Your credit score has a significant role when applying for loans, credit cards, or any other form of credit. A higher credit score indicates that you are a responsible borrower who pays back debts on time. This improves your chances of loan approval and makes you eligible for better interest rates.
Hence, it is essential to check your credit score periodically and take steps to improve it if necessary. Read on to learn how to check your credit score and improve your credit card usage.
Checking Your Credit Score
In India, credit scores are calculated by credit bureaus like CIBIL, Experian, and Equifax. The score typically ranges between 300-900, with a higher number indicating better creditworthiness. Following are some ways to check your credit score:
- Get your credit report from CIBIL: You can visit www.cibil.com and purchase your credit report, including your current CIBIL score. This is the most reliable way to find out your score.
- Credit score simulator tools: Many banks offer free online tools to estimate your credit score without impacting it.
- Credit cards: Some providers share your credit score for free in each billing statement.
Improving Your Credit Score with Credit Cards
Using your credit card strategically can help strengthen your credit profile. Here are some tips:
- Pay your bills on time. Late or missed payments can lower your credit score. Set payment reminders and automate them if possible to avoid missing due dates.
- Maintain a low utilisation ratio: Don’t max out your credit limit. It is recommended that you use less than 30% of your total credit limit.
- Limit new applications: Applying for many new cards in a short span raises red flags for lenders. Apply only when there is a genuine need.
- Build credit mix: Have a combination of secured credit, like home loans and unsecured credit, like personal loans and credit cards.
- Increase credit limit: Accept an increased credit limit when your card provider offers it, but avoid unnecessary spending. Having a higher limit with low utilisation conveys positive spending habits.
- Review statements: Check for errors and report them immediately to credit bureaus. Also, track your spending patterns.
- Opt for secured cards: People new to credit can start with secured cards, which help establish a credit history.
Conclusion
A strong credit score is the gateway to financial opportunities. With strategic credit card habits, you can transform it from a plastic money tool to a score-boosting instrument. Use your credit wisely, spend within limits, and make timely card payments.
These simple practices will build your creditworthiness over time. A high score signifies lower lending risks, making loan approvals easier, quicker, and cheaper. So, monitor your score, analyse patterns, and correct errors.
With a disciplined approach, your credit card can elevate your profile and open doors to attractive credit products that empower your aspirations. The journey to good credit is gradual but rewarding. Start today and inch closer to your financial goals.