A good credit score is the most hyped-up concept in the financial industry. However, it’s not that difficult to do. It’s good, to begin with, a routine tab on monthly expenses and sources of income. Also, keep a small portion to do away with the overall expenditure.
Although, a credit card can easily be used to put right your credit score. In this article, we will present to you 5 simple ways to maintain a healthy credit score and use it wisely.
Of course, a good credit score plays an instrumental role in getting a standard credit proposition. Whether it’s a credit card, personal loan, or any other line of credit. There was a time when credit cards were not too popular however, it’s a different case now. Due to the increased digitalization, more and more online transactions are being emphasized upon. The rapid hike in the level of transactions through online modes is quite epic. The substantial increase in cashless transactions has led to a greater volume of credit card users also.
The latest research paper unveils that Indians are excessively using credit cards and making online payments. It’s extremely relevant to understand that credit card usage will be supercritical to shape your credit score. Overuse of credit cards can substantially spoil the chance of further borrowings and the individual's credit history. It is preferred to always maintain a high credit score to get all loan benefits at a time.
Although, keeping a credit card is just as simple unmatched to getting rid of it. It needs some expertise to make the best usage of your credit and not just ordinarily use it.
The ways highlighted below can help to maintain a good credit score while using a card:
1) Avoid defaulting on regular paybacks: A credit card is actually an unsecured loan which should be paid back on time. It is the best suggestion to not miss repayments ever. This complicates your credit history more. If you fail to pay the credit card bill on time, then pay back with penalties & additional fees. You are not only charged a penalty but your defaults are noted in your payment history. This remains for a long time. This can be rectified if your payments are matched by the savings you do.
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2) At least pay back the minimum due: All credit card holders must pay back at least the outstanding or the minimum due amount. Again, if you do not comply, your credit score suffers again.
So, if you genuinely care about your credit standing, then ensure to make payments in full or at least partially before the deadline.
3) Do not exploit your credit card beyond measure: All financial institutions prescribe a certain credit limit to the borrowers. This will be based on your repayment capacity and a lot of other factors. Just take note to use less than 30% of the credit limit to have a good credit score. Though, it’s a recommendation, not a mandate!