Effective Strategies to Boost Credit Score

The CIBIL score or credit score is a numerical representation, ranging from 300 to 900, that summarises your credit history. A higher score, closer to 900, increases the likelihood of approval for your loan application. A credit score is determined by analysing your payment history, credit utilisation, length of credit history, types of credit accounts, and recent credit inquiries. 

Factors Affecting Credit Score

A strong credit score is a boon to have, as it influences an individual's ability to secure loans and other credit lines at favourable interest rates. The three primary factors that significantly impact credit scores:

1. Repayment History: Your repayment history carries significant weight in determining your credit score. Timely payments reflect well on your score, whereas, a history of defaulting or delayed payments will very likely bring your score down.

2. Income and Employment Stability: Having stable sources of income secures your capacity to repay debt obligations and thereby, makes you more creditworthy.

3. Debt-to-Income Ratio: A lower debt-to-income ratio is generally more favourable for your credit score.

Effective Strategies to Adopt to Boost Credit Scores

1. Timely Repayments: Ensure the punctual settlement of credit card bills and loan EMIs to showcase responsible financial repayment patterns.

2. Routine Credit Report Reviews: Inspect your credit report regularly for inaccuracies and dispute any discrepancies to maintain an authentic portrayal of your creditworthiness.

3. Credit Variety: Include a variety of credit types, such as credit cards, and secured and unsecured loans to present a well-rounded credit history, positively impacting your credit score.

4. Debt Reduction Strategies: Work towards reducing outstanding debts to enhance your debt-to-income ratio and refine your overall financial profile.

5. Mindful Credit Applications: Restrict new credit applications, as multiple inquiries within a brief period can temporarily influence your credit score negatively.

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