How to Go from Average to Good Credit in Just 6 Months

A strong credit score is like a good reputation; it can make you or break you. It proves to lenders that you are responsible and dependable. It can save you a lot of money and headaches to get personal loans, car loans, and other financial products. But what if you simply have an average below average, or even a very bad score? Is it possible to fix it?

The good news is yes! You absolutely can increase your credit score. It takes a little bit of effort and a good deal of discipline, but you can make an enormous difference in 6 months. That’s where we come in. This blog will provide you with a straightforward step-by-step program on how to move your credit into the “good” zone.

Step 1: Know Your Score and Find the Problems

You can’t fix a problem if you don’t know what it is. The first step is to check your credit score. In India, a score of 750 or higher is considered very good. A score below 700 is usually considered average or low.

• Check for Free: You can check your credit score for free on many websites. This will give you a clear idea of where you stand.
• Look at the Report: When you get your score, you will also get a report. Read it carefully. Look for any mistakes, like a loan you already paid off that is still showing up as open. If you see any errors, you need to get them fixed right away. This alone can sometimes improve your score.

Step 2: Pay All Your Bills on Time

This is the most important step of all. It is the number one thing that lenders look at. It can affect your score more than anything else.

• Pay Everything on Time: Ensure that you pay all your loan EMIs and credit card bills on or before the due date. One late payment can ding your score significantly, and it can hang around on your record for a long time.
• Set Reminders: The number 1 way to ensure you never miss a payment is by setting a reminder on your phone, or better yet, setting up an automatic payment from your bank account. That way, you don’t even have to wonder. If you already have a loan, even a ₹4,000 instant loan for that matter, ensure that you are keeping up with all your payments. A very important step to get a good credit score for a personal loan or any other future loan.

Step 3: Keep Your Credit Usage Low

This is a big one that many people don’t know about. Your credit usage is the amount of credit you are using compared to the total credit limit you have.

• The 30% Rule: You should try to keep your credit usage below 30%. For example, if your credit card has a limit of ₹10,000, you should try not to use more than ₹3,000.
• How to Fix It: If your usage is high, focus on paying down your credit card bills. You don’t have to pay them all at once. Even if you pay a few hundred extra once a month, any kind of excess will reduce your balance and lower your relative debt usage ratio. A low ratio indicates to lenders that you’re responsible with money and aren’t tapping out all the credit available to you.

Step 4: Avoid Applying for New Loans

When you apply for a loan or a credit card, the lender checks your credit report. This is called a “hard inquiry.”

• Too Many Inquiries Look Bad: If you apply for many loans in a short time, it looks to lenders like you are desperate for money. This can bring down your credit score.
• Just Wait: During your 6-month plan to fix your credit score, you should try not to apply for any new loans or credit cards. Focus on doing the right things with the credit you already have. This is a key step to building a good credit score for a personal loan in a short time.

Step 5: Have a Mix of Credit

Lenders like to see that you can handle different types of loans.

• What’s a Good Mix? A good credit mix means you have different kinds of loans, like a personal loan and a credit card. It’s a sign that you’re a savvy, experienced borrower.
• Start Small: If you have no credit, take a small loan from a responsible lender. One of the best ways is to borrow a loan and repay it on time, such as through an instant ₹4,000 loan. Stashfin is a good start to build up a proper credit score with a responsible loan.

Conclusion

Your credit score is extremely important to your financial future. It can seem like a monumental thing to fix, but if you do these small things, the change can be made in six months. Pay all of your bills on time, keep a low credit utilization rate, and don’t apply for too many new loans. By staying disciplined and sticking to this plan, you can build your credit score on a path that will enable you to borrow the money you need at better terms in the future.

FAQs

Q1. How much can my credit score go up in 6 months? 

By making on-time payments and reducing your debt, you can see your credit score go up by 50 to 100 points or more in just 6 months.

Q2. Does a good credit score guarantee a loan? 

No, it does not. A good credit score is very important, but lenders also look at your income, your job, and your other loans. However, a good score gives you a much higher chance of getting approved.

Q3. Is it okay to close an old credit card? 

No, you should not close an old credit card. Keeping old accounts open helps increase the length of your credit history, which is a good thing for your score.

Q4. Can I improve my credit score by just checking it often? 

No. Checking your credit score often does not improve it. But it is a good idea to check it from time to time to make sure there are no mistakes in your report.