12 Tips To Get a Perfect Credit Score

Your credit score is one of the most important factors that lenders consider when deciding whether to approve you for a loan or credit card. It can also affect the interest rate you’re offered. A good credit score can save you thousands of dollars over the life of a loan.

#1. Check Your Credit Report Regularly

First step is to check your credit reports regularly. There are three main credit bureaus in India.

  • Experian
  • CIBIL (oldest in India)
  • Equifax

Review your credit reports carefully for any inaccurate information, such as incorrect account information, late payments, or accounts that you don’t recognize. If you find any errors, dispute them with the credit bureau immediately.

#2. Pay Your Bills on Time

Your credit utilisation ratio measures how much of your available credit you are actually using. Your credit score will typically benefit from a reduced credit utilisation ratio.

Set yourself a reminder to pay your bills on time. You can also set up automatic payments from your checking account to your credit cards and other bills.

#3. Reduce Your Credit Utilization

Your credit utilization ratio is the amount of credit you’re using compared to your total available credit. A lower credit utilization ratio is generally better for your credit score.

Aim to keep your credit utilization ratio below 30%. This means that if you have a total credit limit of $10,000, you should keep your credit card balances below $3,000.

#4. Create a Payment Plan for Outstanding Debt

If you have outstanding debt, create a payment plan to reduce it. Focus on paying off high-interest debt first.

There are a number of different debt repayment methods you can use, such as the snowball method or the avalanche method. Choose a method that works best for you and stick to it.

#5. Avoid Opening Too Many New Accounts

Each time you apply for a new credit card or loan, a hard inquiry is placed on your credit report. Hard inquiries can temporarily lower your credit score.

Be selective when opening new accounts. Only apply for credit when you need it and when you’re confident that you can be approved.

#6. Keep Old Accounts Open

Another significant aspect of your credit score is the length of your credit history. Your credit score is probably going to be better the longer your credit history is.

Even if you don’t use your old credit card accounts frequently, keep them open. Your credit score can increase if you keep previous accounts open.

#7. Diversify Your Credit Mix

Having a mix of credit types, such as credit cards, loans, and a mortgage, can be beneficial for your credit score. This shows lenders that you’re able to manage different types of credit responsibly.

If you only have credit cards, consider getting a loan, such as a car loan or student loan.

#8. Use a Secured Credit Card

If you have a low credit score or a limited credit history, consider getting a secured credit card. A secured credit card requires a deposit, which acts as your credit limit.

Secured credit cards can help you build credit and improve your credit score.

#9. Become an Authorized User

If you have a family member or friend with a good credit history, ask if you can be added as an authorized user on one of their credit card accounts. As an authorized user, you’ll be able to use the credit card, but the primary account holder will be responsible for the payments.

Being an authorized user on a credit card with a good payment history can help you improve your credit score.

#10. Be Patient and Consistent

Improving your credit score takes time. Stay committed to responsible financial habits, and your score will gradually increase.

Check your credit score regularly to track your progress. There are a number of free credit monitoring services available.

#11. Seek Professional Help if Needed

If you’re struggling to improve your credit score on your own, consider consulting a credit counselor. A credit counselor can help you create a budget, develop a debt repayment plan, and dispute inaccurate information on your credit report.

#12. Monitor Your Progress

Regularly checking your credit score and credit reports is essential to tracking your progress and identifying any potential problems early on. Many websites and apps offer free credit monitoring services, so there is no excuse not to stay informed about your credit.

Here are some tips for monitoring your credit progress:

  • Check your credit score at least once a month. This will help you to see how your score is changing over time.
  • Review your credit reports carefully for any errors or inaccuracies. 
  • Set up alerts to be notified of any changes to your credit score or credit reports. This way, you can stay on top of your credit and take action immediately if you see anything suspicious.

Here are some additional tips for improving your credit score:

  • Look around for the best credit card and loan interest rates. Never simply take the first offer you are given.
  • Consider using a credit monitoring service. This type of service can help you track your credit score and identify any potential problems early on.
  • Educate yourself about credit. The more you know about credit, the better equipped you will be to manage your finances responsibly.

Here are some additional things to avoid that can negatively impact your credit score:

  • Maxing out your credit cards.
  • Missing payments on your bills.
  • Opening too many new accounts in a short period of time.
  • Closing old credit card accounts.
  • Having a negative item on your credit report, such as a bankruptcy or foreclosure.

Although it takes time and work to raise your credit score, it is ultimately worthwhile. A high credit score can lower your interest and fee costs while also making it simpler for you to be approved for loans and credit cards.

Here is an example of how to use the above tips to improve your credit score:

  • Make a list of all of your debts. This will help you to see how much debt you have and which debts are costing you the most money.
  • Prioritize your debts and create a payment plan. Focus on paying off your high-interest debts first.
  • Set up automatic payments from your checking account to your credit cards and other bills. This will help you to avoid missing payments.
  • Shop around for the best interest rates on loans and credit cards. Don’t just accept the first offer you get.
  • Consider using a credit monitoring service. This type of service can help you to track your credit score and identify any potential problems early on.

By following these tips, you can improve your credit score and save money in the long run.