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Yes, it is very much possible to improve your credit score in a matter of months and become eligible for loans. However, nothing will change at all if you only sit on the couch and worry! All you need to do is to follow some simple tips, and make sure you consistently follow these steps till you achieve your desired score. These tips can push your score in the right direction.

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  • Pay your bills on time: Making even a single late or partial payment or skipping a payment altogether, has a negative effect on your credit score. Paying off all your bills on time and in full is a major contributor to a good credit score. Even if the amount you owe is small, the consequences for your score are big.
  • Keep your credit balances low: Make sure that you don’t exceed more than 50 % of your credit limit. This helps you to keep your credit utilization ratio (the proportion between your actual spending and your credit limit) at a lower rate and has a positive impact on your score. For example, if your credit limit is Rs. 1 lakh, make sure that you do not exceed a monthly bill of more than Rs. 50,000. A bigger credit utilisation ratio implies lack of spending discipline.
  • Apply for new accounts only when needed: Make sure that you don’t open too many new credit accounts. Every time you apply for credit (whether a loan or credit card) it results in an enquiry by lenders. Multiple enquiries in your credit report reflect that you are ‘hungry’ for credit and may not be able to fulfil your debt obligations.
  • Remember to pay your dues in full rather than paying the minimum amount for your credit cards.

How long does it take to rebuild my credit score?

There is no fixed time for rebuilding your score. Naturally, the lower your score, the longer it will take. A credit score of 750 is seen as the minimum required in order to have a good chance of qualifying for loans and avoiding rejection.

On average, it takes 4-12 months to reach a stage where you can become loan-eligible. If your score is between 650 and 700, it will take a few months to reach 750. If your score is less than 650, it will take more time.

There is no overnight quick fix for improving your score. Just like your health report, it takes some patience, change in habits, and self-discipline to see results. Once you achieve a good score, the rewards are life-long.

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