Knowing how to increase your credit score is useful not only for clearing your name, but also for achieving major goals. A good credit score opens doors in the financial market, facilitating the approval of financing with favorable conditions and offering lower interest rates on loans.
Now you will see how to improve your score in an effective and practical manner.
What is considered when defining the score?
Next, we will detail the main criteria used to define the credit score.
Commitment to credit
This is one of the most important factors. It analyzes your behavior regarding the payment of loans and financing already acquired . In other words, if you have a history of honoring your commitments on time, this will have a positive impact on your score.
Payment history
Payment history considers how often you pay your bills, particularly the credit ones. Thus, maintaining your bills timely and paying every invoice on schedule assists you in establishing a favorable history and, in turn, boosting your score.
Outstanding debts
Debts that are in arrears, especially those that have already been registered with credit protection agencies , directly affect your score. Therefore, regularizing these outstanding debts is essential to prevent your score from falling.
Types of credits
Finally, the diversity of credits you use also counts when evaluating your score. A healthy mix of personal credit, home financing, loans and controlled credit card use can indicate that you have control over different types of debts — which contributes to improving your score.
Why isn’t my score increasing?
If you have been following good financial practices but your score is not improving, there may be issues or errors that need to be corrected. Check if:
- there are outstanding debts, generating the so-called “ bad name ”;
- your registration data is up to date;
- you are not applying for credit very often;
- your bills are being paid on time.
It may take a while for your score to reflect these improvements , as it is calculated based on your history over the last few months.
How to increase your score
Now that you understand what can influence your score, it’s time to increase your score. Below, we present 8 practical tips to help you increase your score.
1. Negotiate your debts and clear your name
This is where the process starts in taking over your financial life again. Negotiating your expenses improves both your credit history and score.
2. Keep your accounts up to date
Make a monthly financial plan and set up automatic debit for your bills. These two practices will help you foster a positive financial history.
3. Have accounts in your name
Regular payments are directly related to raising your score. However, in order for these payments to be recorded on time in your financial history , it is important that you have bills linked to your CPF — such as water and electricity bills. This helps to demonstrate your payment behavior, contributing to increasing your score.
4. Make purchases on credit (in moderation)
Cash, cash or debit payments don’t count towards your score, as what matters is the credit commitment. So, it is advisable to focus on purchases that are made with a credit card. But do not overdo it.
5. Avoid installments on credit card bill
While most banks have the facility of paying your credit card bill in installments, making this a regular practice can be detrimental to your score. Paying your bill in installments will cause interest rates to rise, make it more difficult to pay your subsequent installments, and result in debt . All this negatively affects your score.
6. Avoid too much credit
Every time you apply for a new credit card, financing or loan, the financial institution checks your application history. Applying for many loans quickly could be a sign of financial trouble. Therefore, keep your applications within your payment capacity.
7. Keep your data up to date
Another tip is to be good friends with financial institutions and credit bureaus. In order to achieve this, apart from paying your bills promptly, you must update your information on the platforms, such as contact details and income. Doing this ensures that you avoid issues with your score.
8. Consult the Positive Registry
Finally, the Positive Registry works as a kind of financial resume for companies, which can check their score and verify their financial responsibility through it. Thus, staying active and up to date on the tool shows financial responsibility and can improve your score.