Ways to improve your credit score via a Credit Card

Summary: Boost your credit score for better loan approvals by using your Credit Card wisely. Discover effective strategies to improve your credit score in this article.

10 Mar 2023 by IDFC FIRST Bank

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Credit Cards have a reputation of degrading your credit score. In reality, the credit score depends on the way an individual uses their Credit Card. If you use your Credit Card efficiently, you can enjoy a host of benefits and improve your credit score too. But you need to be strategic with your expenses and repayments to do so. This article lists some proven ways to improve your credit score with a Credit Card.

Why is a good CIBIL score important?

Banks and financial institutions in India assess your creditworthiness with your credit score. Hence, a good CIBIL score becomes a fundamental criterion for loan approvals. An individual with a low score becomes a higher risk to the lender and they may reject loan applications. However, with a decent CIBIL score, you can ensure loan approvals at affordable interest rates.

a person performing a credit card transaction

What is a Credit Card?

How to redeem your Credit Card Reward Points?

To maintain a good credit score, you need to be disciplined with your repayments and use your Credit Card well within its credit limit. IDFC FIRST Bank offers you full control over your credit card eexpenses and you can limit your spending by logging into your Credit Card account and keeping track of the transactions.

With timely repayments and controlled spending habits, you can improve your credit score with a Credit Card.

How can Credit Cards help improve credit scores?

Since they offer quick and short-term loans, it is not surprising to know that Credit Cards can impact your credit score. By planning your expenses and finances well, you can improve your CIBIL score using a Credit Card. Here are the ways Credit Card holders can improve their credit score.

· Pay off any outstanding dues

A Credit Card holder must always clear their Credit Card’s outstanding dues prior to the due date. Timely repayment ensures no late payment charges and also improves your overall credit score.

· Avoid owning multiple Credit Cards

Credit cards enhance your purchasing power which may lead to unrestrained spending. If you apply for multiple credit cards, you are indicating to the lender that you are always short on money. As a result, you would have a greater repayment burden and, if you miss paying your EMI on any of your cards, your credit score would be negatively affected.

· Limit credit utilisation

The maximum amount of credit you can use on every Credit Card is known as the credit limit. Exhausting the credit limit is not a good practice and puts you at risk of credit card debt. As a result, lenders consider such Credit Card holders high-risk. If you max out your Credit Card, you have a higher risk of defaulting on payments, which lowers your credit score. In order to maintain a healthy credit score, you should not use more than 40% of your credit limit.

· Track your credit report

Periodically checking your credit report and statement is considered a good practice as it lets you keep track of the charges you pay, expense habits etc. It helps you outline a better plan for your finances. In addition, you can also avoid any unauthorised payments by requesting the bank to correct them based your assessment.

Having a good credit score is extremely beneficial. It helps you get loans at preferential rates and can also influence your eligibility for a better Credit Card in the future. So make sure you follow the above practices to build and maintain a high credit score.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.

The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.