A plethora of websites may suggest to you a hoopla of best ways to increase your credit score but how successful are these tips and tricks, ever wondered? Your credit score reflects how well you use your credit and is thus, immensely important during the requirement of any kind of loan. It is, thereby, important to be aware of the factors that may affect your credit score as well as the measures that may improve it. I have brought you the best and some do it yourself ways on how to improve your credit score in UAE using your credit cards.
Ensure that you pay your credit card monthly bills on time
- A history of late payments and other delinquent behavior can have a strong negative effect on your credit scores for many years.
- To avoid missing your due date, set a reminder on your phone a few days beforehand or mark the date on your calendar. You can also adjust your online account settings to always automatically pay at least the minimum required amount each month.
- Or, better yet, set up automatic payments to pay the full new statement balance each month. To avoid heavy interest rates, you must pay the bill in full.
- This can help you both stay out of credit card debt and avoid interest completely with most cards.
Keep your credit card utilization low
- Credit scoring models look at how much of your available credit you’re using on each credit card in UAE, and how much of your total credit limit is being used across all cards.
- They do this by calculating the percentage of your credit limit you’re using, as reflected on your credit reports. This percentage is called ‘credit utilization.’
- Using a high percentage of your credit limit is seen as very risky. It may indicate that you’re overextended financially and may have trouble paying your bills as a result.
- Generally, the lower your credit utilization, both overall and on each individual account, the better it is for your score.
- So, opening a new card or increasing the credit limits of cards you already have could potentially have a large positive impact on your credit scores.
Avoid applying for many credit cards in a short period of time
- Opening many new accounts in a short period of time can be seen as risky financial behavior because it looks like you’re in need of money and are acting recklessly.
- This ‘new credit’ factor considered in your credit scores is where the number of inquiries and length of time since your most recent inquiry comes into play. The length of time since you last opened an account can also be factored in here.
- While every new inquiry and every new account won’t automatically have a negative impact on your scores, there’s always a possibility that it could. Many hard inquiries can have a negative effect on your credit scores.
Increase the length of your credit card history
- The older your credit history, the better. If you established accounts a long time ago and have been able to manage them responsibly, that demonstrates to lenders that you’re less risky than someone who doesn’t have a very long credit history.
- If you take the length of time each of your accounts has been open and average them together, that’s the average length of your credit history. This average is considered in credit scores because you’re seen as less risky to lenders the longer your accounts have been open. The ages of your newest and oldest accounts are also considered.
- When you open a new credit card and already have some older credit cards, you’ll reduce the average age of your accounts. This could potentially have a negative effect on your scores.
- There are two potential ways to improve your credit scores within this category. First, you can wait for the accounts on your reports to age. You should be careful about adding new credit accounts because every time you do you’ll reduce the average age of your accounts.
- Second, you can ask a loved one to add you to an existing, older credit card account as an authorized user. If you’re added onto an older account with positive payment history, it might increase your average age of accounts.
Using the best credit card in UAE (moneymall) has a direct influence on the most important factors that go into establishing your credit score. So getting a credit card and using it regularly and responsibly is one of the quickest and most effective ways to build or rebuild your credit score. We hope that you will follow these guidelines for the effective use of your credit card.