How to boost credit score by 30 points in 1-month
What's the story
A good credit score is a key factor in securing loans and credit cards. It reflects your trustworthiness to lenders. With some strategic financial habits, you can improve your score by 30 points in just a month. "Credit scores respond to behavior," says Kaushik Chatterjee, founder of LendingPlate. He adds that actions like timely bill payments and correcting errors can lead to significant improvements in one's financial standing.
Payment history
Prioritize timely payments
The most important factor in determining your credit score is your payment history. Paying personal loan EMIs, credit card bills, and other dues on time creates a positive track record. To avoid missing due dates, you can automate payments or set reminders. This simple habit can go a long way in improving your credit score over time.
Utilization ratio
Manage your credit utilization ratio
If you want to use credit wisely, aim to keep your credit utilization ratio below 30%. For a ₹2 lakh limit, that means using no more than ₹60,000. Paying off balances before the statement date can quickly reduce utilization and improve your credit profile. This is another simple yet effective way to boost your score within a month.
Credit mix
Diversify your credit mix
Having a diverse credit history, including credit cards, home loans, personal loans, and secured loans that are paid on time, shows responsible debt management. Even small amounts of credit usage can help build a strong profile over time. While this is a beneficial strategy, achieving a 30-point increase in 30 days typically requires a combination of strategies, not just this one alone.
Report checks
Regularly check for errors
Regularly checking your credit report for errors, such as wrongly reported defaults or incorrect limits, is crucial. If you find any mistakes or inaccuracies, dispute them promptly. Credit bureaus now allow updates every 15 days, adding more transparency and accountability to the process of maintaining a good score. This is an important step in improving your credit profile over time.
Application strategy
Limit hard inquiries
Hard inquiries from multiple loan or credit applications can hurt your score. So, it's best to apply only when necessary and space out requests. This way, you won't come across as credit-hungry to lenders.