Lenders depend on a number called a credit score to assess your financial trustworthiness as a borrower. This figure shows how likely you are to repay borrowed money, and therefore, how worthwhile it is for banks and credit card issuers to provide you with a line of credit. 

If you’re planning to undergo even the easiest credit card application Philippines-based financial services providers offer, you’ll need a good credit score to increase your chances of approval. With a good credit score to your name, you’ll eventually be able to qualify for higher credit limits and better interest rates, which can be a boon for funding bigger goals, like a home or a vehicle. A high credit score would also give you easier access to a broad range of competitive credit card programs, for example that of the Landers Cashback Everywhere Credit Card by Maya. 

If your credit score needs a boost, here are some practical tips you can follow to improve it as quickly as possible:

1) Pay Your Bills on Time

Considering the function of your credit score, it’s no surprise that your payment history plays a big role in the numerical representation of your creditworthiness. To understand the importance of your payment history, remember that even a single missed payment can hurt your score significantly. 

Always pay your bills on time to prevent these payments from hurting your credit score. If you find it hard to remember due dates, try to overcome this challenge by setting up automatic payments or reminders on your phone. Timely payments for all of your bills signal to lenders that you are responsible and capable of managing your finances effectively, which will positively impact your credit score.

2) Reduce Your Credit Card Balances

Do you have existing credit cards? If yes, then how is your utilization ratio? This figure, which compares the credits you are tapping to what is available to you, is used by lenders to gauge your financial health. 

Credit utilization is best kept below 30 percent, as this figure can show potential credit card issuers that you are a responsible borrower who is not dependent on debt to sustain your lifestyle. For example, if your credit limit is PHP 50,000, your balance should ideally not exceed PHP 15,000. If you have existing debts, pay down as much of your existing credit card debt as possible to bring your utilization ratio down.

3) Avoid Applying for New Credit

Lenders perform a hard inquiry on your credit report with every credit card application that you submit. This hard inquiry can temporarily lower your score. While it may be tempting to apply for multiple credit cards or loans in one go to see which one will stick, doing so can hurt your efforts, especially when trying to improve your financial image. Instead, focus on managing your existing credit responsibly, a task that effectively demonstrates your financial stability and trustworthiness as a borrower. 

4) Keep Old Credit Accounts Open

The age of your credit history also has a role in determining your credit score. Closing old accounts reduces the average age of your credit history, which can lower your score overall. Unless there’s an annual fee you can’t afford, keep your oldest accounts open and in good standing. This helps lenders see a long and consistent history of credit management, which will reflect positively on your creditworthiness.

5) Diversify Your Credit Mix 

A mix of credit cards, personal loans, or a car loan can improve your credit score. Being able to balance different types of loans demonstrates to lenders that you can handle different credit products responsibly. 

This is not an endorsement, however, to take on new debt just to diversify. Rather, it’s best if you focus your resources on maintaining and paying off any existing accounts, which is a practical way to showcase your financial reliability.

6) Pay More Than the Minimum Due

When it comes to credit card payments, paying only the minimum due each month can keep you in debt longer and increase the amount of interest you pay. Lenders also see this as a sign of financial strain on your part. 

To improve your credit score, pay more than the minimum due whenever possible. Clearing your balance faster shows that you’re financially proactive and reduces your credit utilization ratio.

7) Use a Secured Credit Card to Begin Your Credit Journey

If you’re new to credit products, using a secured credit card can help you build or rebuild your credit history. Secured credit cards require a cash deposit as collateral, which becomes your credit limit. 

Use this card for small, manageable expenses and pay your bill on time each month. Over time, this will add positive entries to your credit report and help improve your score.

8) Build Good Financial Habits Consistently

Lastly, remember that improving your credit score is not just about quick fixes. It’s also about developing and maintaining good financial habits. 

To achieve this goal, it’s a good idea to create a monthly budget that realistically reflects your expenses and financial capabilities. This will play a key role in keeping your spending in check. At the same time, save an emergency fund to avoid relying on credit for unexpected expenses, and monitor your credit regularly. These habits will help you preserve your long-term financial health, with the bonus of improving your credit score as soon as possible.

Creditworthiness matters to lenders because it’s a reflection of your reliability and financial discipline. Take steps to improve your credit score and you’ll be able to position yourself as a trustworthy borrower, making it easier to secure credit when you need it most. Start with these actionable tips today and see how they can help you achieve your financial goals with tools like a new credit card.