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To Maintain a Good Credit Score you must ______ Maintain Good Credit Score – Credit cards have earned the reputation of ruining more people than the devil himself. While purchasing a credit card today can be very simple, as long as you have the proper documentation, making it work in your favor is a much more difficult task. Not only do they have the power to bury you under an slide of perpetual debt, but they also possess the power to do wonders for your financial strength by potentially improving your credit report and having a significant, positive impact on your CIBIL score.
Today, banks and financial institutions rely almost exclusively on CIBIL scores to determine whether or not to grant loans or credit cards to their customers. Applicants with poor or no credit history are unlikely to obtain credit from a lender.
For those who already have one or more credit cards facilities, there are many ways you can use them to improve your CIBIL scores.
Can a Credit Card Improves Your Credit Score?
Make purchases using cash instead of credit
Most people tend to make large purchases with credit cards with the hope of repaying the amount over a period of time. While this may seem like a feasible option, it can have a detrimental effect on your CIBIL score if payments are not made on time.
For example, Karan, a software engineer, recently purchased a credit card from his local bank. Although his financial situation was quite stable, with no debts to his name, he decided to use his credit card to buy plane tickets worth 70,000 rupees for a vacation in Scandinavia. However, his trip generated expenses that exceeded his planned budget and significantly affected his savings, forcing him to use his credit card again to finance part of his vacation. He finally returned home with a credit card debt of over one lakh and very little left to pay it off. Things quickly turned sour and he realized that he did not earn enough to cover his monthly expenses and card payments. Over time, he applied for a loan from several banks but was rejected due to the negative impact of his credit card debt on his CIBIL score.
Given this situation, it is always advisable to budget responsibly and use cash for purchases whenever possible to minimize the risk of being burdened by a credit card as much as possible. This will help minimize your card usage and establish a credit history based on good money management.
4 Essential Tips for Millennials to Use Credit Cards Responsibly
As a parent, it is important that you teach your children, especially teenagers, the importance of having a good understanding of personal finances. From budgeting their allowances to monitoring their spending habits, there are a lot of things you can’t guide your kids on. Teaching your teens the importance of having and using a credit card is equally important. It is also important to educate them on the importance of having a high credit scores. Therefore, it is your responsibility to teach your children how to use a credit card responsibly.
Here are some important tips to help you educate your children about using credit cards:
- Teach them the basics
- Lead by example
- Allow them to use the credit card
- Set certain ground rules
Teach them the basics
To start with the basics and to educate your children about the credit cards, credit limit, interest charges, paying debts and so on. Subsequently, it is important that you explain all these terms to them in detail. Tell them about the importance of a credit score and how their credit card usage will affect it positively as well as negatively.
Lead by example
You should always practice what you preach. Therefore, in order to teach your children the best habits related to credit card usage, it is better that you follow them after all, kids lead my example.
Allow them to use the credit card
After explaining them about the basics of credit card, it is time to actually let them use it. The right time to give credit cards to your children differs from person to person.
Set certain ground rules – To Maintain a Good Credit Score you must ______ Maintain Good Credit Score
Finally, once your children have a credit card, it is important to set certain ground rules. It is better to give them a set of conditions that they have to follow at the time of using the credit card.
Pay Bills Regularly by Using Credit Cards
By using your credit cards to regularly pay your internet bills, telephone or utility bills like water and electricity can help you build a positive credit history and improve your CIBIL scores. However, since these expenses are usually much smaller than those associated with the purchase of material goods, the debt incurred with your credit card can be paid off quickly or in a short period of time.
5 Habits that can helps you Maintain a Good Credit Score
To Maintain a Good Credit Score you must ______ Maintain Good Credit Score – Your credit scores is a measure of how responsible you are with borrowed funds. However, a credit score of 750 and above is considered as good as it showcases financial fit. This gives creditors a reason to view you as a worthy. So, in return you can get a well interest rate on a loan or get a higher sanctions. And if you already have a credit score of above 700, then here are 5 effective habits to follow and maintain you credit score.
- Monitor your Credit Utilisation Ratio
- Don’t Cancel old Credit Cards
- Check your eligibility for every new loan that you borrows
- Check your CIBIL report regularly
- Take one loan at a Time