Are you considering applying for a new credit card but find it challenging to achieve a sufficient credit score to qualify? You are not alone in this situation; it is a common issue faced by many individuals.
A variety of factors may contribute to a low credit score, commonly referred to as a CIBIL score. Identifying the underlying reasons allows for effective remediation. The initial step is to obtain your credit report and identify any inaccuracies present.
It is possible that you overlooked the payment of your credit card bill or neglected to pay your loan EMI. Alternatively, you may have recently begun earning and have not yet established a robust credit score. However, there is no need for concern.
We present several recommendations that you may consider implementing to enhance your credit score prior to submitting an application for a new credit card.
These are 6 key ways to improve your credit score:
- Timely payment of your outstanding bills is essential: Late payments can significantly impact your credit score. Therefore, it is advisable to ensure that all bills, including those for credit cards and loans, are paid punctually.
- Minimize new credit inquiries: Each time you initiate a new credit inquiry, your credit score experiences a slight decline. Therefore, it is advisable to refrain from making new credit inquiries unless it is absolutely necessary.It is not advisable to assess your loan-seeking capability solely out of curiosity, as doing so can have a negative impact on your credit score.
- It is advisable to keep old credit accounts active: The duration for which an old credit account is held positively impacts your credit score. Even if an old credit card is not in use, it is generally not recommended to close it. Consequently, it is crucial to recognize that closing an old credit account can adversely affect your overall credit limit.
- A secured credit card is a type of credit card that requires the cardholder to deposit a sum of money as collateral, which serves as security for the credit limit. This method is highly regarded as an effective means of establishing a solid credit history.
- Minimize your credit card debt: It is advisable to maintain your credit card debt at or below 30 percent of your total credit limit in order to achieve an optimal credit utilization ratio. For example, if your credit limit is ₹10 lakh, aim to keep your credit card debt at or near ₹3 lakh.
- It is essential to review your credit report periodically, specifically at least once annually. By examining your credit report, you can identify any inaccuracies and take the necessary steps to correct them.
It is important to emphasize that these recommendations are merely suggestive and not comprehensive. There may be additional effective strategies that could be more suitable for your situation, potentially aiding in the enhancement of your credit score prior to applying for a credit card.
