A credit score of 650 is treated as a ‘fair’ score in India by leading credit bureaus. Now given it is not the worst still it can limit access to prime financial products such as premium credit cards or personal loans on low interest rates.
As a norm, according to top tier credit bureaus such as CRIF High Mark, Experian, CIBIL, Equifax among others, leading financial institutions prefer a score of over 750+ before considering offering attractive personal loan terms and credit cards to applicants.
Now, with sincerity and discipline in sustaining proper credit behaviour a jump from a credit score of 650 to a credit score of 750 is possible.
The idea is simple, the higher the credit score of an individual borrower, the better are the chances of the borrower of securing personal loans and credit cards on easier terms and conditions along with friendly interest rates.
This write up is dedicated towards discussing easy ways through which a borrower can fix a credit score of 650 and hit the aspirational credit score number of 750 or 750+.
Focus and pay credit card bills and EMIs on time
Your payment history accounts for about 35% of your credit score. Now even a single missed or ignored EMI payment can pull your credit score down by 75 to 100 points. The same goes with missing out on credit card bill payments as well. That is why you should set up automatic payment or alarms to stay consistent with your credit payments.
On the same lines, even if you are 10 days late with your repayment even then you can see a serious decline in your credit score and you might never see yourself scaling the score of 700. Hence, punctuality is of paramount importance.
Bring down your credit utilisation ratio
The focus here should be on keeping your credit utilisation ratio to as low as possible. Try to ensure that you use less than 30% of your credit limit. This means, for example, your credit card gives you a limit of ₹1 lakhs then you should never use more than ₹30,000 from the given credit limit of ₹1 lakh.
This will ensure that your credit limit always remains less than 30%. This will show your future lenders that you are not a credit or debt reliant person. Now if in case your spending is such that your credit utilisation crosses the red line mark of 30% then in that case you should reach out to your credit lending authority and request them for a higher credit limit by filling out the compliance form as per their instructions. This will ensure that your credit score and overall credit report remains healthy.
Plan your spending properly
Every single credit inquiry brings your credit score down by a few points. That is why applying for a new loan or a new credit card in a relatively short period of time reflects over dependence on credit or debt i.e., it is taken as a sign of credit hungry behaviour on the applicants part. Such behaviour can hurt your credit profile, credit utilisation and credit score in an immensely negative way.
Check, follow up and monitor credit report consistently
If you are a credit card user or a personal loan holder, then it is your own responsibility to carefully check, follow up and monitor your credit profile and go through your credit score on a consistent basis.
Generally, errors such a s incorrect loan status, fraudulent accounts, incorrect transactions etc are sometimes reflected in credit reports that have errors in them. That is why it is important to be swift in resolving such disputes with your credit card providing financial institution.
You can also download one free yearly credit report from leading credit bureaus such as Experian India, CRIF High mark, CIBIL among others to dispute errors and mistakes and raise your voice against any inaction.
Take your time and build a longer credit history
Now to take your credit score from 650 to 750+ in no time and try to ensure that you pay lower EMIs on all future loans, you are still required to invest some time. It looks easy but it is still a little complicated as a task to boost your credit score in the least possible time. That is why to combat this situation you need to keep your old accounts active and open, even if they are not used by you.
This is crucial because older credit lines such as decade old credit cards, personal loans improve and boost your credit age. Now, if you have been consistent in making repayments on time for the last 10 years or so on your credit card bills and personal loan EMIs then this is a clear sign to your future lender that you are an individual that can be trusted and can hence be provided a credit card or a personal loan on easier terms.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
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