How to Build a Good Credit Score With a Credit Card?
Credit cards are financial tools which are immensely popular throughout the country. Reports of 2019 suggest that the usage of such plastic money has sky-rocketed and the circulation touched approximately 48.9 million.
Credit cards are famous for the various features it offers including –
- Reward points.
- Signup bonuses.
- Universal acceptance.
- Cash backs.
- Safe transactions.
- To build a better credit score.
Individuals who are aware of how to use a credit card are acquainted with the fact that, other than availing cash backs, such tools are an efficient way to build a healthy credit score as well. Individuals who do not know how it works should have an explicit knowledge regarding what is a CIBIL or credit score.
What is a credit score?
The credit score is a 3-digit numeric ranging from 300 to 900 used by different financial institutions to determine a borrower’s credibility. The Credit Information Bureau (India) Ltd is the most reputed agency to evaluate credit scores of an individual; hence the name “CIBIL score.’ This RBI approved agency is backed by major global credit bureaus like TransUnion International.
Most financial institutions require a score around or above 750 to provide financial products at the most beneficial terms to prospective users.
An individual can check for their credit score with the help of an online portal provided by their respective financer or by logging into the official website of CIBIL. An individual aiming to improve their credit card CIBIL score can avail a credit card and gradually improve it.
Ways to improve credit score with a credit card
Make timely repayments
One of the best ways to use a credit card and improve the credit score is to make repayments in a timely manner. Individuals who make their payment before or within the billing cycle are supposedly more responsible with their repayment, which positively influences their CIBIL score. Hence, availing a credit card and utilising it efficiently is one of the effective ways to improve your credit score.
Limit credit utilisation using the card
Most consumers think about the credit limit when expanding through such a card. However, a better way to approach credit card spending is to ensure that you never use more than 60% of your card’s limit. Sticking to such a strict limit will not only reduce your financial burden but also improve your credit score over time. Increased credit utilisation ratio is a sign of a credit hungry nature.
Use credit card for bill payments
Whether it is your internet bill or electricity bill, using your credit card can for such bill payments can help to improve your credit card CIBIL score. Such bills help financers and credit bureaus to link your expenses with authorised merchants; they have a higher weightage on the credit score. Thus, whenever possible, use your credit card to pay all your utility bills, instead of buying consumer products.
With a high CIBIL score, you can consider applying for feature-rich credit cards like the Bajaj Finserv RBL Bank SuperCard. Such cards come with borrower-centric benefits such as interest-free periods on loans against the credit card and on ATM cash withdrawals.
How to use a credit card to improve CIBIL score can be a topic of contemplation for individuals with a low score. But determining your requirements, you can avail a card online by following a few simple steps which start with applying for the most suitable credit card in the first place.