5 Tips to Improve Your Credit Score
The Key dos and don’ts that will help you improve the credit score and be eligible for major loans like a home loan.
Why a Good Credit Score Matters
Imagine this: you see a big full page ad in the newspaper enticing you to buy a range of home appliances. It offers appliances at an attractive equated monthly installment. You make a mental calculation and decide you can bear the monthly payout as against the 3,000 in one go for an AC. You go to the shop to book your dream AC but suddenly your plans come crumbling down as the finance company rejected your application on the basis of low credit score. Are you at a loss to understand the why and how of your credit score and what’s the way to maintain a healthy one?
Improving Your Credit Score
Improving your credit score is all about fiscal prudence and disciplined spending along with avoiding credit hungry behavior. Here are some easy tips:
- Timely Payment: This is no doubt the most important factor if you want to improve your credit score. Ensure that all the payments due date. In the case of cheque payment, it has to be made even earlier, perhaps 10 days is a good bet. This is as cheque clearance takes a minimum of three days and could be longer depending on bank holidays.
- Credit Hungry Conduct A Big No: Even if the loan amount is small, say 1,000 or 2,000, never apply for multiple loans. It is detrimental to your overall credit report. It is better to cut down cost.
- Credit Worthiness: This is something that is built only over time, and there is no quick fix solution to it. Essentially a consistent and good history of timely payments and responsible credit behavior help you create your individual credit worthiness.
- Secured Loans Vs Unsecured Loans: When you apply for a secured loan like a home loan, it signals stability and improves your credit score. Conversely, unsecured loans for assets with depreciating value like car loans or personal loans impact your credit score negatively.
- Plan Your Expenses: You don’t have to deprive yourself of the modern luxuries. Plan the things that you require and the expenses involved. Buy them strategically in a way that no expense overwhelms your monthly budget, avoiding a loan. In fact, try saving a small amount every month. By the year end, it will be a sizeable chunk which you can use to service these expenses.
All you need to do is follow these five basic tips and work towards a good credit score.
How We Can Help
For more information or advice about how to manage your finances, feel free to contact us. Our experienced staff members are knowledgeable and would be happy to help. So, find out how to apply for a loan and maintain a good credit score today.