Four ways to use credit cards to improve your CIBIL score


Credit cards are a progressive tool for achieving short-term financial goals. In fact, modern credit cards even make purchases much more affordable thanks to the many features they are equipped with. For example, with the right credit card, you can make big expenses affordable by splitting the payment into multiple installments. The benefits of such an arrangement are numerous, the most important being that it reduces the pressure on your savings. It is also useful when learning how to improve your CIBIL score as these features can help you establish a repayment history.

In fact, there are many ways to use your credit card to increase your CIBIL score. Indeed, it is a credit instrument and using it wisely adds to your credit exposure and mix. Additionally, with banks and financial institutions relying heavily on CIBIL scores to assess whether to grant loans or credit cards, it is important that you use it wisely. It is also prudent to know how to improve CIBIL score with a credit card because it is quite easy to do so. To know the different ways to increase your CIBIL score with a credit card, read on.

Select the right type of credit card to avoid multiple requests
Credit cards have now become much easier to obtain and many lenders will offer you special offers. Keep in mind that every offer will lead to a credit request, and these will require issuers to thoroughly investigate your CIBIL report. Difficult requests lower your CIBIL score, which is why you should not quickly accept every offer you receive. Ideally, you should only select a credit card that best matches your buying habits. This way you can make the most of all the advantages or privileges offered, without the need for several active credit cards.

Note that it can be useful to have several active credit cards. As long as you don’t make several new requests in a short time, you can use these cards to maintain and build your CIBIL score. In fact, having multiple active credit cards increases your total credit limit, which may make it easier for you to maintain your ideal credit utilization rate.

Maintain the ideal credit utilization rate and not use the entire limit
Your maximum credit card limit is assigned to you by your issuer based on their assessments of your financial and credit profile. Although you can access the full limit assigned to you, it is important to use your credit card limit wisely. Ideally, you should strive to maintain a credit utilization ratio of 30% or less. This is based on your total limit and exceeding this limit will lower your CIBIL score. So if you want to improve your score, maintaining the right ratio is proven to help and will work favorably if done consistently.

Pay your credit card bills quickly
The most important rule of using credit cards is to make sure you can make timely payments. There is a specific payment window and you usually have the option of paying the minimum amount or the full amount due. To improve your CIBIL score, always pay the full credit card bill and not just the minimum amount. Making full payments consistently helps you establish a stable repayment history, which significantly increases your score. To notice how this helps, check CIBIL score details and access your CIBIL report online on the Bajaj Finserv website. Just fill out a simple form and verify your identity to find out your details.

Monitor, plan and forecast card spending
The easiest way to maintain an adequate credit utilization ratio is to monitor your spending and spend within limits. You can do this by checking your credit card statements monthly. These will contain details of your transactions, available limit, outstanding balance, etc. Use this information to assess your spending habits and take appropriate action when overspending. If you have multiple credit cards, plan and split your spending between them to make sure you don’t abuse a single card. This will help you maintain a healthy credit card limit, which can come in handy in an emergency.

These tips should help you understand the different ways to get the most out of a credit card, while using it to improve your CIBIL score. Knowing how to improve your CIBIL score is important and a credit card can help in this regard. Remember that good financial health starts with good financial habits. Stay alert to any changes in your CIBIL report and you can do so easily when you check the CIBIL score on Bajaj Finserv for free. Use the service, access a personalized report on your credit health, and monitor your financial well-being with ease.

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Published on

May 21, 2022


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