Improve Credit Score: 11 Tips & Reasons for Poor Score

Credit score is the gateway to the credit world. It is a three digit number which either helps you in achieving dream such as (buying home/car) or break the dream. Your credit worthiness is evaluated on the basis of this number.

This three digit number given out of 900 is statistically derived for every individual after evaluating their credit payment history (loan or credit card). Poor the number, higher would be the rejection chances of your loan or credit card application and vice-versa.

So what factors affect your credit score and how to improve the same?

Here are 11 ways to improve your credit score:

Pay bills on time:

Whether you are having financial crunch or not, make a habit of paying loan EMI/credit card bill before the due date. Because frequent late/missed payment badly impacts the credit score. So you are at loss in two ways – loss of money as you will have to pay extra money to the lender in the form of late payment fee with higher interest. And getting credit in the future becomes difficult as chances of rejection increases, since you have been a late payer in the past.

But sometimes, even a timely payer can miss paying the bill on time. Either he/she forgets to remember the last date. In such cases, make a habit to opt for direct debit facility. So on a prefixed date, money will be automatically debited from your bank account and paid to the card company or loaner. And this way, possibility of missed payment is nil.

Do not keep or apply for too many cards / loans:

Keeping too many cards in the wallet has become a status symbol. Flaunting it will not going to make you a rich person. But using the card as a rich person (when you are not the one) will definitely make you poor soon. If not this, then it will definitely affect your CIBIL score. Because in the eyes of lender, too many credit card or having too many loans, is a sign of credit hungry. Remember “Greed Kills”. So always rely less on credit be it credit card or loan.

Do not utilize complete credit keep it less than 60%:

Higher transaction limit on your credit card does not mean you have to ardently utilize it every month fully. Use your transaction limit wisely and do not overspend or use credit to the full limit. Once in a while is OK. But repetitive habit results in poor CIBIL score. It is recommended to utilize not more than 40% of your credit limit.

Do not apply for enhancing the limit:

Individuals have an habit of completely relying on credit cards. And this is an opportunity for the card companies to offer you credit enhancement. If they do not offer, then individuals ask lender to offer increase the credit limit. In both the cases, the card user is at risk. Because enhancing the credit card limit too often/applying for it multiple times, affects your CIBIL score. Because in the eyes of CIBIL, enhancement means person relies too much on credit. And such individuals can pose risk to the lender in the future.

Pay due amount fully:

Your monthly card statement has one enticing line. Minimum balance due is just Rs. X. This number is very small compared to the total due amount. Individuals think that paying minimum balance does not harm in any way. But this is not true. Lenders get an opportunity to trick you and then charge higher interest. And at the same time, lenders send this transaction details to the credit bureaus (e.g. CIBIL), which results in bad credit score. In the eyes of lender such individuals are at higher probability of turning into defaulter in the future and are not credit worthy.

Do not apply at too many lenders after rejection:

It’s very common that when you apply for a credit card or loan, it gets rejected. This mainly happens because of no credit history or poor credit history. But such individuals then approach to other lenders for their credit requirement. However this is an incorrect approach. After the rejection, your first objective is to understand the reason and act on improving the credit score. Applying at too many lenders is an invitation to poor credit rating.

Check out personal loan for poor CIBIL score.

Do not stop using credit:

If an individual is in debt, then the very first action they take is stop using the credit card in order to pay-off the debt first. However this is not recommended. Ideally you should continue using the credit card, though in small frequency and with smaller transaction amount. But never stop using it completely, because it leads to decreasing credit score.

Read about credit card habits that affect credit score.

Keep credit mix balance:

In the eyes of the lender, if an individual has only unsecured loans in his/her kitty then they view it negatively. Instead if they have a healthy mix of secured and unsecured loan then the risk is low for the lender. Keeping balanced credit mix helps to prevent negative impact on credit score.

Get CIBIL report once every 2 years:

If you have cleared all the loans/ended credit card, then verify whether CIBIL records have been updated or not. This is because, many times banks fail to update CIBIL about the transactions on time. And in the meantime if you apply for another loan/credit card and it gets rejected, then your credit score takes a hit. So always check CIBIL report.

Check tips on how to get CIBIL score.

Become guarantor, but be careful:

Generosity can be risky at times. If you become guarantor to someone and if that person defaults payment in the future, then the guarantor is the person lender will approach for making the due payment. And at the same, the credit score of guarantor will be impacted. So be careful when becoming guarantor whether you do it for your family member or friends.

Offer add-on card, but remember you are also at the risk:

If your credit score is good then lender often makes you eligible to apply for an add-on card in addition to the primary card you already hold. This card can be taken for your family member. But what many people do not know is that, in case of defaults made on add-on cards, the credit score of primary card holder also gets affected. So as mentioned above for guarantor, be careful for whom you are taking secondary card for. Credit rating agencies are emotionless and not at all generous like you.


Above mentioned tips are very simple. But still people do not take their credit repayment seriously or do not understand it’s importance. And they end up affecting their credit score. Good rating is extremely important for finance need. So always keep an objective of getting best score and achieve your dream.

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