Low Credit Score? Here’s How You Can Improve It in the Next Few Months!

If your credit score is low, around 650 or below, securing a loan from a bank can be challenging. Even if approved, banks or non-banking financial corporations (NBFCs) may charge a higher interest rate. so should you improve your credit score.

However, if you plan to take a substantial loan later this year or next year, you should actively work on improve your credit score. There are proven strategies to boost it, such as lowering credit utilization, paying off outstanding debt, opting for a secured credit card, and diversifying your credit mix.

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Improve Credit score 7 key tips to follow

1. Check credit report: Get a free credit report from credit bureau such as CRIF High Mark. Identify errors or discrepancies and dispute them with the credit bureau.

2. Pay Your bills on time: Avoid late payments on credit cards, loans, and EMIs. You may set up auto-pay for timely payments.

3. Reduce credit utilization: Keep your credit utilization below 30% (i.e., use only ₹30,000 if your credit limit is ₹1,00,000). Pay off credit card dues before the due date to lower utilization.

4. Pay off outstanding debts: Clear any overdue loans or credit card bills first. If you have multiple debts, consider the snowball method (smallest first) or avalanche method (highest interest first).

5. Take a secured credit card: If you have a very low score, apply for a secured credit card against a fixed deposit (such as SBI Card, Axis Bank Insta Easy).

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6. Diversify credit mix: Having a mix of secured loans (home/car loans) and unsecured loans (credit cards, personal loans) helps improve your score.

7. Avoid multiple credit applications: Frequent credit applications cause hard inquiries, lowering your score. If rejected for a loan, wait before reapplying.