32-year old sales professional Heena is sad these days. Her loan application has just been rejected due to bad credit score. A bad credit score means she is not fit for the loan risk that the financial institution wants to take. The worst part is that old accounts that she forgot about have come to haunt her back. There are hundreds of Heenas and Hirens amongst us. There is a solution to their problems. Read on to find the different ways you can gain a high credit score.
1. Keep a close watch on credit card balance –
One major factor in your credit score is how much revolving credit you have versus how much you’re actually utilizing. The smaller that percentage is, the better it is for your credit score. The optimum levels are 30-40 per cent. To boost your score, pay down your balances first and then work towards keeping those balances low. In case you have small balances on different credit cards, pay them off and close those cards for good. Keep just 1-2 credit cards and use them actively.
2. Pay bills on time, every time –
One of the biggest ingredients in a good credit score is month after month on-time payments of dues. Bills can be anything. For example something as simple as the bill for your mobile phone connection. If you delay them, credit score gets hurt. Any prospective lender actually looks at your history to determine whether you have good credit habits. This is why credit scores incorporate elements like timely payments.
3. Clean social media and digital footprint –
Behaviour on social media and other digital footprints become a treasure trove of information for lenders. Did you know posting a drunk picture on social media can back-fire on you years later during a loan application process? Believe us when we say this, such behaviour affects your credit score. At the other end of the spectrum, acceptable behaviour on social media is also a plus. Data from professional networks can be accessed to find about a person’s employment history, how stable is the job, and how frequently does a person switch jobs etc. Your social and professional circle can actually be taken into account go assess id you as an individual are a responsible borrower or not.
4. Diversify Credit –
Debt that you have handled well and paid for is good for your credit score. Consider diversifying your credit under various aspects of your needs. Like a small car loan that you can handle, a personal loan for a vacation. These things are something that you can pay for in a shorter run of time along with your regular credit card bills will add up to improving your score.
5. Discipline and Consistency –
Closing old accounts, be it trading accounts, bank accounts that one doesn’t use, credit card bills will go a long way. Consistency in paying bills on time, not defaulting on payments, maintaining a good digital footprint all will help in improving credit scores.