If you are looking forward to boosting your credit score quickly, you should know that it can’t be built overnight. However, there are certain ways by which you can raise your credit score in a relatively short span of time. Here in this article, we’ll guide you on how to do it the right way.
Keep an eye on your credit report
Monitor your credit report to look for mistakes or any other inaccuracies. If you come across one, do not hesitate to raise a dispute. A mistake on your credit report can be one of the primary causes of your low credit score. If your dispute is approved by the credit bureaus, you may see that the error is rectified in less than a month, thereby raising your credit or CIBIL score.
Pay your bills on time
Payment history is one of the major contributing factors to your credit score and report. So make sure that you don’t miss any credit card or loan payments as that might stay on your credit report for years. You can even consider setting up automatic payments for the minimum amount due to avoid missing a payment.
Higher credit limits work
When your credit limit increases and your balance stay the same, it automatically brings down your overall credit utilization, as a result of which your credit or CIBIL score increases. You can easily get a higher credit limit if your income has increased or you've been creditworthy in the past few years.
Ask for a lower interest rate
A lower interest rate can help you pay off your dues quickly. That’s because the maximum amount of your payment can be applied to your principal balance than interest. Remember, lower balances stand for a lower credit utilization ratio, which isn’t good for your credit score and report.
Mix up your credit
Now, this one’s crucial. Having different types of accounts in your credit report is good for your credit history. Lenders are in favor of accounts that showcase mixed credit such as installment loans, student loans, etc. This way you can access low-interest rates and big loan amounts in the upcoming years.
Become an authorized user
If a family member or a close friend of yours has a credit card account with a high credit limit and a healthy credit history, you can consider becoming an authorized user. This, in turn, will add the account to your credit reports, so its credit limit can boost your utilization. However, if the person you choose misses payments, that could reflect poorly on your report. That explains why it is essential to pick someone who is trustworthy and has an overall positive credit history.
Limit applying for multiple accounts
Of course, you need to open accounts to build your credit history, but you must keep in mind to limit the number of times you submit credit applications. That’s because each application can lead to a hard inquiry, which may lower your scores by a few points, but several inquiries can add up and have a compounding effect on your credit or CIBIL scores.
Just not that, opening a new account will also decrease your average age of accounts, and that could also impact your score.
Get the negative entries paid off removed from your report
You may have a long list of late payments on your credit report or even an old collection account that’s been cleared off years ago but still shows up on your report. In such a scenario, you must ask to have the same removed. This process might involve lots of time and effort, but it is totally worth it.
Opt for a secured credit card
Using a secured credit card can help you to build your credit or CIBIL score. But, what is a secured credit card? A secured credit card is the type of card that is backed by a cash deposit. This deposit acts as collateral, which provides a sense of security to the lender in case the cardholder fails to make payments.
Also, note that the amount that you put down in a deposit is your credit card’s limit.
The Bottom Line
Improving your credit score is a must-do, especially if you are planning to make a big-ticket purchase or want to avail a loan. However, you can’t expect your credit score to skyrocket in no time. In fact, it can take a couple of weeks or in some cases a few months, to see a noticeable impact on your score once you have started taking the necessary steps to improve it.
There are a lot of credit card companies that claim to raise your credit scores quickly. Don’t fall for them as you can do it yourself. All it takes is, paying off your debts on time and resolving errors.
For more information, visit CRED.