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10 Smart Ways to Improve Your Credit Score

10 Smart Ways to Improve Your Credit Score

Your credit score is more than just three numbers; it defines your credit worthiness to your potential lenders. If you have a high score, securing a new financial product is much easier. However, if your score is below average, chances are your applications are either getting rejected or you are getting bad financing rates.

Now, the first step you’ll have to take is to improve your credit score. Bear in mind, this isn’t a walk in the park. Getting a great credit score requires effort. And it’s all worth it when you start reaping the rewards of having a good score.

Luckily for you, we’ve listed down a couple of ways you can kick-start your journey towards improving your credit score.

1. Create a Plan to Improve Your Score

Instead of just going with the flow, it’s good to have a detailed plan in place. Look at the factors that affect your credit score. If you’re faring below average in that bracket, work towards fixing that. Take a look at your credit history and understand the areas to fix.

When you’re jotting down a plan, you should also consider financial management. This means, dividing your income into two parts—essentials and non-essentials.

Essentials will include finances for your repayments, rent, food, transport, and other bills. And expenses that don’t need immediate attention, can be clubbed into non-essentials. This could be your entertainment and shopping expenditures.

Creating a diverse plan will help you manage your money better, and lead to improving your credit score too. More on that below.

2. Keep an Eye on Your Credit Card Balances

Your credit card behaviour is one of the first things a lender will observe. If they see your outstanding balance is higher than your available balance, it indicates you’re an irresponsible spender.

Ideally, your credit balance should be at 30%. Your credit utilisation ratio is extremely important, so you need to ensure you rarely exceed 30%. The way you manage your balance determines your rating.

Now, there might be times where your debt-to-credit ratio fluctuates. To avoid the consequences of this predicament, you should focus on consistent payments. If you have high outstanding balances on more than one card, as a last resort you can consolidate your debts and clear them.

3. Make Sure You Have a Stable Income

Clearing your debts and paying your dues on time is possible if you have a steady source of income. This works in the favour of those who are employed by an organisation. However, if you’re self-employed or a freelancer, your income schedules may waver.

In situations like this, you can map out a financial plan. This will help you avoid defaulting on payments. When a lender sees an unswerving repayment schedule, your score is bound to improve. This is because you’re viewed as a low-risk and responsible borrower.

4. Repay Your Dues in a Timely Fashion

Late payments and missed payments affect your score massively. This is because your financial behaviour is registered as unsteady and negligent. The history of these payments are added to your credit report, which is accessible by a lender who has received your application.

There are several ways you can ensure your payments never miss the due date. Create an alert that will remind you of your payment due dates. This will help you plan your finances the minute you receive your pay check.

You can also set up auto-bill payments, so every month a certain amount is deducted for your credit card bills or loan repayments.

5. Reduce Your Debt

It may have been said a hundred times, but it rings with importance. Sinking in debt can take a mental and emotional mental toll on you. You’ll constantly be stressed and overwhelmed when you have to clear huge lump sums.

Start by taking account of all your debts. Then, you can either choose the snowball method or avalanche method to minimise these debts. With snowball, you can begin clearing the smaller debts you have and then move on to the bigger debts. This is more feasible if you’re not sitting on a pile of savings.

However, if your debt is getting out of hand and you have savings, you can consider the avalanche method. This way, you can direct a huge sum of your savings towards the bigger debts and tackle the smaller debts later.

Having a lot of debt affects your credit score drastically. That’s why it’s crucial to clear them. Another tip—avoid taking up another financial product till you’ve cleared these outstanding debts.

6. Keep a Maximum of 3 Credit Cards

There’s a general rule that says you should have less than three credit cards. And there’s a good reason for this. The more financial products you own, the risker you are viewed as by potential lenders.

While having credit cards and other financial products does help with your credit history, you should have a limit. This will make repayments far easier for you. Handling too many repayments can be confusing and might lead to missed dues.

There’s one more thing you should be aware of. Avoid cash advances or swiping your credit card at a pawnshop. Now, this won’t take a toll on your score. However, it will indicate to your bank that you’re venturing into a money-loss situation.

7. Build a Strong History with One Bank

Getting financial products from a single bank equals to you being a loyal customer. And that’s not all. You should also ensure your debts are paid off on time and you never miss clearing your dues. This behaviour will reflect on your credit history report, and will increase your chances of getting applications approved. This also increases your credit score because of your consistency.

8. Check Your Credit History

Sometimes, your credit report have errors that could gravely affect your score. That’s why once or twice a year, you should have a thorough look at your credit history. Go through everything and if you spot a mistake, raise it immediately and get it removed from your report.

9. Invest in Various Assets

This may not necessarily improve your credit score, but is an indication that you’re financially sound. Investing in real estate or even opening a deposit account shows the bank that you’re managing your finances efficiently. And in case of an emergency, you always have something to fall back on.

Once you’re financially stable in the eyes of the lender, your chances of getting applications approved increases.

10. Choose the Right Credit Card

A good credit card that help you maximise the value of your expenses greatly. However, if you don’t get a credit card that’s in line with your lifestyle or spending requirements, you’re losing out on all the benefits it has to offer.

For instance, if you absolutely love shopping and dining out, choose a card that rewards you for those expenses. This could be in the form of cashback or reward points. Similarly, if you spend a considerable amount of your income towards groceries and petrol, consider getting a card that gives you benefits on those categories.

For those who travel regularly, a travel credit card can be a good option to go for. Not only will you get rewards but you’ll get access to many travel-related benefits—complimentary lounge access, air miles conversion, discounts and deals on hotels, and more.

Searching for a credit card can be quite a hassle, especially with hundreds of options in the market. To narrow your search, you can leverage comparison tools and websites like And soon enough, you’ll be left with a couple of choices. Then, you can pick a card that works in your favour.

Final Thoughts

There are a bunch of reasons why your credit score is extremely important. For starters, you’ll be able to borrow money easily if your score averages at 700 and more.

Let’s say you’re planning to buy a home or get a new car. Paying the whole amount is next to impossible, and this is when you’d look for a loan. First, a good credit score means your loan application and approval process will be a breeze. And there’s an added benefit—you’ll get better interest rates too. This could potentially save you a lot more money on interest. That’s not all. You will also get access to better financial deals, something that isn’t privy to those with lower scores.

Follow the above tips and tricks, and with time you’ll have a great score that lenders will not be able to resist!

This is a guest post by Siew Kuan Hang. She is a Content Marketing Journalist at, an online consumer financial marketplace in Malaysia that will help Malaysians to make the smart choice and save money with personal financial matters. Stay tuned and learn about current financial market and products including credit cards, personal loans, insurance and more.

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