A credit score is essential. It opens up all the financial opportunities for an individual to attain help during a financial void. If you are stuck with a score below 700, you might face some issues with loan approval. This is because a score of 750 and above is considered a good score. A good credit score makes an individual eligible for any kind of financial product. A credit score determines the creditworthiness of an individual. A score of 700 will need some improvement so that you can attain any loan product without any hurdles in the long-term. There are some measures and practices that need to be taken by every borrower to enhance the score. If your Experian credit score is below 700, you need to improve it to get the best rates of interest and a low-cost personal loan. All you need to do is be responsible and disciplined in managing the financial journey and check credit score online from time to time. To aim for an excellent score above 800, follow the below mentioned steps and measures.
What is a credit score?
A credit score is a numerical expression based on a level analysis of all credit files to represent the creditworthiness of an individual. It is a very important step that decides whether a borrower is eligible for a loan or not. The score is given after considering all the credit essentials in a credit report. The credit score is a representation of all the credit and financial activities, behavior, and journey of the individual from past to present. This is the first and foremost eligibility criteria for any borrower. The loan provider finds out the score to decide the eligibility. There are various activities that can harm and damage the score even without the notice of the individual. Activities like late payments, missed payments, closed credit accounts, bad credit mix, new credit accounts, and keeping overdue. A credit report is essential and a score above 750 should be maintained under every circumstance. Find out how you can improve your score from below 700 to an excellent one. However, it will take time and there is no overnight magic to score improvement.
Steps to improve your credit score
Pay your bills on time: A credit score is subject to various measures and activities related to credit. Payments are an integral part of what decides the credit score. Late payment is not at all a good credit activity as it damages your score. If you are aiming for an improvement in your credit score, you need to make sure that you pay your bills on time. Every bill or EMI has a due date. The bills need to be paid by the due date and not after the date. When you delay, you not only pay extra charges but also lose credit points from your score. This also gets registered on the credit report and leaves behind a financial scar.
Do not close credit accounts: It is possible that there are credit accounts that you don’t use and you probably want to close them. However, this is not a good idea if you want an Experian credit score above 700. Closing credit accounts will damage your credit score. The longer the credit age, the better your credit score will be. Make sure you let the accounts remain active even if you do not use them. Open credit accounts increase the credit age and improve your score.
Do not pay the minimum bill amount: A bill has two components; the minimum amount and the full bill amount. It is not recommended to pay the minimum bill amount. When you pay the minimum amount, you only benefit initially. In the long-run, you lose out on your credit score as well as pay extra for late charges and extra outstanding fees. The idea is to pay the full bill amount without leaving any outstanding amount.
Do not apply for multiple loans: Whenever you apply for a loan, a hard enquiry is run on your credit report. This hard enquiry drops some points from your credit score. This will not let your score increase. Do not apply for multiple loan options if you are trying to improve your score. After a rejected loan application, the idea should be to improve the score and not apply for an endless number of applications.
Have the right credit mix: A credit mix is a mixture of ongoing loans that you have. Make sure you do not have any unsecured loans. There should be a good balance between unsecured and secured forms of loans. A good credit mix will help to maintain your score.
Do not use too many credit cards: credit cards come with a pre-approved limit. It is very expensive and the bills become a burden. Control the usage as it often leads to a debt trap.
Check your credit score online to stay updated with your Experian credit score. To get an easy approval on your personal loan, a good score above 750 is a must have. Make sure you follow the above mentioned steps to improve your credit report.