To qualify for the best interest rates and

How to Fix your Credit Score


A credit score is an
evaluation of a customer’s creditworthiness, based on one’s credit history. A
good credit score can help you qualify for the best interest rates and terms
when you need to borrow money.

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The Fair Isaac
Corporation (FICO) has defined ranges for credit score:

1.    Excellent – 750+

2.    Good – 700 to 749

3.    Average – 650 to 699

4.    Below Average – 550
to 649

5.    Bad – 550 and below

Things that
negatively impact your credit score:

out credit cards

public records like bankruptcy, foreclose, etc

a victim of identity theft

Here are several ways
you can fix your credit score:

Check credit report:

The first step
towards fixing your credit score is to go through your credit report
thoroughly. It’s easy to check your credit reports; you’re entitled to a free
copy, once a year, under the Fair Credit Reporting Act. This is because it
contains information that is used to calculate our credit score and there’s a
possibility of errors. Check for any payments that are incorrectly listed for
any of you accounts and verify the outstanding amounts for every open account.
In case you come across any errors in the report, resolve them with the credit

Stay under the credit

The easiest way to keep
yourself below the credit limit is to make numerous small payments – also called
micropayments – to keep your balances down. You can also opt for a higher credit

Credit Ratio:

Credit Utilisation
ratio is an important method of calculating your credit score. It’s obtained by
the dividing sum of your credit card balances with the total credit available
to you. A ratio of less than 30% is ideal to apply for new loans if required. A
low ratio is a sign that you haven’t spent over the credit limit and you know
how to manage your expenses.

Touch base with collections

If you have small
dues and you don’t mind paying them immediately, call the collection agency and
request for a “Pay for delete” – you
pay the amount owed and they remove the negative balance from your credit
report completely. Remember to collect a “pay for delete” written letter from
the agency showing that they’ve agreed to go through with the process.

Avoid late payments:

One of the biggest
contributors to a bad credit score is delayed payment. Missed payments stay on
the report for a minimum of 7 years. Make sure you make timely payments towards
all your bills. One way to keep late payments in check is to setup reminders on
your phone. You can also setup reminders through online bank portals which send
you email and text reminders about outstanding payments. You can also have a
standing instruction with your bank to make out payments on your behalf.

Reduce your dues:

The best way to fix
your credit score is to stop or reduce using credit cards. Maintain a constant
credit equal to or under 10% available credit. 
Using the entire limit (or even close to it) will increase the credit
ration and therefore hamper your credit score.

Obtain a secured
credit card

A secured credit card
is linked to your savings account and will be an efficient way to build your