5 proven ways to raise your credit score from 580 to 800 | Mint

Raising your credit score from the high 500s to around 800 can easily unlock better personal loan terms and can also open up the gates for premium credit cards for aspirational applicants. Consistency in personal loan repayments, credit card bill clearance and efficient management of EMIs can also holistically assist borrowers in yielding major improvements in their credit scores within six to twelve months.

That is why to showcase your sincerity and honesty as a credible borrower you must ensure that you repay your loans and credit card bills on time. This practice when imbibed for years together helps in building the borrowers credit history.

In case you are a beginner then you should try to start small. Elaborating on the same, Aditi Singh, Chief Strategy Officer (CSO), Satin Creditcare, says “Start small; stay consistent. Even timely repayments on microloans can help develop a good credit history. Maintain low credit utilisation, avoid multiple loans simultaneously, and stay on top of your credit report to see solid and manageable improvement and opportunities. Take credit within your budget, don’t let your borrowings exceed your income.”

Keeping the above facts in mind, let us hence check out five proven ways that can be deployed by borrowers to improve their credit score from 580 to 800 in gradual fashion:

1. Missed payments can damage your credit score

Your payment history forms a major chunk of your credit score. That is why even one missed payment can adversely affect several years of good credit behaviour. To combat the same always ensure that you should align your personal loan or credit card bill repayments through auto debit.

Most of the leading lending institutions provide borrowers with this facility of auto debit of funds on a monthly or quarterly basis. This is done to ensure no pending payment is missed, and this simple step also helps in keeping the credit profile of borrowers healthy.

2. Focus on keeping your credit utilisation low

Your credit utilisation ratio i.e., the ratio of total balances divided by total credit limit, contributes a significant portion of your credit score. Professionals suggest staying under 30% of this limit. Though the 10 to 20% range provides stronger benefits.

The idea is simple, if you have a credit limit of ₹1,00,000 on your credit card then you should never use more than ₹30,000 i.e., 30% of this total available credit limit. This will ensure that lenders never see you as over reliant on credit. Further, requesting a higher credit limit without spending more or timely repayments helps in bringing down credit utilisation.

3. Maintain age and mix of credit

The length of your credit history and the mix of credit types you hold also play an important role in determining your credit score and keeping your overall credit profile sound. Given you should close your old credit accounts such as credit cards and personal loans that come with annual fees, otherwise try to keep accounts active to showcase lenders your willingness to struggle and manage repayments for years together. A diversity of credit i.e., loans such as home loans, personal loans, credit card bills among other such credit lines cumulatively demonstrate reliability.

4. Limit new hard inquiries

Every single hard inquiry is a massive negative for your credit score. Whenever you apply for a new personal loan or credit card, within a short period of time then a hard inquiry takes place on your credit profile. This can easily result in reduction of points from your credit score. That is why applying sparingly is always suggested and keeps the borrower in a positive light.

5. Dispute errors and monitor regularly

Credit reports often contain inaccurate entries. Entries such as duplicate data, unpaid loans, incorrect dates, missed payments wrongly listed. That is why disputing such errors can help you in restoring lost credit score points. Further, regular checks on your credit report through your credit bureau such as CIBIL, CRIF, Experian or Equifax can help in maintaining accuracy.

Hence, by following these prudent five strategies of, punctual payments, low utilisation, mixed credit, minimal inquiries and error correction, can assist borrowers in potentially lifting their score from 580 to 800 in a six to eight month period.

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Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit, as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.