How To Boost Your Credit Score? Check 3 Simple Steps

Credit score is an important metric to determine a person's creditworthiness and hisor her ability to repay loans in longer duration. Credit score reflects an individual's credit history and directly impacts his or her credit-related benefits.

A high-credit score means that banks, NBFCs or another lenders are likely to have lower risk on lending loans to individuals. It also helps people to get better loan terms. In contrast, low credit score can hinder their loan ability, borrowing options and even led to higher interest rates.

What Impacts Credit Score?

An individual's credit score, which is also known as CIBIL score, is impacted by multiple aspects like a person's credit history, length of credit history, etc. Payment history is one of the most important factor which affects a person's payment history. Consistent repayment of EMIs and instalment of loans will ensure that a person can make payments on time and showcase your ability to manage debt effectively. At the same time, missing on payments has the risk of damaging credit score.

Credit Utilisation

Credit utilisation is another important factor which impacts a person's available limit. Keeping a ratio below 30% can possibilly reduce the chances of borrowing. A longer history with accounts open for extended periods typically suggests a more reliable borrower. This aspect reflects stability and responsibility in managing credit over time.

How To Maintain A Healthy Credit Score? 3 Simple Steps

Diversified credit mix, can also benefit borrowers. People can do this by managing different types of debts like installment loans like car loans or mortgages, etc.

Be Punctual

Punctuality is the key to maintaining a healthy credit score. Stick to your EMI deadlines and other amounts, maintain sufficient balance before EMI deduction and do not extend your loans.

Review and Revaluate

Regularly reviewing your credit report and correcting any inaccuracies is crucial. Additionally, adopting practices like timely bill payments, keeping credit utilisation below 30%, and maintaining a diverse credit mix can significantly boost your score.
You are entitled to one free annual credit report from each bureau, such as CRIF High Mark. Reviewing these reports helps identify errors or fraudulent activities like unknown loans. Dispute any incorrect information immediately with the bureau and lender.

Credit Utilisation Ratio

Try to keep your credit utilisation ratio (CUR) below 30%. The ratio indicates how much a person is utilising their credit. Low utilisation indicates that a person doesn't rely much on credit. Hence, it is advised to keep the ratio on a range close to 30%.

In addition to this, borrowers muist try to diversify their credit profile by opting for different types of loans at the time of need like home loans, auto loans. Additionally, personal loans and credit cards often come with higher rate of interests and hefty fines on delay in payment or non-payment.

In India, individuals can check their credit score on multiple portals or websites which are reliable. One of the most reliable metric of checking credit score is CIBIL (TransUnion CIBIL). CIBIL is authorised by the Reserve Bank of India (RBI). It also provides credit reports and scores for individual persons as well as business entities.