How I Raised My Credit Score By 250 Points

I had already unfolded the climax in my previous blog, on how I was being denied higher education due to my own credit mistakes. This blog is essentially the return of the hero who fights with bad credit and lives happily after with a great credit score.

850. That was the number printed on my latest CRIF Credit Report. Read ahead to know – How I Raised My Credit Score By 250 Points.

Credit Score = Trust?

One of the premises of a civilization or society is its need for safety. It is because of this need for safety from the wild did the early human start forming communities. Humanity has evolved and advanced a lot from them, but the basic need for safety is perennial. It is very important to have those few trustable companions or entities who make us feel safe.

Since the age of the Kings and the Landlords, the practice of lending also pivoted around the similar element of trust. Lending has transformed from being a local, personal referral based activity now into a very large industry backed by digital systems and a sense of trust emanating from the use of data sciences. The industry allows instant lending and peers to digital peer-to-peer lending on basis of data-backed trust that the person taking the credit will pay back after the pre-defined time. This data-backed trust comes from the “credit scores” provided by the Credit Bureaus by understanding behavioral patterns from the millions of records of individuals such as you and me.

I realized that I had to improve my credit score from 500 so that a bank can begin trusting upon me to repay its money. In my quest to improve, I began analyzing my credit report against the five major factors that form the basis for a credit score. And voila, I had devised a clear plan of action to seize control of my credit situation-

  • Payment History : my credit report clearly reflected my negligence around making payments towards my credit card dues. I would generally pay up money only after many follow-ups from the credit card companies, perhaps this was one of the most important factors barring me to pursue my dreams. I immediately cleared pending dues on all of my credit cards and vowed to now pay full dues at least 3 days prior to the due date.
  • Age of Credit : I had 4 credit cards. Since now I have to pay on all cards in time, I decided to close 3 of these cards. I decided to maintain the oldest credit card I had, as the higher age of credit means a better credit score.
  • Credit Utilization : The average spend on each of these 4 cards was nearly 80% of the assigned credit limit. This meant that the credit utilization ratio was 80%, which ideally should be 30-40%. The credit card I chose to retain was linked to my salary account. My banker helped me get the credit limit of this card increased. This enabled me to enjoy higher credit just with one card, but have a low utilization. I crossed my heart to not use above 25% of the allowed credit limit at any point.
  • Type of Credit : I pledged to explore a car loan (secured loan) and diversify from just having credit cards (unsecured loans). And the next year when I had a slightly better credit score, I took two additional loans, one for buying a car and the other for buying a laptop and paid them off in the same year. This allowed me to add different types of credit as well as provide better evidence of my credit behavior.
  • Number of Credit Inquiries : This did not seem to be a problem for me, however, I have since then avoided unnecessarily applying for credit cards or loans.

12 months of discipline had helped me improve my score from mid 500s to 670, it helped me get a car loan — but it wasn’t enough to help me fulfill my dream. After another six months of care, my credit score was above 750 and I was packing my bags to leave for an MBA. All I needed was a basic understanding of credit score and discipline to follow my plan. Last month I repaid my education loan but still continue to follow the rules I set for myself 5 years ago. As you read my story, let me tell my credit score as of today stands above 850.

Today, in parts of the world, your credit score can stand in your way of getting accepted as a tenant, employee or even spouse. Hence it is becoming paramount to manage your credit score to maintain your credibility not just for getting loans but for fulfilling your dreams.Don’t let your ignorance hamper your dreams.

Get Educated and Educate Others. Journey to happy credit starts here CRIFHIGHMARK CREDIT REPORT

About the Author: Subhankar Mishra works as Service Delivery Manager at CRIF High Mark, India’s largest Credit Bureau database.

How Often Should I Check My Credit Score? – What’s The Myth? What’s The Truth?

Credit Score is one of the most important factors of your financial credibility and often people are confused about various things related to it. ‘How to check score?’ ‘When to Check Score?’ ‘How many times should you check it in a year?’ are some of the most commonly asked questions. It is important to know your answers, know the truths and myths behind them.

Firstly, answering the most frequently asked question, ‘How often should I check my credit score?’ The answer is you can check it however often you wish to. It is a common myth that checking your own credit score frequently has a negative impact on your score. There is some negative impact on your credit score if you apply for new loan or card very often or with many banks at the same time, as the banks would make as many ‘credit inquiries’ with the credit bureau. With high number or frequent ‘credit inquiries’, the credit bureau believes that you are desperate to get a fresh loan, therefore, considers that behavior negative.

Having said this, it is not necessary to check your credit score all the time or every day. Let’s guide you through the ‘how’ and ‘when’ to help you determine the right time to check your credit score.

Who Should Check Credit Score?

A credit report is generated only when you own a credit card or have a loan taken in your name. Credit scores are calculated from the credit report. Therefore, whoever meets the above criteria is likely to have a credit score. All such people should certainly and regularly check their credit report and credit score.

What If You Never Had a Credit Card or Loan Before? When you have not borrowed in the past or have never had a Credit Card or a loan, there will be no updates about you with the credit bureau, who mark such cases as NH or ‘No History’. Due to a lack of details, the credit bureau will be unable to comment on your payment behavior. In such cases, we advise to start building your credit score and checking it once a year. For more details , you could visit our blog What do banks see when they look at your credit report?

When Should You Check Your Credit Score?

When to check credit score completely depends on your comfort level and your credit activity. Checking your credit score once every quarter is perfect but people often check it twice a year or even monthly at times. The credit score should be checked and the credit report reviewed at least once in a year that’s a minimum!

It is important to remember that checking your credit score on your own does not impact the credit score at all, even if done very often. In fact, keeping a track of your credit score frequently makes sure that you are aware of your creditworthiness, you are taking informed decisions about your credit, and you have a clear picture about when and how to maintain your credit score. A quick reminder, avoid focusing too much on the day-to-day changes and try to identify the overall trend in your credit score. Below are some reasons why you might want to check your credit score or credit report:

1. Before applying for a new credit card or loan such as housing loan, auto loan to avoid any surprises
2. While building or improving your credit history to keep a track of your credit scores.
3. After settling off or closing a loan to know if the updates were made

When Not to Check Credit Score?

There is no such time when to avoid the credit score. The importance of credit score has been talked about in every other financial article. It has to be a part of your yearly routine at least to stay updated and informed.

Even when you have good credit score, it is important to keep an eye on any drops in score or inaccurate information on your credit report and to ensure that it is maintained above acceptable thresholds. If it is on the lower end, make sure you change your habits and take conscious steps to bring it up. Also, minor changes on your credit report or credit score should not be a cause of concern as these are expected to happen. So checking credit score daily can be avoided.

How to Check Your Credit Score?

There are various online websites which give you credit score, but the source of such credit scores would be one of the four RBI regulated credit bureaus such as CRIF. When it comes to finances, you ought to trust the expert and give importance to data security.

One of the trusted way to do so is check it from CRIF, a RBI regulated credit bureau. You are entitled to check a credit score and credit report FREE once in a calendar year from CRIF. Checking your credit score is easy three step process – fill your personal details, confirm your identity and download the https://blog.crifhighmark.com/wp-admin/tools.phpreport.

There is no right time or right day to start keeping a track on your financial credibility. Informed or Unaware, choose wisely