4 Ways in Which You Can Improve Your Credit Score – Staying Creditworthy

If you’ve borrowed money, you would know the importance of your credit score because there is probably no lender who would lend you a loan without checking this three-digit number. In fact the entire credit history of a borrower plays a vital role in determining your credit score.

There are several myths that can distract you from getting a better credit score but you have to stop believing in them and start believing in the facts. Here in this post, we will tell you about the ways in which you can improve your credit score and fix all errors.

#1: Avoid missing the due dates

If you continue missing the due date on your credit card bill, forget to pay your EMIs on time, you can be sure that this will have an adverse impact on your credit report. Even though you will miss one payment or EMI, this will get reflected on your report. It will depict the number of days for which the bill stayed unpaid after crossing the due date. In case your credit score is low due to the fact that you fail to pay off your bills on time, you should be fast with making the repayments.

#2: Maintain a good credit utilisation ratio

Credit utilisation ratio is defined as the total credit that you use from the given credit limit and this is determined in terms of percentage. This ratio will be calculated in the basis of total credit limit that is available on all the cards that you have. If you have multiple cards, the utilization ratio of all the cards will be taken into account. Hence try to spend less and maintain a good-enough ratio.

#3: All open accounts should be brought to ‘current’

The most necessary and vital part of your credit score is your payment history. Missed payments usually cause lot of damage, particularly when your payments are due for more than 30 days. This is why financial experts recommend that any open account is brought to a ‘current’ state. Do you owe debt that has been written off by the lender and then sold off to the debt collection agency? If yes, then this too will be registered on the credit report. Although collection agencies scream too hard about delinquent accounts, you have to ensure making a safe choice.

#4: High interest credit card debt should be paid off

Usually FICO splits debt into 2 different categories, bad debt and good debt. When you invest in assets like mortgage or student loans, this is considered as good debt. On the other hand, when you owe debt on credit cards, this debt is considered as bad debt due to the hefty rates that you have to pay. If you wish to boost your credit score, make sure you first repay your bad debts as this will have the best impact on your score.

Therefore, now that you know the ways in which you can increase your credit score, you should start following them in order to get the best results. Having a better score will help you grab a loan with the best possible interest rates.