Skip to main content

How to Build good Credit Score with credit card


Using your credit card for regular spends and ensuring timely and full repayment of outstanding dues helps in building a good credit score.

Using a credit card is equivalent to taking a loan since it's the card issuer who pays for you and you repay the amount. Being a credit, credit card transactions are reported to credit bureaus who then use it to evaluate your credit score. Given that credit score reflects your credit worthiness and repayment behaviour, how you handle credit cards is what ultimately determines its impact on your credit score.

Using your credit card for regular spends and ensuring timely and full repayment of outstanding dues helps in building a good credit score. "Make sure your credit utilisation ratio doesn't exceed 30-40% of your credit limit regularly. Lenders usually hesitate to lend to borrowers who frequently breach this mark. You may also consider increasing the credit limit for lowering your credit utilisation

Here are 5 things you need to follow cautiously while making transactions through credit cards on monthly basis.

Pay your dues on time: Your repayments, be they credit card bills or loan EMIs, form the backbone of your credit score. So it is extremely important that you pay your outstanding balances on time every time. Every time you miss your payment, your credit score takes a hit. Every time you repay on time, your credit score goes up.

Pay your bills in full: As much as possible, pay your entire credit card dues every time before the due date. If you cannot pay the entire amount for whatever reasons, try to pay the maximum you can and not just the minimum amount. For one, the interest on the credit card is very high interest on the unpaid amount, thereby increasing your repayment burden. Second, it also gives an impression of being credit-hungry.

 Keep your credit utilization low: Credit bureaus look at how you are utilizing your credit. So, use only part of your credit limit.

Utilisation is usually considered ideal. For instance, if your credit limit is Rs 100000, use just Rs 20000-30000 a month on it. This would make you look like someone who uses credit in a responsible manner. This is where multiple cards help you by spreading your spending across cards. Your other lines of credit apart from credit cards also have a significant impact on credit score. Too much debt can mean substantially higher EMIs, which can make it difficult to keep up with monthly payments. These missed payments will lower credit score. The lower your debt, the easier it will be to maintain a good credit score.

Keep your credit inquiries low: Each time you apply for a credit product – a credit card or a loan – a query goes to the credit bureau and your credit score takes a small hit. So do not apply randomly for cards or loans. One should do their research properly, narrow down the most relevant offer with the highest potential for approval, and then apply for it. "Each new credit account also lowers your average credit age, and therefore your credit score. So refrain from opening new credit accounts one after the other

Check your credit report: Requesting your credit score directly from the credit bureau is considered as a soft query and does not affect your credit score. Checking your credit score regularly ensures that no discrepancies or errors are reported, and your credit score genuinely reflects your financial behaviour. The sooner you have a view into this, the sooner you can correct your course in case of any issues


SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Popular posts from this blog

National Savings Certificate

National Savings Certificate Here's everything you need to know about the 5-year savings scheme offered by the Government This is a 5-year small savings scheme of the government. From 1 July 2016, a National Savings Certificate (NSC) can be held in the electronic mode too. Physical pre-printed NSC certificates have been discontinued and replaced with Public Provident Fund-like passbooks. What's on offer The minimum amount you can invest in them is Rs100 and there is no upper limit. Under this scheme, all deposits up to Rs1.5 lakh qualify for deduction under section 80C of the Income-tax Act, 1961. The interest earned is taxable. You can invest in multiples of Rs 100. These certificates can be owned individually, jointly and also on behalf of minors. The interest rates for all small savings schemes are released on a quarterly basis. The effective rate for NSC from 1 October to 31 December is 8%. The interest is calculated on an annual compounding basis and is given along w...
Read more

Am you Required to E-file Tax Return?

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Am I Required to 'E-file' My Return? Yes, under the law you are required to e-file your return if your income for the year is Rs. 500,000 or more. Even if you are not required to e-file your return, it is advisable to do so for the following benefits: i) E-filing is environment friendly. ii) E-filing ensures certain validations before the return is filed. Therefore, e-returns are more accurate than the paper returns. iii) E-returns are processed faster than the paper returns. iv) E-filing can be done from the comfort of home/office and you do not have to stand in queue to e-file. v) E-returns can be accessed anytime from the tax department's e-filing portal. For further information contact Prajna Capit...
Read more

Mutual Fund Review: HDFC Index Sensex Plus

  In terms of size, HDFC Index Sensex Plus may be one of the smallest offerings from the HDFC stable. But that has not dampened its show, which has beaten the Sensex by a mile in overall returns   HDFC Index Sensex Plus is a passively managed diversified equity scheme with Sensex as its benchmark index. The fund also invests a small proportion of its equity portfolio in non-Sensex scrips. The scheme cannot boast of an impressive size and is one of the smallest in the HDFC basket with assets under management (AUM) of less than 60 crore. PERFORMANCE: Being passively managed and portfolio aligned to that of the benchmark, the performance of the index fund is expected to follow that of the benchmark and in this respect, it has not disappointed investors. Since its launch in July 2002, the fund has outperformed Sensex in overall returns by good margins.    While every 1,000 invested in HDFC Index Sensex Plus in July 2002 is worth 6,130 now, a similar amount invested in Sensex then wo...
Read more

Different types of Mutual Funds

You may not be comfortable investing in the stock market. It might not seem like your cup of tea. But you can start by investing in Mutual Funds. Many first-time investors invest in Mutual Funds. This is because they do not know how to invest in individual securities. Basic information on Mutual Funds People invest their money in stocks, bonds, and other securities through Mutual Funds. Each Fund has different schemes with specific objectives. Professional Fund Managers look after these schemes. Your Fund Manager could help you invest in a scheme that suits your financial goal. Functioning of Mutual Funds You could make money through Mutual Funds in different ways. A single Mutual Fund could hold many different stocks, bonds, and debentures. This minimizes the risk by spreading out your investment. You could earn dividends from stocks and interest from bonds. You could also earn capital by selling securities when their price increases. Usually, you could choose to sell your share any t...
Read more

IDFC - Long term infrastructure bonds - Tranche 2

IDFC - Long term infrastructure bonds What are infrastructure bonds? In 2010, the government introduced a new section 80CCF under the Income Tax Act, 1961 (" Income Tax Act ") to provide for income tax deductions for subscription to long-term infrastructure bonds and pursuant to that the Central Board of Direct Taxes passed Notification No. 48/2010/F.No.149/84/2010-SO(TPL) dated July 9, 2010. These long term infrastructure bonds offer an additional window of tax deduction of investments up to Rs. 20,000 for the financial year 2010-11. This deduction is over and above the Rs 1 lakh deduction available under sections 80C, 80CCC and 80CCD read with section 80CCE of the Income Tax Act. Infrastructure bonds help in intermediating the retail investor's savings into infrastructure sector directly. Long term infrastructure Bonds by IDFC IDFC issued an earlier tranche of these long term infrastructure bonds on November 12, 2010. This is the second public issue of long-te...
Read more
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now