Financial Health: Tips for achieving a credit score of 800 and above

financialexpress.com:

Credit score plays a pivotal role in determining an individual’s financial health and access to credit. This score serves as a numeric representation of a person’s creditworthiness, based on their credit history and financial behaviour. One of its primary significance lies in its role in determining eligibility for various forms of credit, including loans, credit cards, mortgages, and even utility services.

Lenders use credit scores as a key factor in assessing the risk associated with lending money to an individual. A higher credit score signifies a lower risk borrower, which often translates to better loan terms, lower interest rates, and higher credit limits. A low credit score may result in limited access to credit or higher interest rates, making borrowing more expensive. Maintaining a healthy credit score is essential for financial stability and access to various opportunities.

Building a credit score of 800 requires diligent effort. Here’s a step-by-step guide to help you achieve this goal:

If you cannot pay the entire dues, at least pay the minimum. Avoid missing even a single payment and that will positively impact your credit score. Automate your credit card payments and clear your dues before the deadline. Avoid making late payments.

Also Read: Invest in mutual funds or prepay your home loan?

A high credit utilisation ratio (CUR) moderately hurts credit score. What is CUR? It is the percentage of your available spending limit in a month. Let us say you had two credit cards, each with a spending limit of Rs 1 lakh. You spent Rs 55,000 on one card and Rs 75,000 on another. Your total spend is Rs 21.3 lakh out of a total limit of Rs 2 lakh, so your CUR is 65 per cent. This is very high. It will pull your score