Credit Card Actions That Can Help Reach a Strong Credit Score

Your credit repaying history, which includes loan and credit card payments, is one of the most important factors taken into consideration by credit bureaus when calculating your credit score. In contrast to loans, which are used to achieve various financial goals such as purchasing a home or car, funding a child’s higher education, or when in need of funds, credit cards, when used in a disciplined manner, can play an important role in building and maintaining an excellent online credit score. In contrast to loans, credit cards do not carry any interest charges.

So that you can take advantage of the critical advantages of credit cards, such as their ability to serve as a gateway to improving one’s minimum cibil score for credit card, here are six credit card actions to consider taking:

Ensure that credit card bills are paid on a regular and timely basis

When you make credit card payments, your credit card issuer reports them to the credit bureaus, which allows the bureaus to compute your credit score. Given that your credit payback history is one of the most important factors considered in online credit score calculation, it is critical to developing the habit of paying your credit card bills on time and in full on a regular basis. 

Failure to do so may result in a decrease in your credit score, which may affect your eligibility and chances of being approved for loans and credit cards in the future. Credit card users who are having difficulties making timely and comprehensive repayments of their debts may want to explore converting either their entire outstanding debt or specific large-ticket items into a monthly instalment plan (like EMI). This would allow them to return their debts in smaller instalments at a lower interest rate than finance charges, as well as take advantage of the option to choose a repayment term as long as 5 years.

Maintain a credit usage ratio of no more than 30% of a total credit limit

The credit usage/utilisation ratio (CUR) refers to the percentage of your total credit card limit that you have utilised. In light of the fact that lenders often regard credit card users with a CUR greater than 30 percent to be credit hungry, credit bureaus are likely to lower your credit score by a few points if you exceed this threshold. As a result, keep this ratio under 30% to avoid damaging your online credit score and dropping it below the minimum cibil score for credit card. Those who consistently fall short of this threshold can either request a rise in their credit limit from their lender or apply for an extra credit card. Your CUR will decrease as a result, provided that you do not increase your credit card spending after receiving a greater credit limit.

Keep your previous credit cards open as long as possible.

The average duration of your credit history, also known as the age of your credit history, is one of the most important factors considered by credit bureaus when calculating your minimum cibil score for credit card. A longer average length/age of credit history is preferred by lenders over those who have a shorter average length/age of credit history. Credit card users must make sure that their previous credit cards are kept in their possession due to the fact that your credit history comprises repayment of your loan EMIs as well as your credit card payments. In addition to having a negative influence on your credit score in one way, closing older credit cards has a negative impact on your online credit score in two ways.

In the first instance, your total credit limit is lowered, which results in an increase in your credit utilisation ratio as a result (CUR). When your credit utilisation rate (CUR) exceeds 30%, your credit score is reduced by a few points, as credit bureaus typically consider CUR above 30% to be an indication of credit desperation. Second, the average age of your credit history decreases as a result of the closure of older credit cards, which can be damaging to your credit score and decrease it to a level equal to or even below the minimum cibil score for credit card. As a result, consumers who have many credit cards and need to close some of them should initially consider closing the cards that are comparatively recent in age rather than the cards that are older.

Monthly examine your credit report

In your credit report, you will get a summary of your credit repayment history, which will be used by credit bureaus to calculate your credit score. Because lenders determine your creditworthiness by obtaining a copy of your credit report from the appropriate bureau, it is advisable to check your credit report on a regular basis, at least once every three months. This habit would assist you in identifying and correcting any potential typographical errors or fraudulent activity in your credit report before they have a negative impact on your required minimum cibil score for credit card.

If you are rejected a regular credit card, you can obtain a secured credit card to help you build a credit history.

When it comes to building a solid credit score, first-time credit users, or those who have not previously used any form of credit and thus do not have a credit history, can benefit from taking advantage of credit cards and returning their debts on time in full. When applying for your first credit card as a new credit applicant, it would be smart to contact your existing bank, that is, the bank with which you already have an established relationship, whether it be a savings or a salary account.

Those who are unable to obtain a conventional credit card for a variety of reasons, such as a low credit score, insufficient income, or an unsuitable place of residence, should consider obtaining secured credit cards in order to raise their online credit score. These cards are very similar to their conventional counterparts and provide identical benefits, with the exception that they are issued against your fixed deposits instead of your savings accounts.