5 key tips to boost your credit score for a stronger financial future
As we usher into the New Year, it is an ideal time to review our financial situation and strategically plan our finances. Your ability to seek faster and cheaper credit is greatly determined by your credit scores and therefore it is essential to periodically monitor your credit scores.
An individual’s credit score, which ranges from 300-900, represents your creditworthiness and assists lenders with risk assessment. A higher score typically indicates better financial discipline and lower risk, leading to easier loan approval and favourable interest rates.
Below are a few tips to keep in mind to improve your credit score throughout your financial journey:
Make timely credit repayments: Ensuring that you make all credit payments on time is crucial for maintaining and improving your credit score.
Maintain a good credit mix: A balanced mix of secured and unsecured credit, demonstrates responsible borrowing behaviour and positively improves your credit score.
Keep track of your credit report: Regularly monitoring your credit report can help you identify any discrepancies, enabling you to take timely action and avoid potential adverse impacts on your credit score.
Limit your loan & credit card applications: Limit your applications for a new card or loan. Apply for credit only when it is required.
Establish longer repayment track records: Maintaining old accounts and consistently making on-time payments can positively impact your credit scores, as a long credit history demonstrates effective credit management to lenders.
How to adopt habits towards efficient financial management?
While you should work on improving your credit score, it's equally important to adopt habits directed towards efficient financial management. Establishing clear financial goals and creating budgets to achieve these goals will aid in efficient financial planning. It’s crucial to manage your income through the right mix of investments, savings and expenses.
You should also assess your appetite for high-risk investments, and balance with options like insurance, including life and health to protect yourself and your family from unforeseen circumstances. Alongside, it is also essential to create adequate corpus since it provides an additional layer of security and financial resilience.
The new year presents an excellent opportunity to take charge of your financial future. By following these tips, you can work towards building and improving your credit score, paving the way for better financial opportunities and smart money management. With a focus on crafting a seamless and comprehensive financial strategy, you will be well-equipped to navigate the path towards a more stable future.
Sanjeet Dawar
Managing Director, CRIF High Mark
Source : Publication: mint genie,27th Dec 2023