If you want to improve your credit score, it will require your time and patience. However, a low credit score can be easily improved by applying a correct approach in getting it increased. There might be various reasons why your credit score is low. It can be due to any of the reasons such as poor payment track record, high credit utilization ratio, errors in your credit report, etc.

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How much time does it take to build your credit score?
Building a credit score can be easy for those who have never defaulted on their payments and have been prudent in repaying the loan. People who have consistently failed in making payments on time and have not been disciplined in repayments may find it tough to build their score.
It can take anywhere from six months to a year, in general, to rebuild your damaged credit score. If your credit score is around 750 and you take proper measures to build your credit score, you may see a positive impact in six months and a higher credit score by the end of the year. However, the time required for rebuilding your credit score varies on a case to case basis.
It is thus recommended that you follow measures to improve your credit score beforehand so that you have a pretty good score when you actually need a credit product. It is worth mentioning that lenders prefer those applicants who already have a very good score, preferably above 750.
Important Measures To Improve Your Credit Score
Following measures must be taken into consideration to improve your credit score:
1. Improving Payment History
By regular and on-time payments of credit card EMIs and loans, your payment history gets improved that eventually results in an increase in your credit score. Even if you miss a single payment of credit card or loan EMIs, your credit history gets hugely impacted which results in the fall of your credit score. Thus, an improved payment history plays the most vital role in building your credit score.
2. Lowering Credit Utilization Ratio
Credit Utilization Ratio is an important factor that influences your credit score. To maintain a good credit utilization ratio, it is advised to use less than 30% of the total available credit limit.
Even though using the credit limit in the range of 60-70% may not have an impact on credit score but maxing out your card having a high CUR in the range of 90-100% often may impact your credit score negatively.
Therefore, to avoid the expense burden on one single credit product, it is better to divide the burden by availing multiple credit lines, as it helps in reducing the credit utilization ratio in near future.
3. Maintaining Good Mix of Credit
Mix of credit can be maintained by availing more of secured loans, as compared to unsecured loans. Secured loans, such as home loans or car loans, help to increase the credit score as they are termed as long-term appreciating assets. As the repayment tenure is higher for home loans, it becomes evident that the borrower shall be making regular payments for longer duration to the lender, which will help in maintaining and balancing the credit score.
4. Avoiding Closure of Older Accounts
Most people have this misconception that closing the less functional or old accounts may help in increasing their credit score, which is false. So, it is always recommended to not close your old accounts or old credit cards, as it negatively impacts your credit score. Older accounts show your long-term association and connection with the banks or NBFCs (Non-Banking Financial Companies), which is considered good by the credit bureaus. This further helps in the improvement of your credit score.
5. Regular Monitoring of Credit Report
Keeping a regular track of credit report is an important practice in maintaining and rebuilding credit score. There could be instances of incorrect or inaccurate personal information being present in your credit report, which is supposed to be immediately reported to the credit bureaus by submitting disputes. Error-free credit report can further be checked for managing personal finances and to avoid being a victim of identity theft.
6. Not Applying for Multiple Credits
Applying for multiple credit products at once depicts you as a credit hungry person, and this credit hungry behaviour is immediately tracked by credit bureaus which further leads to fall in the credit score. Therefore, avoid applying for multiple credit products at once. Even banks and NBFCs doubt in giving approvals to such applicants, as they find a person at high risk who may be unable to pay the loan amount on time and incur losses for the lender.
Also Know: How can I check my credit score for free without affecting it?
