A credit score is typically a “three digit number”, which usually ranges between 300 and 850. A credit score represents your credit rating and the likelihood that you will pay your EMIs, bills and other dues on time. The higher the credit score, the higher is the possibility that any money lent to you will be recovered without hassles and you will pay your EMIs on time.
The credit score is generally calculated on the basis of the contents of your consumer file and your credit history. If you have been paying all your dues on time and have never hassled any financial agency or organization for the recovery of the dues, then you would have a good credit rating.
A score of 700 or above is considered good and the one varying between 600 – 700 is considered average. The credit score above 800 is considered excellent. Most of the credit scores fall under the range of 600 – 750.
Which Organizations Use The Credit Scores?
There are many organizations which check your credit score before offering your services and most of these include money lending companies, banks facilitating mortgage loans, car dealership & car loan providing companies and the credit card companies. Your credit score aids the companies to make the decisions pertaining to whether or not to provide your credit like loan or credit card and what would be the terms of the offer.
A high credit score means you would face very little difficulty in getting the loan and the loan that you will get will also possess the easiest conditions to satisfy.
How Can You Increase Your Credit Rating?
The best way to increase your credit rating is by being always on time with all your dues and payments. This is one of the primary ways to do so.
Apart from paying all the dues on time, there are some other tips that you can utilize. Here’s your detailed credit score guide from which you can follow the steps to increase your credit score.
- Always ensure that the balances on your credit cards and other “revolving credit” is low. Don’t let the balances increase and make it a habit to pay your credit card bill always on time.
- If you have taken a loan or are under debt, then pay it off instead of moving it around.
- Never close your unused credit cards as one of the strategies to increase your credit rating/ score.
- In order to increase the amount of your available credit, do not open the new credit cards which you don’t require. It also has a bad impact on your credit score.
- In order to pay your bills and credit card payments on time and to avoid forgetting the payments, set up the payment reminders.
- If you have been managing your credit for only a short time, then don’t hasten up for opening several new accounts too rapidly. The new accounts will lower down your average account age and may negatively affect your credit ratings.
Following above mentioned tips would help ensure you move in the right direction if you are looking to improve your credit score!