A credit score is a 3-digit numeric summary that represents your credit history, indicating how well you have managed your credit. It is important for lenders who assess your creditworthiness before approving loans.
Your credit score plays a significant role to secure a personal loan. Lenders use your credit score to determine your creditworthiness. A higher score increases your chances of loan approval, while a lower score may lead to rejection. Sometimes lenders approve low interest rate and high Loan amount for higher credit score and High Rate of Interest and Low loan amount for low credit score.
In this article we will discuss how to improve credit score quickly. There are 7 tips which can help to improve credit score quickly.
Maintain On time Payment
Paying your bills, credit card bills, and EMIs on time is essential for maintaining a good credit score. Missing even a single payment can negatively impact your score. Our recommendation is to consistently make timely payments on all your bills and loans to boost your credit score.
In addition to on-time payments, there are other important factors that you should consider. Using a trusted credit score app can help you monitor your credit score and repayment history effectively.
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Reduce your Credit Utilization
Credit utilization refers to the percentage of your available credit limit that you have used. We recommend keeping your credit utilization ratio at or below 30%. Maintaining a low credit utilization ratio is a good practice for preserving a healthy credit score. You can calculate your credit utilization ratio using your own calculator or by using a trusted credit monitoring application.
Split your Credit Card Bills
If your credit card bill is for a large amount that you can’t pay in full at once, consider splitting the payment into smaller amounts. This way, you can make multiple payments throughout the month, making it easier to manage. Often, if you are unable to pay the full amount, lenders or credit card providers may still report the payment as on time if you make partial payments as agreed. This approach can help you maintain a good credit score.
Identify And Fix Errors
Regularly check your credit and repayment history using a trusted application. If you find any errors, report them to the credit information company. Once the error is corrected, your credit score may improve as a result.
Reduce your enquiry
It is common for individuals with low credit scores to seek small personal loans. However, when lenders inquire about your credit history, each inquiry is recorded on your credit report. If multiple inquiries are added within a short period, especially within a month, most lenders may reject your loan application, even for small amounts. This pattern suggests that you are struggling to find a lender willing to offer you a loan, which can negatively impact your credit report.
Our recommendation is to avoid frequent credit inquiries if your credit score is low. If your credit score is high, try to limit the number of inquiries to no more than three per month.
Increase Your Credit Limit
You can improve your credit utilization ratio by increasing your credit limit. If you have a strong repayment history, many banks may offer to raise your credit limit. By increasing your credit limit while keeping your spending low, your credit utilization ratio will decrease, helping you maintain it below 30%. This, in turn, can lead to an improved credit score.
Close Small Loans.
Review your credit report and list any small loans that are still pending. Focus on paying off these small loans and closing them one by one. Once the loans are closed, the lenders will update your credit report, which can help improve your credit score.
Take small Loan.
If your credit score remains low despite closing all small loans and consistently paying your credit card bills on time, our advice is to find a trusted lender who can provide small loans, even as low as ₹1,000. Take out these small loans at least three times and ensure that you make timely repayments. Lenders like Zetloan will update your loan details on your credit report. Based on our experience, this strategy can help improve your credit score.