Tips for maintaining a good credit score

Your credit history shows how you have previously handled debt. This history is reflected in your credit score, a three-digit figure that sums up your credit report's details and creditworthiness. Your credit score is calculated based on your credit history, which includes information such as the history of your payment history, the number of loans or credit cards you have used, and so on. Keeping a good credit score can have a crucial effect on your financial health, which means lower interest rates and easier access to loans and credit.

A good credit score depends on responsible credit usage over time. Here are some pointers to help you boost your credit score.

 

Prompt payment of bills

The most important thing you can do to improve your credit score is to pay your bills on time as payment history is the most vital component in evaluating your credit score. However, this includes paying all your bills, not just credit cards and loans. So ensure to pay all your bills on time to keep your credit score high.

 

Review your credit report regularly

Knowing what could work in your favour or against can help you improve your credit score. So keep an eye on your credit report for any errors as they can hurt your credit score. Carefully review them and contact the respective bureau immediately for clarifications. 

 

Keep old credit cards to maintain credit history

Your credit score is also affected by your credit history’s length. Therefore keeping old credit cards open can improve your credit score as they help you enhance the length of your credit history. So the longer you display good credit habits, the higher your credit score. 

 

Take one loan at a time

Borrowing multiple loans simultaneously is considered a sign of high credit risk. So, avoid taking multiple loans simultaneously if you want to keep your credit score intact. It is preferable to prioritize your needs, research various product offerings and find the best fit before applying for a loan. 

 

Avoid exhausting your credit limit

Avoid using your credit limit to the maximum, raising your credit utilization ratio, and lowering your credit score. However, if the expenses exceed the credit limit on the existing credit line, you can request the bank to increase the credit limit.

 

Avoid applying for a new credit card  

Applying for new credit cards leads to a hard enquiry where a credit card issuer assesses your credit report. This causes your credit score to get lowered by five or fewer points. Also, new credit applications account for 10% of your total score. If you want to keep your credit score high, avoid applying for new credit cards or loans unless necessary. 

 

Avail of at least one credit product

People with no credit history may also find getting loans in their names challenging. Even if they get approval for a loan, the interest rates offered will be higher than those available to people with a credit history. So, obtaining at least one credit line, such as a credit card, could be a feasible option for maintaining your credit history and increasing your credit score.

 

Contact your creditors if you encounter issues

If you run into financial difficulties that would impair your ability to pay your bills, you should contact your creditors right away. Often, you might be able to negotiate a lower interest rate, arrange alternate payment options, or otherwise mitigate the situation.

To sum up, if you want to improve your credit score, focus on lowering your outstanding amounts and maintaining a good credit history through prompt payment and mindfully handling your credit account. At BanqMart you can get competitive loans and the best credit card in Dubai for your requirements without impacting your credit score.