New Delhi Generally, if you maintain a credit score of 750 and above, it is considered a good score. Individuals with such scores are considered by lenders to be more creditworthy, and therefore, are more likely to approve a loan or credit card. Many lenders have begun to look at credit scores as part of their risk-based pricing exercise when setting interest rates for their loan applicants. Hence, people with higher credit scores have more chances of getting loans at lower interest rates.
However, if your credit score is low (that is, below 750), can you still improve it and reap the benefits. Here are the ways in which a person can improve his credit score:
Check your credit report for errors: Credit bureaus use data related to one’s current outstanding loans, past credit accounts, EMI payments, new loans and credit card applications, etc., while calculating the credit score. Therefore, any clerical error on the part of the bureau or the lender, or any fraudulent credit application or transaction made in one’s name can adversely affect the credit score. The only way to detect such errors or fraudulent activity is to review the credit report. Such errors or fraud, if any, should be reported to the concerned credit bureau or lender for rectification. Once corrected, the report will automatically reflect an improved credit score.
Avoid direct loan enquiries with lenders: Radhika Binani, Chief Product Officer, Paisabazaar.com said, “Whenever one applies for a loan or credit card, the lender asks the credit bureaus to evaluate their creditworthiness on the applicant’s credit score. receives reports. to use the online lending marketplace as the credit report requests initiated by them do not lower their credit score.”
Pay off your loan by the due date: Of all the factors used to calculate credit score, repayment of loan and credit card dues are widely considered to carry the maximum weightage. Hence, timely payment of credit card dues and EMIs in future will lead to steady improvement in credit score.
Keep credit utilization ratio within 30%: This ratio is the ratio of the total credit limit availed by an individual. One should try to keep this ratio within 30% as exceeding it makes one look like a credit hungry person and thus, less creditworthy. “If one’s credit utilization ratio often exceeds the 30% level, one should request the card issuer to increase his/her credit limit or opt for an additional credit card,” Binani said.
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