How to improve your Credit Score ?
As objective these reports are, there is still a possibility to improve your scores which is not an impossible task.
1) Verify your reports
Firstly you need to make sure that all your previous records of debts reflected in your report are completely true. The credit bureau is answerable to you as to how they included a particular record in your report. So you need to go through all the previous records and identify any inaccurate ones. Any adverse record without sufficing proof will have to be removed by the credit bureau. There are greater chances of this happening if the records are not that recent.
2) Get a secured credit card to build up the score
If you want to rebuild your score, it is advisable to get a credit card. It will signal to prospective lenders that you have overcome your financial stress and can take up the responsibility of availing credits. But get another credit card only if you are in a position to service the payments, otherwise you will be just adding up to your misery.
3) Have a blend of Credit Account types
There are mainly 4 types of credit accounts that impact your score.
Credit Account Type |
Relevance |
Real Estate backed Loans |
|
Installment Loan |
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Credit Cards |
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Retail Cards |
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It is absolutely important to have a blend of all types of credit accounts with more exposure to real estate backed loans (Home Loans and Loan against Property). However as these can impact your credit score big time, you need to be very careful while repaying them.
4) Judicious Use of Credit Card Limit
Often people get oblivious to the importance of Credit vs. Debit ratios. If you keep on using your credit card for your bills without paying it for a long time, it will still impact your score. It is preferred that you only use your credit cards under 35% of its limit to keep the ratio in balance.