How to increase your Credit Score in 2024?

Credit scores play an important role when you need credit. As to run a business or for personal reasons, you may need credit immediately to purchase something. When you apply for credit at any company or bank, they will perform a hard credit inquiry on your credit file. So they can check your credit score, and whether you are capable of paying the loan or not.

So credit score is a thing that you have to maintain for a good financial life. If your credit score is in good range, then well and good. If not? Don’t worry, this article will help you boost your credit score in 2024. There are many ways to repair your credit score in Malaysia. A bad credit score is not a thing anymore!

How important is it to have a good credit score at the bank?

Are you starting a new business and you want credit? If any emergency happens to you, so you apply for credit from any Malaysian Bank. What they will first do? The bank will first perform a hard credit inquiry to check your credit score. A credit score tells your worthiness to get a credit. Other than applying for credit, if you want a credit card, the bank will also check your credit score. 

According to FICO scores, Credit scores range from 300 to 900. If your credit score is between 300 to 550, then it’s considered a bad score and your credit application will be denied. 550 to 649 is a poor credit score that you need to improve to apply for a loan. While 650 to 699 is considered a Fair credit score, you are applying to apply for a loan. While a credit score of about 700 is good, so you can apply for credit anytime. 

Your financial life is very much dependent on a good credit score. Applying for credit or want a credit card, getting lower interest rate credit, or mortgage. The bank will review your credit score that either you are in a position to pay back credit or not. So a good credit score will indicate your good financial health and your ability to pay the loan. 

Benefits you can get from a good credit score at the bank

FICO scores have defined the criteria for good credit scores. That is at least 670 or more. You can survive with a bad credit score too but it is preferred to have a good credit score. Why? Having a good credit score will let you enjoy many perks and benefits at the bank. These are:

• Interest rate of credit is directly linked with credit score. So having a good credit score means you can qualify for better interest rates for both credit card and loan. That is lower than the usual ones. So fewer charges mean that you can pay off debt easily and enjoy your lifestyle.
• Poor credit score means that your loan can be denied. So if your credit score is good, the chances of loan approval also increase. Banks also check other factors like income and previous debts, but credit score is the main thing. 
• If you are applying for a loan with a good credit score, then there may be chances of getting other offers and rewards too. And you can get more money as a loan if your credit score is good. 
• If you want an auto loan from any bank in Malaysia, then they will check your credit report and insurance history. So good credit score will let you pay less for insurance than others

Best ways to get a good credit score 

Don’t get disheartened, if the credit score becomes low. There is a way to get out of it, just stay disciplined and try smart actions. There are many ways to get a good credit score:

Follow healthy habits: 

How small or big the amount is, clear your debts. Like paying off the monthly bills and debt on time, it for sure keeps your credit score good. Keeping the Credit Utilization Ratio below 30% will also help to maintain a good credit score. Don’t use all of the available credit. 

Check errors: 

Still credit score is low after paying the debt. Then you should check if any error occurs in the credit report like unpaid dues any purchasing errors or overlapping entries of a product. Fix these errors to improve the credit score. 

No more cards: 

If you already have a credit card, then don’t apply for another one. To maintain a good credit score, get a new card when it is necessary. If you have 1 or 2 cards already, keep these accounts open whether you are using them or not.  Because credit health gets better with older accounts. 

Increase credit limit: 

If the bank calls you about improving the credit limit. Take it seriously, because an increased credit limit will lower the credit Utilization Ratio and improve the credit score.

Create credit history: 

Take small loans and pay them on time. This will positively impact your credit score. Improved credit score will inform the lenders that you can pay the loan on time responsibly. 

Set payment reminder: 

No one is Einstein; in the busyness of life anyone can forget to make a payment on time. So set reminders for EMI payments. You can add reminders in your mobile calendar or your online wallet too. 

Longer payment period: 

Paying huge amounts in EMI loans? You can also personalize the periods that suit you. Then the risk of skipping the payment because of a huge amount will also be reduced. 

You have applied for a loan from a bank or any other lender in Malaysia, credit score plays a vital role in its approval. So to keep it in good range is very important. But if your credit score is below average and you are facing bankruptcy. Then get credit repair services from the best Malaysian companies like Credit Bureaus Malaysia or Credit Repair Malaysia. 

How to avoid bad credit practices in 2024?

If you don’t want to live on the edge or deal with bankruptcy. Then you have to follow healthy credit habits to improve your credit score. What are these? 

• Avoid the habit of missed bills or debt payments, because it will decline the credit score. Set reminders to pay bills at the right time. At least pay the minimum balance every month, it helps you to maintain a good FICO score.
• Try to keep your debt amount lower than your credit limit, which is known to be the credit Utilization Ratio. If this ratio is below 30% then credit score will rise. This will happen when you pay off as much debt as you can. 
• Make a habit of budgeting, you can also download a budgeting app. Cut unnecessary purchases and try to pay off the bills, debts, and loans first. 
• If you are unable to pay a huge amount of debt, customize the debt tenure. So you can easily pay a small amount of debt every month.
• Don’t apply for credit multiple times in a row. Get a loan, pay it, and then apply for another one. Multiple loan requests mean multiple hard inquiries on your credit file. That can lower the credit score.

Final words

Credit can help you in your hour of need, paying it responsibly should be your priority. Like water is a basic necessity to live, similarly, a credit score is the necessity of having a good financial life. You can improve your credit score by building good financial habits in 2024.