A credit score is a critical component of your financial health, affecting your ability to borrow money or secure favorable loan terms. In India, credit scores range from 300 to 900, with 750+ considered excellent.
Several factors influence your credit score. Payment history is the most crucial, accounting for 35% of the score. Always pay your bills, credit card dues, and EMIs on time to maintain a positive payment history. Credit utilization ratio, the percentage of available credit used, is another key factor. Aim to keep it below 30%.
Other factors include the length of your credit history, types of credit (credit cards, loans), and recent hard inquiries. Avoid applying for multiple loans or credit cards within a short period to prevent negative impacts on your score.
To improve your credit score, check your credit report regularly for errors and dispute inaccuracies. Set reminders for timely payments or use auto-pay options. If your score is low, consider secured credit cards or small personal loans to build a positive credit history.
Improving your credit score requires discipline and time, but it significantly enhances your financial opportunities, from lower interest rates to better loan approval chances.
