6 ways to improve your credit score and boost your financial credibility

Improving your credit score is essential for securing loans and better interest rates. Key practices include paying credit card bills on time, keeping utilisation below 30%, and avoiding frequent hard inquiries.

As per the latest RBI guidelines, credit bureaus must now update borrower records every 15 days—twice as fast as the previous monthly cycle—enabling quicker reflection of positive credit behaviour.

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 aspirational personal 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 and boost creditworthiness. 

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.

What is the impact of a good credit score?

A good credit score boosts your chances of loan approval, lowers interest rates, enhances credit card limits, and helps you access better financial products with ease.

How often should you check your credit score?

You should check your credit score at least once every three to six months to track improvements, detect errors early, and ensure your profile reflects your latest credit behaviour. If problems arise then be sincere in reporting  the same to your respective credit bureau and get the issue resolved swiftly. This will prevent the erosion of your credit score. 

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Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.