It is not very simple to form and maintain a strong credit score. If your score becomes poor, improving it takes time and effort. Although using the credit card in a disciplined manner is a prudent way to ameliorate your score, this is not just the sole way. There are several other mediums to ameliorate your score. Read here to understand ways to form a good credit score without using any credit card.
However, note that if you use a credit card, then it would allow you to enhance your score quickly over time. This means, if you do not have a score, then you can apply for a credit card, say IndusInd Aura Edge credit card. Once you apply, ensure to check the IndusInd bank credit card status to know when the card would be processed. After the credit card is processed, use it well in a disciplined manner to build your score. However, what should you do if you don’t want to avail a credit card but still you want to increase your credit score. Here’s what you should do, read on.
Credit score and report
Credit score
This is a three-digit numerical representation of your past credit record. It shows your credibility. The score is dependent on your payment history and your past credit record. Lenders consider your past repayment record as an indicator of your repayment potential.
Credit score plays a crucial role in providing you a loan and approval on credit card. This is particularly true in the case of unsecured loans as well as credit cards as they do not have any security or asset backed on them.
Credit report
Credit bureaus ensure to keep continuous track of your credit and generate your credit standing in numerical format between 300 and 900 known as credit score. Have you ever thought of what goes into building your credit score? Any missed out credit actions that can boost your score and any mistakes that can result in a fall in your score must be corrected instantly.
Read on to know top five keyways of forming a good credit score with zero need of a credit card –
Avail a small loan at NBFC or bank –
If you hold a strong relation with NBFC or bank, then you can simply borrow the loan from the financial institution. Ensure to borrow it as per your repayment potential. Repaying the small loan will assist in forming your score but ensure to repay timely. In the case you default on any repayment, it may have a bad impact on your score.
Ask someone to include you as a user –
If you are aware of someone, you can then request them to include you as a user, who is authorised. In this manner, you can make the most out of the timely repayments of the account owner. His strong score will even impact your score, which would get built. However, it can even be the opposite round. In the case you default on making the repayments, negative impact on your score can have a bad impact on your score.
Apply for secured credit card –
You can place an application for secured cards. Such credit cards basically are secured against fixed deposits. Hence, you can get the cards approved with ease than unsecured credit cards. Also, the credit card limit that you may get can be equal to the deposit value or 80-90 per cent of the deposit value. For example, if your FD equals Rs 60,000, you can get a card with a limit equaling Rs 60,000 or 80-90 per cent of it. Pay your card bills timely with secured cards. Doing so can allow you to form your score. Secured cards show your credibility. You can even avail automatic upgrades to unsecured cards or may even request for unsecured credit cards with a good credit score.
Availing peer to peer loans
Peer to peer loan is known as P2P lending. This is just an alternative means of funding, which permits you to avail loan from others via online lending platforms. In the case you are not able to avail the loan from your financial institution, you can always avail from an NBFC or bank.
Such loans provide a higher rate of interest to you as a borrower with short credit past record or low score. However, they can also be utilised for forming your score as such peer-to-peer lending podiums report the bureaus directly. Just make sure you are not borrowing higher funds than you require or wasting it on purchasing unnecessary products or services.
Ending note
In the case you follow any one of the ways as mentioned above, then you can form a strong score. It is important to always conduct your payments timely as a few payment defaults can result in a bad impact on your score. So, post forming your score, in the case you mistakenly or purposely default in making payments, it can waste your effort that you took in forming a good credit score.
Frequently asked questions –
How can you ameliorate your score?
There are many ways to ameliorate your score. These include checking out your report periodically, repaying your dues on time and in full, keeping a balance between secured and unsecured credit options, timely checking your credit report, and taking the correct measures to improve your score in the case of any issue.
What’s the important thing you must factor in to form your credit?
Paying your EMIs and credit card dues timely and in full can allow you to build your score. Loan lenders and credit card issuers report your repayment behaviour to the bureau every thirty days. So, make sure to timely make repayments of your credit deals in full to build your score.
How long can it take for you to recover your low credit score?
There’s no specific timeline to recover your low score. It may take months to even years. Just remember to be financially disciplined to build a good score.