How to increase your credit score from 600 to 720 in 6 simple steps

To be able to take a loan on convenient terms and conditions, it is important to have an impressive credit score.

And even if you don't have a good credit score, you can make conscious efforts to improve it over a period of time. These are some of the workable steps that can lead to a higher credit score.

6 steps to help improve your credit score

i. Pay your bills on time: One of the most important steps to take is to pay all your bills (credit card and loan EMIs) before the due date. This is the most important factor that plays a role in building a credit score.

ii. Credit utilisation ratio: Another factor that has a bearing on your credit score is your credit utilisation ratio. This indicates the percentage of the overall credit limit that you have exhausted. The higher the ratio, the lower your credit score. Conversely, the lower the ratio, the higher the score.

iii. New loan applications: Regardless of your financial situation, try to restrict new loan applications if you are aiming to improve your credit score. More new applications for credit cards and loans indicate desperation for credit, and reflect badly on your credit score. This must be factored in.

iv. Build positive credit history: One should make conscious efforts to build credit history by either giving a guarantee of someone in the family who has an impressive credit history, or by procuring a secured credit card. Then by servicing the debt responsibly contributes towards building a good credit history.

v. Check your credit report regularly: Experts tend to recommend checking your credit score regularly – at least once a year – and disputing errors (if any). The error could be a wrong loan entered in your name, or a credit cleared but not reflected in your credit report.

vi. Clear your debt strategically: One way to build your credit score is to consolidate your debt and simplify payments by opting for a lender which charges lower interest rates.

To sum up, one should take a series of steps over a period of time – from clearing debts to lowering your CUR (credit utilisation ratio) – to boost your score from low (600) to high (720). Remember that a poor score not only lowers your bargaining power while raising a loan but also leads to loan rejections more often than not.

Disclaimer: MintMoney has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit score. MintMoney does not promote or encourage taking credit, as it comes with a set of risks, such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.