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05 May

Tips to improve Credit Score

Your credit score – this 3 digits number can make or break your financial dreams. This number is a reflection of your past payment behaviour.  

A credit score has gained importance in the recent years. The lending institutions evaluate your credit worthiness based on your credit score, which helps the lending institution to estimate the likelihood of repayment of a credit facility based on your past pattern of credit usage and loan repayment behaviour. 

So higher the score, higher the confidence the lending institution would have in you and hence better the chances of your credit application getting approved.  

Generally in India, a credit score of more than 750 is considered to be good, which we all wish to have.  

You know the famous phrase – ‘Rome wasn’t built in a day!’, so the same applies here. You could gradually build your credit score. 

Here are some essential steps that would lead you to that goal:  

  1. Ensure your credit report is error free  

Check your credit report periodically (at least twice a year) to ensure it does not contain any erroneous data as that can hurt your credit score.  

If you find any errors on your credit report, make sure that you contact the credit bureau or the lending institution to correct this error. Ideally, you could also check with your credit counsellor and seek expert advice. 


  1. Pay off your debts 

Setting a realistic plan to repay your debts is a good step. Minimizing the outstanding debt will help to improve your credit score. 


  1. Less credit cards and low usage 

Be prudent with the number of credit cards you own. Credit utilisation on each credit card should ideally be 30-40% of your credit limit. So make prudent use of your credit cards! 


  1. New credit purchases 

Ensure that you apply for credit only when you require it. Your applications for a credit facility result as ‘enquiries’ on your credit report and stay there for 7 years! High number of ‘enquiries’ could have a negative impact on your credit score. 


A credit score is based on your credit history and behaviour built over the years. These 5 simple ways are your first steps to build a good credit history and improve your credit score. 


Be prudent – it’s about your financial health we are talking about! 


Satish Mehta
Satish is a Chartered Accountant by education, a veteran of Housing Finance and a Credit Information practitioner with over 40 years of experience. He previously worked with HDFC Ltd – India’s largest mortgage finance company and was the founding Managing Director of CIBIL – India’s first and largest Credit Information Bureau. He has global experience in his chosen fields, is a Professor of Practice at a leading University and has written e-books for the World Bank on his subjects. He is passionate about learning & knowledge transfer & believes in giving back to the industry he worked in throughout his career.

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