How to increase your credit score
How to Improve your credit score is something we all ask ourselves when we sign for a loan, credit card, or other form of financing. Your credit score is your finance report card — the higher, the better, because that is how much credit you can get on good terms. If you’re just starting out or if you’re trying to lift a bad credit score, taking on some good habits will help you notice the changes quite soon. Let’s get started.
What is a Credit Score?
A credit score is a 3-digit number between 300 and 900, and it tells lenders how creditworthy you are. The larger the number, the more creditworthy you are, and the better your chances of getting loans, credit cards and mortgages at better rates.
7 Best Tips on How to Improve your Credit Score
1. Pay all of your bills on time
One of the biggest determinants of your credit score is paying bills on time or not. Paying a single bill late can cost you an enormous amount of points on your score.
What to do:
- Clear your EMIs, credit card dues, and loan installments before they are due.
- Use auto-debit features and/or calendar reminders to help you keep track of payments.
- Consistency over a period of time provides lenders sufficient evidence to be able to build a trust relationship, and will improve your credit.
2. Maintain credit usage under 30%
Credit utilization is the portion of your credit limit being used. High credit utilization (i.e. usage of more than 30%) is an indicator of financial hardship and leads to a lower credit score.
Example:
If your credit limit is 1,00,000, you should try to spend not more than 30,000 a month.
What to do:
- If necessary, apply use multiple cards for expenses.
- Pay in installments throughout the month.
- Don’t charge your credit cards to their capacity.
3. Avoid applying for several credit cards or loans simultaneously
Each time I apply for credit, lenders ask for a hard inquiry on my credit report that lowers my credit profile temporarily.
What to do:
- Use only when absolutely necessary.
- Space out your applications.
- Use pre-approval or soft inquiry techniques.
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4. Maintain a Long and Active Credit History
For how long you’ve had credit (your credit age) is another significant factor in credit scores. Accounts that are older demonstrate over time you’ve been a responsible credit user.
What we can do:
- Maintain the oldest credit cards active and in use.
- Don’t close existing credit accounts.
- Pull out all of your old credit cards and use them occasionally to purchase something, and then pay them out to zero immediately or shortly afterwards.
5. Review Your Credit Report Regularly
At times, your credit report will be impacted by a couple of mistakes like duplicate accounts, or a wrong balance.
What are we doing:
- Review your entire credit report at least once a 6-month period.
- Look for errors and question them.
- Notice the difference once you have objected to any mistakes.
6. Always Pay Your Credit Card Bills in Full
Only making the minimum payment on your credit card will cause you to build a high-interest credit account and impact your credit profile.
What can we do:
- Always remit the amount in full.
- Reduce any unwarranted credit card spending.
- Avoid using revolving credit where possible.
7. Decrease Outstanding Loan Commitments and Overdue Debt
Excessive unpaid loans or excessive EMI payments can damage your credit record.
What to do:
- Pay outstanding debts earlier if you can.
- Make regular part-prepayments.
- Avoid new loans until manageable debts.
How Long Does it Take to Enhance Your Credit Score?
It is not possible to increase your credit score overnight. But if you do not have low credit, then your credit can be increased in 3 to 6 months. But severe defaults may take 12 months or more.
Final Thoughts on How to Improve Your Credit Rating
A healthy credit score makes the doors of many financial windows available. Doing these steps in a disciplined way — paying bills on time, keeping credit utilization low and reviewing credit reports every now and then — will enhance your credit profile gradually, and sooner or later, you will be quoted lower interest rates and better loan approvals.
Learn More About CIBIL
TransUnion CIBIL is a leading credit information company in India and has one of the largest consumer credit information databases in the world. Your CIBIL Score is of great significance to banks and lenders when they are making the decision about sanctioning your loan or credit card.
Check your CIBIL Score or your credit report online. Simply log on to their official CIBIL website.
Now you can know your credit health — check your CIBIL Score today!
By Vikas Saini, 28/05/2025
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