Maintaining a good credit score is essential for securing loans, getting approved for credit cards, and enjoying lower interest rates on your financial products. While paying your bills on time is the most well-known strategy for improving your score, there are several other tactics that can make a huge difference. If you're looking to boost your credit score or maintain a healthy one, here are some smart hacks to consider:

1. Check Your Credit Report Regularly

Before you can improve your credit score, you need to know where you stand. Errors or discrepancies in your credit report can negatively affect your score without you even knowing it. Here’s what you can do:

· Request a free copy of your credit report from one of the major credit bureaus: Equifax, Experian, or TransUnion.

· Look for mistakes, like incorrect account information, payment errors, or fraudulent activity.

· If you find any errors, dispute them immediately. Getting mistakes corrected can quickly improve your score.

2. Pay More Than the Minimum Payment

If you only make the minimum payment on your credit card bill, you might not be doing enough to raise your score. While making the minimum payment on time helps you avoid late fees, it doesn't help much with improving your credit utilization ratio—a key factor in your score. Here’s how to get more out of your payments:

· Pay more than the minimum: Ideally, pay off your entire credit card balance each month.

· If that’s not possible, aim to pay down high-interest balances first. Reducing your overall debt burden will improve your credit score over time.

3. Use Less Than 30% of Your Credit Limit

Your credit utilization ratio—the percentage of available credit you’re using—has a significant impact on your credit score. The lower this ratio, the better your score. Experts recommend that you aim to use no more than 30% of your credit limit.

· For example, if your credit card limit is ₹50,000, try to keep your balance under ₹15,000.

· If you find it difficult to stay below this threshold, consider requesting a higher credit limit from your bank. This can immediately lower your utilization ratio, as long as you don’t increase your spending.

4. Diversify Your Credit Mix

Credit scoring models look at your credit mix to see how well you manage different types of credit. While credit cards make up a significant portion of your credit profile, having a variety of credit types can improve your score.

· Consider adding a mix of revolving credit (credit cards) and installment loans (personal loans, car loans, etc.) to your portfolio.

· Keep in mind, though, that opening too many new accounts in a short period can have a negative impact on your score. So, only open new credit accounts when necessary.

5. Become an Authorized User

If you have a family member or close friend with a good credit history, ask if you can be added as an authorized user on one of their credit cards. This can boost your score by helping you:

· Benefit from their good payment history.

· Improve your credit utilization ratio.

Just make sure that the primary cardholder maintains low balances and makes on-time payments, as their behavior will directly impact your score.

6. Settle Old Debts and Close Unused Accounts

Clearing up old debts and closing inactive accounts can have a positive impact on your score. Here’s why:

· Settling old accounts: If you have any accounts in collections, negotiating with creditors to settle them can sometimes improve your credit score. Even if it doesn’t raise your score immediately, it will reflect positively in the long term.

· Closing unused accounts: While it might seem counterintuitive, closing unused or inactive credit accounts can sometimes be beneficial, especially if they have high annual fees or you’re not managing them properly. However, avoid closing your oldest accounts, as long credit histories are better for your score.

7. Keep Old Accounts Open

The length of your credit history is another important factor in determining your credit score. Closing old accounts, especially those in good standing, can hurt your score by shortening your credit history.

· Don’t close old accounts if they’re in good standing, as keeping them open improves your credit history length.

· Keep these accounts active by occasionally using them for small purchases and paying them off in full each month.

8. Consolidate High-Interest Debt with a Personal Loan

If you have multiple high-interest credit card balances, it may make sense to consolidate them with a personal loan at a lower interest rate. By doing this, you can:

· Lower your monthly payment and focus on paying off your debt faster.

· Improve your credit utilization ratio, as consolidating balances into one loan can free up available credit on your credit cards.

Just make sure you don’t rack up new credit card debt after consolidating!

9. Consider a Secured Credit Card

If you’re just starting to build your credit or if you have a low credit score, a secured credit card can be a great way to improve your score. These cards require a deposit, which serves as collateral and your credit limit. By using the card responsibly (and paying off the balance in full every month), you can:

· Build a positive payment history.

· Improve your credit utilization and credit score over time.

10. Be Patient: Improving Your Score Takes Time

Finally, remember that boosting your credit score doesn’t happen overnight. While these hacks can help, the key to long-term credit success is consistent and responsible financial behavior over time. Keep making your payments on time, keep your balances low, and don’t take on excessive debt.

Final Thoughts:

While paying bills on time is a crucial part of boosting your credit score, there are several other smart strategies you can use to enhance your financial profile. From keeping your credit utilization low to diversifying your credit mix and maintaining old accounts, these smart hacks can lead to noticeable improvements in your score. So, get proactive about your credit, and start implementing these tips today to unlock better financial opportunities in the future!

 

Disclaimer:

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of any agency, organization, employer, or company. All information provided is for general informational purposes only. While every effort has been made to ensure accuracy, we make no representations or warranties of any kind, express or implied, about the completeness, reliability, or suitability of the information contained herein. Readers are advised to verify facts and seek professional advice where necessary. Any reliance placed on such information is strictly at the reader’s own risk.