Your credit score is your ability to repay your loans on time. It affects your interest rates as well as your repayment period. The better your credit score, the shorter your repayment period, therefore a credit score above 750 is considered good. Your credit score is calculated based on your credit card payments, your loans, your credit usage.
Here are some of the ways you can improve credit score:
- Make Your Payments On Time
It is essential to make sure that all your payments are on time. Any delay in even a single instalment will cause a drop in your credit score. You need to maintain discipline with your installments to build and maintain a good credit score. The best credit score would be anything above 800, but a score over 750 is ideal.
- Increase Your Credit History
You can maintain your older credit cards and improve your credit history. Since credit history is also a factor that determines your credit score, it will significantly help you improve it. Make sure that you pay your credit bills on time. It is also important to note that you can build your credit scores with a virtual credit card too.
- Customize your Credit Card Limit
Using your credit card is also a factor in determining your credit score. It does not matter if it is a VISA credit card or a MasterCard; you will still have the option to customize your credit card limit. Try and avoid using too much of your credit limit and make it a point to pay your credit bills on time and before the due date.
- Decrease your Credit Usage
Credit card utilization makes up for about 30% of your credit score. Therefore, you should strive to not utilize all your credit card limits. Keep in mind that the less you use your credit card, the more your credit score increases. With that said, you do not need to completely stop using your credit card to increase your credit score.
- Do Not Issue Too Many Credit Cards
Do not issue more credit cards than you can handle. Requests such as application for a new credit card, or a car loan, home loan, a mortgage affect your credit score. While these requests, once in a while do not affect your score, too many of them within a small period can cause a drop. It is assumed that you need money and you are unable to manage your financial situation such that you are taking too many loans within a short period.
Even though each person has a different financial situation and credit history, it is crucial to be financially smart and safe with your money. It is easy to lose track of your credit bills since they are not like a physical currency that you can see and touch. It is always a good idea to maintain your score and be responsible for your finances.