Golden Rules: 7 Ways to Improve Your Credit Score Quickly and Effectively
Your credit score is a crucial factor affecting your ability to get loans, open credit cards, or engage in other financial transactions. A high score opens up many opportunities with preferential interest rates, while a low score can lead to difficulties. So how can you "polish" your credit profile? Let's explore 7 proven ways to improve your credit score right below.
Always Pay Your Debts on Time - The Golden Rule
This is the most heavily weighted factor in calculating your credit score. Paying your loans—whether it's credit card debt, consumer loans, or installment plans—on time and in full will build a solid reputation. A single late payment can negatively affect your score for a long time.
Quick Tip: Set up payment reminders on your phone or register for an auto-debit service so you never miss a due date.
Keep Your Credit Utilization Ratio Low
The Credit Utilization Ratio is the percentage of the amount you owe against your total available credit limit. For example, if you have a credit card with a 20 million VND limit and you owe 15 million, your utilization ratio is 75%, which is a very high figure.
Expert Advice: Try to keep this ratio below 30% on each card and across your total credit limit. Paying more than the minimum amount each month is the best way to lower this ratio.
Limit Opening Too Many New Credit Accounts
Every time you apply for a loan or a new credit card, a hard inquiry is recorded on your credit history. Too many inquiries in a short period can lower your credit score, as it suggests you might be experiencing financial difficulties.
Don't Rush to Close Old Credit Accounts
The length of your credit history is also an important factor. A long-standing credit account with a good payment history is beneficial to your score. Closing an old account will reduce your total credit limit, which can increase your credit utilization ratio and shorten your average credit history length.
Regularly Check Your Personal Credit Report
Errors on credit reports are not uncommon. You have the right to request your credit report from the National Credit Information Centre of Vietnam (CIC) to check it. If you find incorrect information, contact the CIC and the relevant credit institution immediately to request a correction.
Diversify Your Credit Mix
Successfully managing different types of credit (credit cards, installment loans, mortgages, etc.) shows that you are capable of managing diverse financial responsibilities. However, don't try to take on more debt just to diversify if you don't actually need it.
Build a Credit History (If You're New)
If you've never had a loan or credit card, start building your credit history by opening a credit card with a low limit or by making a purchase on an installment plan. The most important thing is to always pay in full and on time to build a "clean" profile from the very beginning.
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