NEWS & ADVICE : CREDIT CARDS
How Your Credit Card Can Help To Improve Your Credit Score
By Ankit Sharma
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Using a credit card is not only advantageous for the conveniences that it provides, but, an individual can also use his credit card to improve his credit score. A credit card provides a person one of the easiest ways of building a good credit history, which is an important determinant of a person's credit score.  A credit score plays a significant role for an individual's financial health, specially when he/she wants to avail loans to make major purchases like buying a car or a home. The final cost of these loans for the borrower depends on his credit score.

This article explains some of the best ways of using a credit card with the objective of enhancing one's credit score.

First, get a credit card (with a reputed brand name)

Some people feel that using a credit card will only lead to overspending and so they choose to use debit cards over credit cards. But, they must understand that judicious and smart use of credit cards can be used to a person's advantage. Specially, those who have a poor credit score and are looking for ways to improve it, should get at least one credit card. It will be helpful for the simple reason that using the plastic card will help to generate a credit history, which determines the credit score.

So, it is advised to own and use at least one credit card from a reputed credit card issuer. Generally, getting associated with a good credit card company helps in availing high credit limits.   

Get the highest credit limit

Cardholders should opt to get credit cards from those card issuers who are offering them the highest credit limits. Even if the cardholder never spends as high as his credit limit, having a high credit limit has a positive effect on an individual's credit score and improves it.

Avoid carrying too many credit cards

Owning and managing multiple credit cards can have a negative effect on one's credit score. If an individual already possesses one or two credit cards which provide him enough credit limits to manage his expenses, then getting another credit card will reduce his credit score. The idea is to have a high credit limit and not to maintain numerous cards.  

For example, a person having just one credit card with a credit limit of Rs. 2 lakh will have a higher credit score than a person carrying, say three cards, with combined credit limit of Rs. 2 lakh.


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