Loans and credit cards have become essential financial tools for many people. These credit facilities allow you to meet expenses without depleting your savings. You need to remember that one of the key factors that a financial institution considers while evaluating your loan application is your credit history.
In particular, it is your credit score that is a decisive factor for availing a loan or a credit card. By building a good credit history, you can increase your chances of getting a loan or a credit card, that too, with good terms and conditions.
If you are looking to build your credit history fast, here are some tips you can follow:
5 Tips To Build Credit History Fast
Get A Secured Credit Card
You can open a fixed deposit and use it as collateral to apply for a secured credit card. These are easier to obtain even if you have no credit history, as the fixed deposit acts as collateral. You could opt for cards with low credit limits to avoid overspending.
Use your credit card for small, regular expenses and pay off the balance on time to demonstrate responsible credit behaviour.
Take A Consumer Durable Loan
You can take a consumer durable loan to purchase products such as a smartphone or a household appliance. Repaying these loans on time builds a positive repayment history, which is reported to credit bureaus like CIBIL, TransUnion, or Equifax. It is important to opt for a loan amount you can comfortably repay.
Pay Utility Bills And EMIs On Time
Timely payment of utility bills, such as electricity, mobile, or broadband and equated monthly instalments (EMIs) for loans can positively contribute to your credit history. Ensure you never miss the deadline to make such payments.
Monitor Your Credit Report Regularly
Credit bureaus like CIBIL, Experian, and Equifax maintain your credit history. Regularly checking your credit report ensures accuracy and helps you track your progress. A clean credit report with no errors reflects positively on your financial discipline.
Keep Credit Utilisation Ratio Low
The credit utilisation ratio is the percentage of your total available credit that you’re currently using. Even as you try to build your credit history fast, it is vital to keep your credit utilisation ratio low, preferably below 30%.
To conclude, you need discipline and need to make smart choices to build your credit history fast. Paying your EMIs on time and monitoring your credit report are some of the things you must do to build a good credit history within a short period.
. Read more on Personal Finance by NDTV Profit.Your credit score is an important consideration for a financial institution when you apply for a loan or a credit card. Read MorePersonal Finance
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