A checklist to fix your credit score and achieve your financial milestones faster.
Aspirations require credit. And a good credit score can be instrumental in achieving major milestones. It not only makes you a creditworthy person but also gives you the confidence to dream big.
But the wrong usage of credit accounts (loans and credit cards) can lower your credit score and also become a hurdle in your milestones. If you are there and don’t know how to improve your credit score, work on this checklist. So you can be ready to take any financial plunge.
First things first, credit score isn’t static. You can work towards building a better credit score only when you know your current score. Check out your credit score from CIBIL and Experian on OneScore for an ad-free and spam-free experience.
• Check what’s hurting your credit score.
• Check for errors like fraudulent activities on your card or inaccuracy in personal information & dispute them
Payment history makes up 35% of your credit score. A history of delayed payments can impact your score so it’s always a good idea to set up payment alerts and pay on time. Even better if you can automate your bills & EMIs. And ensure that you always pay more than the minimum amount due.
If you carry different balances on multiple cards that you are struggling to pay off. Try this:
• Tally up how much you owe
• List the balance and interest rate for each card
• Prioritize the high-interest credit card bills
If you have multiple high-interest cards, you can also consolidate the debt and pay it off at a lower interest rate.
Note: A 3-5% fee is charged on the balance transfer. Use it only when your consolidated debt and individual interest rates amount to a much higher sum.
Credit utilization has a 30% weightage in your credit report. It compares your credit card balance with your overall credit limit. Always remember not to max out your credit card. If you have expenses that can’t be brought down, try getting a new credit card or increasing your credit limit.
Whenever you apply for a new credit account (credit card or loan), the lender runs a hard credit inquiry with the credit bureaus. This is known as a hard inquiry. Too many of these in a short span of time affect your credit score and that’s the reason you shouldn’t apply for too many credit cards or loans in a short span of time.
Does that mean you shouldn’t be checking your credit score too often?
No, soft inquiries don’t affect credit score. In fact, it’s a good habit to check your credit score frequently.
Another essential part that defines your credit score is the length of your credit history. It makes up 15% of your credit score. So don’t be in a hurry to discard your cards unless you absolutely have to. Try using it once in a while just to keep it active.
Your credit score is defined by simple factors that determine how well you are managing your credit accounts. And managing credit accounts isn’t nearly as complicated. Well, at least not when you can get a bird’s eye view of all these factors on OneScore . We also share timely recommendations on how to take your score to the next level.
Download OneScore to track your credit score, and always be in charge of your credit score.
- OneScore , November 11, 2022