Take control of your finances by enhancing your credit score, which potentially reflects your financial credibility. Whether you are applying for the best credit card in India, or applying for insurance, everywhere, your credit score is thoroughly calculated and checked. If you are confused about calculating the credit score on your own, you can use a licensed credit card app and calculate your score. It will be evaluated based on your past credit history, payment behavior, ability to meet financial obligations, etc. Achieving and maintaining a high credit score does more than just help you acquire banking products; it helps seal opportunities for a financially independent future.
5 Strategies to Enhance Your Credit Score and Creditworthiness
Resisting application for the best credit card in India? Or has the new financial landscape concerning credit scores confused you? In either case, here are a few proven strategies that you could apply to improve your financial reliability:
Monitor Your Credit Report Regularly
Although you use the best credit card in India, a credit report is nothing less than a report card concerning your financial activities. You must ensure the report is error-free. In case you identify mistakes, report them immediately and get them rectified to reflect the right score. Also, this report mirrors an individual’s financial mistakes. Hence, monitor your credit report regularly; it will help you avoid the same mistakes, improving your credit score.
Maintain Discipline in Financial Payments
Whether paying the bill on the best credit card in India or meeting your other financial obligations, payment history makes a difference. Ensure you pay all your credit card bills, EMIs, and installments on or before the due date. It will reflect your commitment to paying off your financial dues on time, thereby improving your credit score. You can utilize a credit card app to send yourself bill payment reminders or opt for auto debit facilities with your bank and pay your bills on time.
Keep a Low Credit Utilisation
Credit utilization refers to a percentage that reflects credit limits available to you versus how much you use it. It reflects your dependency on credit money. Keeping your credit card outstanding balances low in proportion compared to your credit limit, ideally below 30%, is advisable. It indicates that you can handle your finances well without credit money and are less likely to be a credit risk for lenders; that leads to an enhanced credit score. If you have multiple credit cards, regulate the utilization of funds from each one using a credit card app for enhanced creditworthiness.
Avoid Removal of Old Accounts from Credit Report
It is usually observed that many people remove their old accounts, accounts with negative history, and deactivated accounts from their credit reports. It is a practice done to enhance the credit score. But, one should avoid doing it as these accounts will get auto-deleted from your report, with time, once you pay them off. Also, keeping these accounts in your report will help you present a good credit repayment history. If you have paid your debts on time, keeping them in your reports will improve your credit reputation.
Restrict Hard Enquiries
Even if you use the best credit card in India, you cannot escape the soft and hard inquiries. Soft inquiries occur when you check your credit score or a financial institution or a potential employer checks your credit score. These won’t affect your creditworthiness. However, a hard inquiry occurs when you apply for a loan or a credit card. When these inquiries amplify within a short span, your credit score falls. Restrict the hard inquiries as much as possible for an improved credit score.
Factors Positively Impacting Your Credit Score
Even after using the best credit card in India, if your credit score is low, consider the following factors that may positively affect your score:
- Having a longer credit age reflects your experience in handling the credits. It helps lenders understand your commitment to repaying your debts, making you an asset for them.
- Avoid negative records on your credit report in the form of insolvencies, foreclosures, penalties for late payments, etc. Your credit score will automatically get upgraded.
- Have a diversified credit portfolio that includes a healthy combination of credit cards, installment payments, mortgages, etc. It reflects your ability to handle financial obligations from varied sources, impacting your credit score positively.
Irrespective of you having the best credit card in India, your credit score needs to be consistently regulated and checked. Apply the above strategies and witness your credit score improve by the day. Also, consider the factors positively impacting your credit score and use them strategically. Thus, improve your creditworthiness and enjoy seamless financial transactions.