Credit score: 6 key ways to improve your scale of creditworthiness

There are numerous ways to improve your credit score. Some of the basic ways entail maintaining a healthy credit lifestyle by paying your credit card bills on time, keeping credit card utilisation below 30 percent and limiting your hard credit inquiries.

It is noteworthy to mention that credit rating agencies, as per the latest RBI guidelines, are supposed to update their records every 15 days unlike one month earlier.

This is good news for the borrowers since they may find it hard to get their profile updated in line with their latest credit behaviour. These are some of the important steps one should take to maintain a healthy credit behaviour.

Improve your credit score

1. Pay your credit card bills on time: It is very important to pay your credit card bills on time. The lower your outstanding balance is, the better it is for your credit score.

2. Keep your credit utilisation below 30 percent: It is advisable to keep your credit utilisation below 30 percent. For instance, if your credit card limit is ₹10 lakh, you should make sure that you use only ₹3 lakh of this sum.

3. Limit your credit inquiries: Seeking loan repeatedly, and frequently leads to loss of credit score, albeit marginally. Therefore, it is not advisable to frequently carry out credit inquiries.

4. Check your credit score from time to time: At least once a year, every investor and current loan borrower must check their credit score. This allows you to rectify any error, if any.

5. Don’t close your credit account: If you have a credit account, you should not close it. An existing current account helps strengthen the credit score.

6. Do not refrain from using more than one credit card: It is also recommended to use more than one credit card so that your overall usage always stays below the total available credit limit. This, in the long run, helps you maintain a good credit score.