How to Improve Your Credit Score Using Credit Cards
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Credit scores significantly contribute to the approval of loan applications. A credit score is used as a tool to assess the risk of lending money to a borrower and the higher the credit score, the more likely you are to pay your debts on time.
Having a good credit score can make it easier to get loans with lower interest rates. But did you know that your Credit Card can help you improve your credit score?
With your Credit Card, you can easily build your credit score.
However, there are some tips you need to follow to use your Credit Card to your advantage, and this article will cover them all. So, let us get started.
Tips to Improve Your Credit Score Using Credit Cards
Timely Payment of Dues
Payment history is one of the most important factors in your credit score. Therefore, clearing the dues before the due date is essential to build a good credit score.
In addition, remember to make payments on time and ensure that there are no arrears or late payments, which can hurt your credit score. Paying debts on time will also help you avoid penalties for late or non-payment of Credit Card dues.
Avoid Exhausting the Maximum Credit Limit
The maximum credit limit is the maximum amount that you can borrow from the bank on your Credit Card.
Try not to reach this limit, as it negatively impacts your credit score, leading to financial issues (such as a debt trap). It may also indicate that the borrower has financial problems, which can negatively affect the credit score.
In short, the best Credit Card advice for improving your credit score is to keep your credit utilization rate low.
However, if you expect to reach your Credit Card limit, ask your bank to increase it before you begin your Credit Card application.
Keep Your Credit Card for a Long Time
Having the same Credit Card in your wallet for years can help you build a solid credit score. All you need to do is to use it from time to time and pay the bills regularly to keep it active. Besides, it will allow you to show lenders that you are financially stable in the long run.
Avoid Deactivating Your Credit Card
If you do not use your Credit Card, do not close your Credit Card account. This is because doing so can have a negative impact on your credit score.
Be Patient
Improving your credit score can take time and effort, especially if you have made a few missteps or if you have a bad credit history.
To streamline the application process, use the Credit Card apply option available for easy access. However, with good credit habits like using Credit Cards responsibly and paying debts on time, you can get your score back on track.
Summing Up
The use of your Credit Card greatly influences your credit score. By clearing Credit Card bills on time, keeping the Credit Card balances low, using the card appropriately, and not closing old Credit Cards, you can maintain a healthy credit history.
Following these recommendations, it is likely that you will be able to establish a healthy and stable credit score, making it easier to obtain credit in the future.
If you do not have a Credit Card, you can look for a ‘Credit Card apply online’ option for a seamless process and start improving your credit score instantly.
Disclaimer: No Business Standard Journalist was involved in creation of this content
Topics : Credit cards
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First Published: Sep 03 2024 | 2:55 PM IST
