Credit Card Usage and Its Positive Impact on Your CIBIL Score

The way in which you use your credit card has a significant influence on your CIBIL score. Wondering why? Well, this is because a card card is counted as part of your credit history, so the following actions are recorded:

• How much of your credit limit you use
• How long you’ve had the credit card for 
• If you usually pay your credit card bills in full 
• If you usually pay your bills on time 
• Any delays or defaults 

One of the lesser-known advantages of using a credit card responsibly and smartly is that you can increase your CIBIL score. 

How to Use A Credit Card Responsibly 

Understanding the relationship between your credit card and CIBIL score is crucial. Here’s how you can maintain good financial health. 

1. Select The Right Credit Card

One of the advantages of using a credit card is saving money on purchases from partners. Leverage this by:

• Making sure that your card gives you offers from brands and retailers you are likely to purchase from
• Ensuring the card helps you pay bills easily rather than becoming a burden
• Checking the cashback, discounts and redemption platforms

2. Make Repayment a Priority

Your repayment behaviour is directly proportional to your score. Keep these factors in mind:

• If you pay only a minimal amount or fail to make payments, your credit score will decrease
• Paying your TAD (total amount due) consistently can boost your score over time 
• Paying the minimum due means your balance attracts interest

3. Know The Importance of Credit Utilisation 

How much credit you use from what is available to you also affects your score. Here’s what you can keep in mind:

• Maintain your credit utilisation ratio below 30%
• Using up your limit every month makes you seem over-reliant on credit 
• Increase your credit limit when possible to increase your purchasing power 

4. Keep Using Your Credit Card

Consistent usage builds your history with credit, and the duration impacts your score. An older credit card can help you enhance your score, as it implies you have the ability to handle credit in the long term. So, think again before you shut down an older account. 

5. Get More Than One Card

Here are some tips:

• Using more than one card helps you decrease your credit utilisation 
• Ideally, you should aim to keep no more than three credit cards open at any given time
• Having too many credit cards might make repayment difficult and lower your credit score

6. Check Promotional Messages

Festive seasons are the time when credit card companies offer whopping savings with partner brands. Be it smartphones or home décor, this is the time to shop to your heart’s content. You can easily save money, reduce your bills, and thus repay on time by taking advantage of such promotions. 

7. Don’t Apply For Too Many Card At Once

It’s easy to fall into the trap of sending off many applications in one sitting. After all, you are simply improving your chances, right? Wrong. This behaviour makes you look like you cannot do with credit and lowers your score due to multiple inquiries. Instead, choose the right card and apply only if you qualify. 

Want to choose the best card based on these pointers? Keep these things in mind:

• Credit Limit

Check the limit that has been provided to you. It should be sufficient to satisfy your requirements without negatively impacting your credit usage ratio.

• Cashback And Discounts

Most credit cards provide outstanding rewards that may be used for making pocket-friendly purchases. Ensure your card offers you these based on your spending patterns. 

• Annual Fees & Charges

Make sure you choose a credit card only after reviewing the charges. You don’t want to end up paying high fees due to hidden charges for late payments, forex, and more. 

• Terms & Conditions

Read the card’s MITC (Most Important Terms and Conditions) document carefully. This will help you understand the rewards and perks you are likely to receive and their limitations, if any. 

To ensure that you can positively impact your credit score with responsible usage, get the 

One Credit Card. This metal credit card is not only stylish but also helps you monitor your expenditures effectively. Its mobile app is built on full-stack technology, which helps you set limits on different purchase categories. 

It also helps you get a detailed visual analysis of your spending so you can spend smarter and more confidently than ever before. You can even track your rewards and see offers near you on the One Credit Card app. Apart from paying your bills with reward points, you can also earn accelerated rewards, up to 5X, for your top 2 spending categories every cycle. This helps you rack up points and decrease your liability. So, what are you waiting for? Apply now for the One Credit Card.