Credit score plays an essential role in availing speedy loan approval. The fact lenders tend to favour borrowers with a higher credit score makes it all the more important for borrowers to increase their credit score. There are several practices that serve as an answer to a borrower’s question of “how to increase credit score?”
Practices like paying bills on time enhance a borrower’s payment record and help them avoid the appearance of ‘negative information’ on their credit report. While restricting the need to open new credit accounts decreases the risk of accumulating more debt and also reduces the scope of placing ‘hard inquiry’ on their credit record.
Clearing debts and marinating a low balance on credit card will also prove effective in increasing the credit score. It will help cardholders to maintain a healthy credit utilisation ratio and will give them the tag of a responsible debtor who pays credit on time.
Also, the practice of maintaining unused credit cards and factoring in utility payments made through a credit card helps in increasing credit score and managing credit responsibly. Closing an unused credit card may increase the credit utilisation ratio of the account holder, which further decreases their credit score.
Similarly, using a credit card to pay off small utility debts may directly prove helpful for those who want to increase their credit score. It serves the cardholders as an opportunity to enhance their payment track record and helps increase credit score simultaneously.