry over to the next bill cycle along with interest. If you want to avoid piling up interest, try paying the full bill over time instead of just paying the minimum amount due. To maintain a good credit score, always pay in full and on time.