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A credit score includes a 3-digit number estimated by credit bureaus based on your credit history. Your score can range from 300 to 900. When you want to take a loan, lenders check the score to decide whether you can repay it. They prefer a credit score like 750 or more, nearer to 900.
Here are 5 ways to increase your credit score fast.
#1 – Plan your credit smartly
Create your credit profile to build a credit score. For example, apply online for a credit card. When opening new accounts like those of credit cards are reported to credit bureaus, they start calculating your score.
To build or improve a low score, you can opt for:
A secured credit card
It is backed by your cash deposit as collateral on your account. It provides security to the card issuer if you find trouble paying back.
A credit-builder loan
It includes a small amount that you can easily pay back soon and show your creditworthiness.
To boost an established high credit score, you can choose:
A rewards credit card
A good rewards credit card offers up to 10X rewards without any limit, expiry or redemption fees. Every time you use the card to buy something, you earn rewards like cash back and offers.
A credit card with the lowest interest rate
Low interest on your credit card dues helps clear them faster and improve your credit score.
A lifetime free credit card
It doesn’t come with annual maintenance fees. This again helps lighten overall dues to maintain a good credit score.
#2 – Pay down all dues on time
Remember to clear your loan EMIs and credit card dues in full on time.
Here is how to do that:
- Set a reminder or mark the payment due dates on your calendar.
- Try to pay down dues a day before the given date.
- Keep paying the outstanding amount as and when you can. Don’t pile up the total due amount or wait to pay it later.
- Try automated bill payments. For that, send a standing instruction to your bank to debit from your savings account before or on your due date.
When already indebted, avoid taking another loan before clearing all dues.
#3 – Increase your credit limit
You can be eligible for higher limits on credit cards with an established good credit score. By increasing the credit limits, your credit utilisation can be comparatively low. This can further lift your score.
#4 – Keep positive entries on your credit report
Don’t close old accounts displaying good loan repayment capacity and reliable credit behaviour. Lenders check this to determine your credit card eligibility for low interest rates that favour increasing your credit score.
Likewise, see to it that the negative entries that you’ve paid off are removed from your credit report.
#5 – Check financial documents regularly
Check your credit card statements and loan documents regularly. Get any errors corrected as soon as possible. This can prevent delayed payments from affecting your credit score.
Once you earn a high credit score, try to maintain it by keeping up good credit behaviour.