How to improve your credit score: 6 hacks every credit card user must know

Having a good credit score is not as easy as it appears. At the outset, one must tick all the boxes: clearing dues on time, making full payments (instead of just the minimum due) on credit cards, and so on. However, even this may not be sufficient to maintain a strong score.

It requires all this, and much more. Here, we give a lowdown on some credit score hacks to help you maintain a high score regardless of your financial situation.

6 credit score hacks for a high score

I. Unpaid bill: As mentioned above, there should not be any unpaid bills or dues. One must clear them well in time. Notably, credit card bills and loan EMIs may be paid anytime before the due date. Some people believe that one day's delay would not make a significant difference, but it does.

II. Full payment: When clearing credit card dues, one must make sure to pay the entire bill instead of the minimum due. Although it is right to pay the minimum due, if your goal is to maintain a high credit score, then this option is definitely not meant for you.

III. Settle the dues: There is a common pattern among some credit card users to settle the dues at a discount when the bills mount heavily. This is another no-no for those who are aiming for a high credit score. For instance, when your credit card bill hits ₹1 lakh, settling it for ₹70,000 may be tempting to get rid of this liability. But this would cause an adverse impact on your score.

IV. Maxing out a card: Another misconception among credit card users is that you can max out your card when the need arises. Although this does not appear to be a particularly bad thing to do, it would lead to a decline in your score. In other words, it is recommended that you keep a credit limit that is higher than your usual requirement.

For instance, if your usual requirement is ₹5 lakh, it is recommended that you have a credit limit of ₹10 lakh or more. Typically, the ideal credit utilisation ratio should be 30 per cent or lower.

V. Existing card: You may have an old credit card that you don’t use, and you may be tempted to cancel it. Refrain from doing so for the sake of your high credit score. As explained above, a higher credit limit will help you maintain a high score.

VI. Review report: Last but not least, you must keep reviewing your credit report from time to time. What if there is a mistake in it that stands to be rectified?

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 score. 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.

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