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Tips to improve your credit score

A credit score is your credit history expressed as a number. You can also think of it as a grade for how responsibly you’ve managed loans, lines of credit and other financial obligations over the years. While having a good credit score can help you get loans easily and in general make your life much easier and accessible in the future, having a bad credit score can cause serious harm to a peaceful future!

Always Strive to never miss a payment

Do you know that your payment history accounts for up to 35% of your credit score? A record of on-time payments is a key factor and is the easiest way to ensure that you build a positive credit history. Just keep your spendings under control. Spend only what you can afford to repay in full or EMI each month.

Don’t apply to too many lending platform at once

Once you do have access to credit, don’t apply to too many lending platforms with abandon. Your credit scores take a small hit every time there is a hard inquiry  (i.e how many times you have applied for credit in the past 12 months) on your credit reports.

Keep your credit utilization ratio at optimum level

Your credit utilization ratio is the amount of credit you use on a regular basis compared to the amount of credit that you have access to. To calculate it, look at how much your EMI/month is then divide that by your total credit limit.

Monitor Your Credit

You can do everything right—But identity theft, financial fraud and credit-report errors can rear their ugly heads at any time. You are entitled to one free credit report each year from each of the three credit bureaus. Review them to make sure they accurately reflect your credit behavior. Trouble your lenders if they have not reported your loans properly & precisely on time.

Final Thoughts

Now that you know how to build credit from the scratch, it’s time to go out and do it. If you follow these tips, you’ll be setting yourself up for a brighter financial future.

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