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What is Credit Score?
Credit score is a number which tells how responsibly you have paid the loan or credit card taken earlier. This score ranges between 300 to 900. A score of 750 or above is considered good.
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Make EMI and Credit Card payments on time
The easiest and best way to increase your credit score is to pay every EMI and credit card bill on time. If there is repeated delay in payment, it can have a direct impact on your credit score.
Never use the full limit of your credit card.
If your credit card limit is ₹ 1 lakh, then try not to use it completely all the time. It is considered best to use about 30% or less of the total limit. This is called Credit Utilization Ratio.
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Avoid applying for multiple loans or credit cards at once
By applying for many loans or credit cards, banks check your credit report several times. This is called Hard Inquiry. Excessive hard inquiry impacts the credit score.
Do not close old credit card without any reason.
If your old credit card is working properly and there is no problem on it, then do not close it just to increase the score. Your old credit history can make your credit profile stronger in many cases.
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Check Credit Report from time to time
Sometimes wrong information gets fed in the credit report. During checking, if you see any record of loan or outstanding money which is not yours, then immediately go to the concerned bank and get it corrected.
Take as much loan as you need
If your EMI is higher than your income, then there may be a problem in getting a new loan in future. Therefore, try to take only that much loan which can be easily repaid.
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Take small loans to build credit history
If you have never used a loan or credit card, your credit history may be less. In such a situation, taking a card with low credit limit or a small loan and making timely payment can gradually increase your credit history.
Note: Loan Approval Policy of every bank and financial institution may be different. Just having a good credit score does not guarantee a loan. Income, business, existing debt and other sources are also taken into account.
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