Top 10 Ways to Build a Strong Credit Score
Your credit score is more than just a number. It’s a reflection of your financial credibility and discipline. A high credit score opens doors to better loan offers, lower interest rates, and premium credit cards. Whether you’re applying for a home loan or financing your next car, your credit score can make or break the deal. At Untold You, we bring you 10 powerful and practical ways to build and maintain a strong credit score in India.
1. Always Pay EMIs and Credit Card Bills on Time
Timely repayment is the most critical factor. Missing even one due date can negatively impact your CIBIL score. Set up auto-debits or reminders to ensure you never miss a payment.
Pro Tip: Paying the minimum due isn’t enough—always aim to pay your full bill amount.
2. Keep Your Credit Utilization Ratio Below 30%
Credit utilization ratio is the percentage of your credit limit you use. A high ratio indicates credit dependency and can lower your score. Try to use less than 30% of your available credit at any time.
For instance, if your credit limit is ₹1,00,000, keep monthly spending below ₹30,000.
3. Avoid Frequent Loan or Credit Card Applications
Each application triggers a hard inquiry into your credit report, slightly lowering your score. Multiple inquiries in a short span may raise red flags with lenders.
Apply only when necessary and space out your applications.
4. Maintain a Mix of Credit Types
A healthy mix of secured (home, auto loans) and unsecured (personal loans, credit cards) credit shows that you can manage different types of credit responsibly. Avoid over-reliance on unsecured loans.
5. Don’t Close Your Old Credit Cards
Credit history length plays a key role in your score. Keeping older credit cards active—even if you use them occasionally—helps strengthen your credit profile.
Canceling a long-standing card shortens your credit history and may increase your credit utilization.
6. Check Your Credit Report Regularly
You’re entitled to one free CIBIL report every year. Review it to catch errors like incorrect personal details or unauthorized accounts. Rectifying them can significantly improve your score.
Visit Untold You for tools and guidance on understanding your credit report.
7. Make Multiple Small Payments (Credit Card Hacks)
Instead of paying once a month, make multiple small payments throughout the billing cycle. This keeps your credit utilization ratio low and shows frequent repayments.
8. Don’t Be a Loan Guarantor Unless Absolutely Necessary
If the primary borrower defaults, your credit score takes a hit too. Think carefully before co-signing loans, especially if the person has questionable credit habits.
9. Resolve Old Debts or Collections
If you have overdue loans or defaulted EMIs, work on settling or repaying them. A ‘settled’ status is better than ‘written off’ in your report. Always ask for a No Dues Certificate once the issue is resolved.
10. Use Credit Builder Products
Some banks offer secured credit cards or credit-builder loans. These are great for students, new professionals, or people with no credit history. Use them responsibly to start building your score.
Bonus Tip: Link PAN and Aadhaar to Credit Accounts
Ensure that your financial accounts are properly linked to Aadhaar and PAN to ensure smooth verification and credit tracking.
Why a Strong Credit Score Matters
- Lower Interest Rates: High scores mean better rates on loans and credit cards.
- Higher Loan Approvals: Banks are more likely to approve your application.
- Better Negotiation Power: You can negotiate terms, limits, and repayment timelines with good credit.
- Faster Loan Disbursal: Pre-approved offers and faster processing times await those with stellar scores.
Final Words from Untold You
A strong credit score isn’t built overnight—it’s a result of consistent and disciplined financial behavior. Start small, stay consistent, and watch your credit health flourish. For more tips, calculators, and tools, explore the personal finance section at Untold You.
