Credit card

How to Improve CIBIL score using your Credit Card ?

Credit card companies are not just lending you money to buy things. They also help in establishing your credit history and build your CIBIL score. They provide a safer alternative to carrying around cash. Apart from the perks and offers that you receive with your credit card, there is a lot more that you can do if you have a credit card. You can enjoy various benefits that come along with having a good credit score. Banks frequently look at your credit score before approving a loan application or even a credit card application, so keeping a decent credit score is critical. All you need is a few minutes and an internet connection in order to use your credit card to improve your CIBIL Score.

Tips to Improve your CIBIL score using Credit Card

  1. Regular Payments- Try to be as consistent as possible with your credit card payments because a single missed payment can have a negative influence on your credit score. Apart from the negative impact that it might have on your credit score, credit card companies charge a huge amount of penalty whenever you miss a credit card payment. Paying your credit card bills has become easy in today’s world. There are a variety of options through which you can pay your credit card bills like using your debit card, Net banking or UPI. UPI full form that is Unified Payment Interface is the most preferable choice among all other payment options of paying the credit card bills.People prefer to make their credit card payments using UPI rather than any other mode of payment.  
  2. Lower Credit Utilization- Get a credit card with a high limit and try not to use more than half of it. Banks will view you as a creditworthy applicant and will be able to offer you numerous packages as a result of this. Once you get approval for a large amount of credit on your credit card application, you should then focus on spending less or in other words using very less amount of credit that is available on your credit card. This makes you look that you do not require much credit and are least likely to default on any of the credit card repayment. 
  3. Keep Old Accounts- Many people think that your account age does not make any difference, but maintaining an old account with a bank means that you have a good relationship with the bank. Credit bureaus look at your account age and then determine your CIBIL score. Keeping old accounts with the same bank makes you appear responsible and creditworthy because you have been involved with the bank for a long time.
  4. Avoid Debt Settlement- When you settle a credit card debt, it will always appear as settled on your credit record, and numerous loan settlements can have a negative impact on your credit report. Therefore, make sure that you do not settle the chunk or majority of your debts. Whenever you settle a debt and it appears on your credit report that you have settled any of your debt, banks assume that you might have taken another loan to settle this debt. Moreover, taking out a loan to repay for another loan has an adverse effect on your overall credit background and your credit score can fall drastically. However, make sure that you avoid debt settlements as much as possible in order to maintain a good credit score. 

The above are some of the points through which you can use your credit card to build up or maintain your CIBIL score. However, you need to choose from the best credit cards in India to build up your credit score. Apart from these tips you should have healthy financial practices in order to have a high CIBIL score.


Read More: What are the eligibility requirements for a personal loan from HDFC?

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