Credit Cards are one of the most popular financial products of present times and are used extensively across a wide range of payment platforms, both online and offline. With the specific efforts of the Government of India to promote cashless transactions, Credit Cards have witnessed a significant boost in their platform. Add to it the rising popularity of e-commerce platforms; it seems like a match made in heaven. Credit Cards enable you to make payments online conveniently.
Due to the rising popularity of Credit Cards, many card issuing companies have now started the process of applying for Credit Cards online. You just have to fill the application with some essential information and the Credit Card issuer will get in touch with you to get further information. If your application is approved, you will receive your new Credit Card in a few days.
In order to maximise the benefits derived from a Credit Card, you need to use it with utmost financial discipline. Otherwise you will be burdened under a debt in no time. The rate of interest against Credit Card debts go as high as 42%,and if you do not make the payment within the interest-free period, you will have to pay interest from the first day itself. Similarly, if you do not pay your bill in full and keep on paying only the minimum amount due, you will soon be pressed under the burden of debts. This will not only affect you financially as you will have to service a high-interest debt but would also ruin your credit score, which might render you ineligible for any borrowings in the near future.
It is not as if Credit Cards can only damage your credit score.If you use them judiciously, they can help you build a good credit history and also repair your credit score through a gradual process. Below mentioned are five tips that you must follow to build your credit score by judicious use of your Credit Cards:
In order to maintain a good credit score, you must pay your Credit Card dues before the due date. If you fail to make the payment before the due date, not only do you have to pay excessive penalties, your credit score also takes a hit. It is advisable that you set your Credit Card bills on auto-debit from your bank account, to avoid such instances.
Do not fall into the trap of making minimum payment; you must pay your Credit Card bills in full every month. Every card comes with an interest-free period of up to 60 days, during which you do not have to pay any interest on the amount utilised if you repay the dues in full. If you only make minimum payments, not only will you have to service high-interest rate, but the lenders will consider you as credit hungry. If you can not repay the entire due amount, at least try to pay as much amount as you can.
Keep a close eye on your credit utilisation ratio (CUR) and need to ensure that it is always below 30% of the total limit available. If your CUR is above this level, it will have a negative impact on your credit score. If you have multiple Credit Cards, make sure that you spread your usage across them in such a way that the total CUR stays below 30%. Higher CUR would mean that you will be paying high-interest rates on the Credit Card debt.
Every time you apply for a Credit Card or loan, the lender makes a hard inquiry into your credit score,and this not only lowers your credit score but also portrays you as credit hungry. Do not randomly go for every Credit Card Offer Online. Do your research and only then apply for the most useful card. If your credit score is good, your Credit Card issuer will raise your limit itself, eliminating the need to apply for a new Credit Card.
Credit Score is not a perfect method,and there might be some discrepancies in the calculation of your score where some Credit Card debt that does not belong to you appears. You must keep a close eye on your credit report and raise disputes whenever you see any Credit Card that you do not think belongs to you. By using your Credit Card judiciously, you can not only maximise the benefits of your card but can also maintain a healthy credit score conveniently.
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