Learn the key ways in which your credit card use impacts your CIBIL Score and discover how Bajaj Finserv Credit Pass can be your credit health guide.
Embarking on a financial adventure often involves wielding the magic plastic wand we call a credit card. But did you know that each swipe, tap, or insert can script a tale that echoes in the chambers of your credit history? Welcome to the fascinating realm of CIBIL Score impact of credit card use, where every transaction and every decision shapes your credit destiny. In this article, we’ll unravel four crucial insights that demystify the connection between your credit card escapades and the three-digit number that wields power over your financial future.
Let’s start with the basics: the full form of CIBIL is Credit Information Bureau (India) Limited, our nation’s oldest credit information company, which is now known as TransUnion CIBIL since 2016. This company calculates your credit card score check, a number ranging from 300 to 900 that reflects your financial reputation. A score of 750+ is considered ideal by most creditors. One factor that can greatly influence your credit score is how you use your credit cards. Using them responsibly can actually boost your credit score, creating more financial opportunities in your future.
The Balancing Act of Credit Utilisation;
Your credit utilisation ratio, expressed as a percentage, is the ratio of how much credit you’ve used compared to your total credit limit. Think of your credit limit as a wedding buffet. If you pile your plate too high, it can backfire in more ways than one. It can make you physically unwell and it can create a negative impression about how greedy you are. The same goes for your credit cards. Maxing out your credit cards can negatively impact your financial health, tanking your CIBIL Score and give you a reputation for being credit-hungry. Financial experts recommend using only 30% or less of your available credit limit to show you’re responsible and not overly reliant on credit. Doing so will also help you manage your payments better and help you improve your credit score.
The Art of Being Punctual with Payments;
Being fashionably late might work in some situations, but not when it comes to paying your credit card bills. Delayed payments not only result in late fees but also send a not-so-friendly signal to credit bureaus. On the other hand, paying your bills on time leaves a good impression, contributing positively to your CIBIL Score improve. If you struggle in this department, consider setting reminders or automating payments to ensure you never miss a due date.
Long-Term Relationships with Credit Cards;
Ever heard the saying, ‘Rome wasn’t built in a day’? Well, your credit score isn’t built overnight either. The length of your credit history matters. The longer your credit history, the more stable and reliable you seem to lenders. Closing old credit card accounts might seem like tidying up your financial closet, but it could actually backfire. Your oldest credit card is like a badge of honour – it shows you’ve been a responsible borrower for a longer time and helps you maintain your credit utilisation ratio. So, unless that old card comes with hefty fees, it might be wise to let it stay and continue boosting your creditworthiness.
A Healthy Blend of Credit Types;
Variety is the spice of life, and it applies to your credit portfolio too. Lenders like to see a mix of different types of credit on your report because it shows you can handle different financial responsibilities. If you already have a secured home or car loan and a collateral-free personal loan, consider acquiring a credit card to the mix. Just like a variety of foods makes for a healthy meal, diversity in credit types is good for your financial diet and can have a positive impact on your credit score.
Read Here More: Everything You Need To Know About CIBIL Score: Meaning & Importance
Now that we’ve unravelled the secrets of the CIBIL Score and credit card use, let’s talk about a nifty tool to help you build your creditworthiness by putting these ideas into practice. The Bajaj Finserv Credit Pass is like a personal trainer for your credit score. With the Credit Pass, you can access your personalised credit dashboard that provides a complete overview of all your credit accounts so you can monitor the factors that impact it. Use it to stay on top of your credit game by tracking upcoming deadlines and analysing your credit utilisation ratio and credit mix. With monthly CIBIL Score checks, you can stay on the right path and utilise the interactive tools to make wiser credit decisions. Unlock this CIBIL-powered offering by visiting the Credit Pass page and signing up today to make the most of the limited period offer a full year of free access.