Five Ways How You Can Build a Great Credit Score

As you might be aware, it is essential to have a good credit score today if you want to avail a loan or credit card. Your credit score is a three-digit number between 300 and 900, which forms a part of your credit report. Your credit report denotes your creditworthiness and financial standing as a borrower. It is the standard against which banks and other financial institutions lend because it is a reflection of several things – your repayment history, the number of ongoing loans you’re paying off, the terms of those loans, and your credit card usage. Banks can even find out the number of times you’ve inquired about a loan through your credit score.

Therefore, it’s vital that you have a good credit score. Here are a few ways you can do just that:

  • Don’t default on payments: If there’s one thing that can really boost your credit score, it’s making timely payments. If you’ve missed a payment or two in the past, it’s time to stop that now and get back on track. Ensure that you pay all your bills on time- whether they are loan

EMIs or credit card bills.

  • One loan at a time: Applying for too many loans or credit cards at once is a terrible idea. This is because every time you make an inquiry about a loan or credit card, it reflects on your credit report as a hard inquiry. Too many hard inquiries on your credit report lower your credit score and indicate that you’re very desperate for a loan. It also doesn't give a good impression to your banker, because they will then be apprehensive about your financial situation.
  • Use credit cards sparingly: If you have credit cards, it’s best to keep a maximum of two. Use them only when absolutely necessary, because while they grant you access to funds when required, it isn’t free money. Also, ensure to clear your credit card bills on time. Banks will obviously appreciate a customer who manages his money well, as that is a clear indication of his ability to make timely payments.
  • Review your credit score regularly: It is a good idea for you to check your credit score every four-five months and make sure that they are not adversely affected. Don’t worry- when you do so, you are only making a soft inquiry about your credit score, and this won’t change your credit score itself in any manner.
  • Be patient: This is also a valid point. People who have been borrowing for a long time will have substantial data and a number of accounts in their report. If you’re a new borrower, you obviously won’t have any credit history to speak of. Just ensure that once you start borrowing, you follow all the above points. That will ensure that you have a healthy credit score.
Author image
About KreditBee
India Website
Need a personal loan? Download App
Bootstrap Example