A credit score can be the deciding factor between financial ease and costly borrowing. From securing a home loan to getting approved for a high-limit credit card, your score influences not only the chances of approval but also the interest rates you’ll pay. Hitting a credit score of 800 is like having a golden key to the best loan and credit card deals. It opens the door to low-interest financing, helping you save big!While a score above 800 is seen as excellent and 670–739 is considered good, anything under 600 can raise red flags for lenders and significantly limit your financial options.If your score is on the lower side, don’t worry!Financial experts suggest five practical ways to steadily improve your credit profile and secure better financial opportunities:1. Pay on time, in full: Your payment history is the single most important factor in calculating your credit score. Missing even one payment or paying only the minimum due can leave a negative mark, especially if you already have a limited or shaky credit history.“Many underestimate the impact of missing even one EMI. It creates a negative mark in the scoring algorithm, signalling unreliability to lenders,” Satish Mehta, Founder of Athena CredXpert told ET.Experts recommend automating EMIs and credit card payments to avoid delays. Even though paying the minimum due may not hurt your score immediately, the high interest (up to 40%) still impacts your finances.2. Use secured loans to rebuild credit: If traditional loans are out of reach due to a bad score, secured loans backed by fixed deposits or gold can help. These are easier to obtain and are reported to credit bureaus. Using them for small, planned expenses and repaying on time can help you rebuild your profile.“Start small and focus on consistent, timely repayments to restore trust,” advises Raj Khosla, Founder & MD, MyMoneyMantra told the outlet. Regular repayments over six to nine months can outweigh earlier defaults.3. Keep credit utilisation in check: Your credit utilisation ratio—the percentage of your credit limit used—also affects your score. Using more than 30-40% of your credit limit regularly can be seen as risky behaviour, even if you pay your dues on time.Spread your spending across multiple cards rather than maxing out one. However, avoid applying for too many new cards in a short time, as this can raise red flags with credit bureaus.4. Avoid frequent EMI conversions: While turning a large credit card bill into EMIs may seem convenient, doing it frequently can damage your score. Raj Khosla told ET that, “Each EMI conversion shows up as an inability to pay the balance outright, which can lower your score.” If you must borrow, opt for a personal loan, it usually has a lower interest rate and fixed repayment terms. While it can still affect your credit score, it’s a better option than high-interest credit card debt.5. Handle overdue loans carefully: If you have overdue payments, avoid taking new loans to repay old ones. This often leads to a debt trap. “Swapping one debt for another doesn’t solve the problem; it just delays it,” Satish Mehta said. Focus on clearing smaller high-interest loans first, and seek help from a credit counsellor to structure repayments if needed.
