Want a better credit score? Improve your credit score in just months— Here's how

In today’s financial backdrop a solid credit score is important for securing favourable loan terms, credit card approvals along with securing other credit lines such as home loans, education loans etc.

That is why aspirational borrowers should focus on aiming to boost their individual creditworthiness swiftly. This can be achieved by implementing responsible financial habits that can lead to minor improvements in credit scores in about 30 to 90 days depending on the borrowers financial discipline and existing credit profile.

How can you improve your credit score?

As a responsible borrower, to improve your credit score you should check your credit report for errors and fix it promptly. Pay all pending bills within the stipulated time and avoid applying for new credit lines within a short period of time.

Manish Jain, Country Managing Director, Experian India, says “Rebuilding a low credit score begins with identifying the underlying reasons – whether it’s missed payments, high credit utilisation, or errors in your credit report. From there, consistent and timely repayments, limiting outstanding debt, and using credit wisely are critical steps.”

Follow these 4 smart moves to raise your credit score quickly

Here are four simple ways through which loan applicants and borrowers can boost their credit scores quickly within a short period of time:

1. Ensure timely payments

Your payment history is a crucial factor in evaluating your creditworthiness through credit scoring models. That is why even a single missed payment can adversely influence your credit score. To keep your credit profile healthy, on your part you should:

• Set up automatic debit instructions for payments to avoid missing due dates.
• Focus on consistently paying your bills on time demonstrates financial responsibility.
• Timely payments can lead to a significant improvement in your credit score.

2. Maintain low credit utilisation

Your credit utilisation ratio, basically the percentage of credit used relative to your total credit limit, this figure should ideally be below the 30% mark. High utilisation indicates over-reliance on credit, which can negatively impact your score. That is why you should:

• Aim to use less than 30% of your available credit limit.
• Requesting a higher credit limit can help reduce your utilisation ratio.
• Paying off outstanding balances promptly contributes to a healthier credit profile.

3. Limit new credit applications

Each new credit application can result in a hard inquiry, which may slightly lower your credit score. Multiple applications within a short period can signal financial distress to lenders. Hence, to combat the same situation you should consider:

• Applying for new credit only when necessary.
• Space out credit applications to minimise the impact on your score.
• Focus on managing existing credit accounts responsibly.

4. Regularly monitor your credit report

Errors or omissions in your credit report can create problems and hinder your credit score adversely. That is why it is prudent to regularly review your credit report and your overall credit profile.

Hence, sensible management of your ongoing credit lines such as credit cards and personal loans allows you to efficiently take care of your borrowing integrity. To further facilitate the same:

• You can request for your free credit report annually from credit bureaus such as CIBIL, Experian, CRIF High Mark among others.
• Raise and discuss your problems and disputes with the respective credit bureau.
• Constantly checking your report helps you in staying informed about your borrowing health.
• Sincere reading and building knowledge on credit reports, the importance of debt management will also go a long way to help you manage your borrowing profile efficiently.

Therefore, it is imperative for you to acknowledge the fact that improving your credit score is just the beginning. It is equally vital to maintain it.

That is why as you work towards a better score focus on building a solid credit mix over time. Having a combination of secured and unsecured loans, managed efficiently can further consolidate your credit profile and future borrowing potential.

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.