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How to improve your credit score? Know 4 easy ways

Before we get into how you can improve your credit score, you must know why it matters. A good credit score gets you better rates on mortgages, auto loans and other things that involve financing.

People who have excellent credit scores are considered lower risk borrowers and you will get a loan easily. People who have a low credit score don’t get loans easily. Along with that, it can also affect your ability to find rental housing, rent cars, get life insurance etc.


Ways to Improve your Credit Score

  • Pay your bills on time

90% of lenders determine on giving loans based on the following factors:

  • Payment history (35%)
  • Credit usage (30%)
  • Age of credit accounts (15%)
  • Credit mix (10%)
  • New credit inquiries (10%)

Payment history gives the lenders an overview that you are on time when it comes to paying back. It builds trust that you will pay your loan back on time.

  • Pay your debts and credits as soon as possible

When the lender sees that you don’t have overarching debts and fewer credit payments, they can ensure that you will be able to pay back the loan on time and smoothly.

  • Keep your old accounts open

Your credit score also depends on how long you’ve had your credit accounts. The older your average credit is, the more favourable you appear to lenders and banks. If you have an old account that you are not using, don’t close it and instead make use of its history.

  • Avoid applying for multiple new credits

When you apply for multiple new credits, it can lead to inquiries in your credit history. There is two type of inquiries – hard inquiry and a soft inquiry. Hard inquiries can affect your credit score as it includes applications for a new credit card, a mortgage, an auto loan, or some other form of new credit. Taking many credits at an instance can give the bank the impression that you are in a financial crisis and pose a risk. Hence, only focus on one loan at a time.


So, these are some of the ways you can improve your credit score. Know here how you can check your credit score.

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