Building a credit history from scratch can seem daunting for a first-time Credit Card applicant or user. However, if broken down into smaller steps, it is rather easy to maintain a good credit score.
To help you build your credit score from scratch, here are some insightful tips for meeting Credit Card eligibility requirements when you apply for a Credit Card. Read on to learn more about which factors affect your credit score.
5 Ways to improve your credit score and meet Credit Card eligibility
1. Start small
Your credit report consists of repayment histories and pending or missed payments, which together make your credit score. To start building a good credit score, you will need to have at least 6 to 12 months of consistent and timely repayments.
So, you can start small, such as buying a mobile phone using your Credit Card or spending money on household items. However, plan your expenses carefully through your Credit Cards by only spending the amount you can easily manage.
2. Maintain a low debt-to-credit ratio
Your debt-to-credit ratio, also known as credit utilisation ratio, is an indicator that gives insight into your spending habits. This ratio is calculated based on the credit borrowed and the total credit limit. Ideally, the credit utilisation ratio should be within 30%.
If the ratio is always above 30%, it indicates that you borrow more than your limit. To tackle this, try increasing the limit of your Credit Card or reducing your dependency on the card.
3. Pay bills on time
Paying bills on time significantly impacts your credit score. Timely payments affect your credit report positively, demonstrating your reliability as a borrower.
Automate payments or set up reminders to ensure you never miss a due date. Consistently paying your bills on time will steadily build a strong credit history and help you meet credit card eligibility criteria.
4. Monitor your credit report regularly
Checking your credit report regularly enables you to be aware of your credit status and spot errors right on time. Knowing them earlier gives you an advantage in fixing them before they give you disruption when you apply for a Credit Card online.
You can request a free credit report from major credit bureaus periodically. Review the report carefully and raise discrepancies to keep your credit score accurate and up-to-date.
5. Make financial plans and budgets
A clear financial plan will help you understand your financial goals and keep track of your income and expenses. Additionally, it will help you create a roadmap to plan your expenses using various financial tools and help manage your debt wisely.
Having a plan in hand will help you gain confidence in your financial situation and align your finances according to your goals. It will also aid in developing healthy spending habits and secure an instant Credit Card online.
Conclusion
Building a steady, strong credit score takes time and consistent effort towards planning and managing your expenses. To improve or build your credit score from scratch, you can start simply by paying your bills on time and planning small expenses via Credit Cards.
By following the tips shared in this article, you can meet Credit Card eligibility criteria, secure an instant credit card online and secure financial stability in the future.
