7 Tips To Increase Your Credit Score

Your credit score is your financial reputation, whether you’re planning for retirement, buying a dream home, life insurance or securing a loan, a good credit score opens doors to better financial opportunities. If you’re wondering how to increase your credit score, here are seven simple yet effective tips to improve it.

1. Pay your bills on time, every time

Payment history is the base of your credit score. Missed payments can greatly reduce your CIBIL score, whereas consistent and timely payments show that you are financially disciplined. Just create reminders or automated payments for your loans and credit card payments and make sure that you never miss a due date again.

Pro tip: Stay on top of your payment schedules because a single late payment will have an effect on your CIBIL rating.

2. Limit your credit utilisation

Credit utilisation refers to the amount of credit you’re using compared to your credit limit. Aim to keep your utilization below 30% of your total credit limit. For example, if your limit is Rs 1 Lakh, try not to exceed ₹30,000 in outstanding balances.

Pro tip: If you are almost at your limit, pay that amount off before the billing cycle ends to lower your utilisation ratio.

3. Don’t apply for credit too often

When you apply for a loan or a credit card, an inquiry is going to be put to your credit report. Multiple credit inquiries can decrease your CIBIL score. So, it’s best to apply for new loans only when necessary.

Pro tip: Instead of applying for multiple credit cards at one go, focus on managing one or two cards really well.

4. Check your CIBIL score periodically

Monitoring your credit report keeps you updated about your financial health. At times, discrepancies such as unrecorded payments or wrong data can lower your score unfairly. Checking your CIBIL score periodically ensures that your report is accurate and you have a clear view of everything.

Pro tip: You can request one free credit report each year from credit bureaus. Make it a routine to check it every year..

5. Do not close old accounts

The length of your credit history is taken into account when calculating your credit score. Old accounts, especially those which are in good standing, give an impression of your long-term creditworthiness. Keep your old credit cards open even if you do not actively use them any longer.

Pro tip: Keep old accounts with zero balances open to lengthen your credit history and maintain a strong CIBIL score.

6. Dispute errors on your credit report

Errors in your credit report-such as unrecorded payments or wrong account details-can pull down your score. If you notice any errors while reviewing your report, file a dispute with the credit bureau immediately. Fixing such mistakes often leads to an instant score boost.

Pro tip: Take photos of your payments and all the communication as this might help when disputing some errors.

7. Build Credit Responsibly

If you’re new to credit, consider options like secured credit cards or becoming an authorised user on someone else’s account to build a credit history responsibly. Use credit sparingly, making small purchases you can easily repay, and always pay off balances in full to avoid interest charges. Over time, these habits will help establish a solid credit foundation.

Why do good credit scores matter in life insurance?

Whether you’re a working professional planning for retirement or just starting your career and wanting a term insurance plan, your credit score serves as a crucial foundation for your financial future. For individuals with good CIBIL ratings, securing loans and purchasing insurance can be significantly easier. Insurers view good credit scores as indicators of responsible financial behavior, which helps them assess risk more accurately.

Additionally, a solid credit rating fosters trust, allowing insurers to simplify requirements, such as income proof and expedite the issuance of policies. It’s important to note that while CIBIL scores are considered during the insurance application process, being a reliable customer can also contribute to improving your credit score over time.

Take charge of your credit today

It takes time to build and maintain a strong credit score, but the rewards you reap for it are worth it. Follow these tips and watch as your CIBIL score increases as you plan for a financially secured future.

t’s never too late or too early to take control of your financial health. Start with smart financial steps like improving your credit score or investing in Kotak Life Insurance as the first step toward a secure and stress-free future.