Ways to improve your credit score

September 15, 2014 . FundsIndia Desk

This article is a contribution towards our financial literacy series. It has been written by a specialist in credit and debt counseling – Satish Mehta, Founder and Director of

credit-scoreYour credit score – a 3 digit number can make or break your financial dreams for it is a reflection of your past payment behaviour.

Credit scores have gained importance in recent years. Lending institutions evaluate your credit worthiness based on your credit score, which helps them estimate the likelihood of the repayment of a credit facility based on your past patterns of credit usage and loan repayment behaviour.

Higher the score, higher will be the confidence of the lending institution in you and hence, better the chances of your credit application getting approved. Generally, in India, a credit score of more than 750 is considered to be good.

Just like the famous phrase – ‘Rome wasn’t built in a day!’, you gradually build your credit score too. Here are some essential steps that would lead you to your goal of a good credit score:

1. Ensure your credit report is error free – Check your credit report periodically (at least twice a year) to ensure it does not contain any erroneous data as that can hurt your credit score. If you find any errors on your credit report, make sure that you contact the credit bureau, or the lending institution, to correct this error. Ideally, you could also check with your credit counsellor and seek expert advice.
2. Pay off your debts – Setting a realistic plan to repay your debts is a good step. Minimizing the outstanding debt will help improve your credit score.
3. Timely repayments of your EMIs – Payment history influences almost 35% of your total credit score. Hence, it is an important factor that determines your overall credit score. Be consistent and have a responsible approach towards your repayments. Always pay on TIME!
4. Less credit cards and low usage – Be prudent with the number of credit cards you own. Credit utilisation on each credit card should ideally be about 30-40% of your credit limit. So make sure you make prudent use of your credit cards.
5. New credit purchases – Ensure that you apply for credit only when you require it. Your applications for a credit facility result as ‘enquiries’ on your credit report and stay there for 7 years. A high number of ‘enquiries’ could have a negative impact on your credit score.

A credit score is based on your credit history and behaviour built over the years. These 5 simple ways are your first steps to build a good credit history and improve your credit score. Be prudent for it’s your financial health.


Satish Mehta is the Founder and Director of – a credit and debt counselling company that provides end to end customized counselling to individuals by handholding them through their credit life cycle.

2 thoughts on “Ways to improve your credit score

  1. Hi, great article. I read recently that cibil identity theft has become common these days. This scares me a lot, is there a way to avoid them?

  2. Hi, great article. I read recently that cibil identity theft has become common these days. This scares me a lot, is there a way to avoid them?

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