How to Build Your Credit Score Fast In 2024
Blog Outline
What Is Credit Score?
How To Build Your Credit Score?
8 Tips to Build your Credit Score
1. Apply for a Credit Card
Unsecured Credit Card
Unsecured credit cards are ideal for building your credit score, but beginners often face hurdles due to the absence of a credit history. Unlike secured ones, unsecured credit cards don’t need collateral. To qualify, a strong credit history and ample income are necessary to showcase creditworthiness. If you’re earning, apply for an unsecured credit card. If approved, use it to start building your credit score. Otherwise, consider alternative credit card options that are more accessible.
Secured Credit Card
2. Become an Authorized User
3. Avoid Applying for Multiple Credit Cards at Once
4. Use Credit Card Regularly
5. Monitor Credit Utilization Ratio
6. Stay On Top Of Your Bills
7. Maintain a Healthy Credit Mix
Unsecured loans, like personal, business, or education loans, often contribute to a decrease in credit scores. These loans, lacking collateral, pose higher risks than secured ones such as home or auto loans. To sustain a good credit score, it’s advisable to maintain a balanced mix of credit. This approach mitigates risk and results in a more favourable credit score. A diverse credit portfolio portrays the borrower as less risky, benefiting both the individual and the lending institutions.
8. Check Your Credit Score Regularly
How To Check Credit Score
- Annual Credit Report: To check your credit score, you can obtain a free copy of your credit report from each of the three major credit bureaus—Experian, Equifax, and CIBIL—once every 12 months. This can be done through the Annual Credit Report website:https://www.annualcreditreport.com/index.action. While this report typically includes your credit score from one or more bureaus, it may not be the exact score used by lenders. This process allows you to regularly check your credit score and monitor your financial standing throughout the year.
- CIBIL Website: To check your credit score, CIBIL, the most widely used credit bureau in India, provides a free credit score once a year through their website:https://www.cibil.com/freecibilscore. However, to access this service, you’ll need to create an account on their website and provide your PAN number along with other necessary details. This enables you to perform a credit score check and stay informed about your creditworthiness.
Things To Remember About Credit Score
Monitor your credit report regularly:
It’s important to keep an eye on your credit report. Even if you don’t frequently check your credit score, it’s a good idea to review your credit report once a year. This helps ensure that all the information is correct and current. If you notice any mistakes, report them to the credit bureau. It goes beyond checking your credit score it involves reviewing your credit history to find and fix any discrepancies.
The Importance Of Building A Good Credit Score
Frequently Asked Questions
Getting a credit card won’t automatically decrease your CIBIL score. In fact, using a credit card responsibly can improve your score over time. However, missed payments or reaching your credit limit can have negative effects. Also, when you apply for a card, it may lead to a temporary, small impact on your score. The key is to use credit cards wisely, making timely payments and managing your credit responsibly.
Yes, your CIBIL score affects your chances of getting a new loan or credit card. A higher score increases approval chances, while a lower score may lead to less favorable terms or denial. Maintain a positive credit history for better opportunities.
A CIBIL credit score of 750 or higher is generally considered good for applying for any type of loan.
Banks and NBFCs usually want a CIBIL credit score of 750 or more to approve personal loans. A higher score means you’re less likely to have trouble repaying, making it easier for banks to approve your loan.
The credit score required for a credit card application can vary among issuers. However, a generally good credit score, often around 750 or higher, increases your chances of approval. It’s advisable to check the specific requirements of the credit card issuer you are interested in.
