Understanding credit card use for a good credit score

Meet Garima, a young teacher, who aspires to travel, own a home, and achieve financial stability. Eager to set things in motion, she also recognises the importance of a good credit score. However, Garima finds herself at a crossroads due to a lack of knowledge about responsible credit card use that can help improve her credit score.

In this article, we'll explore why one needs a good credit score and how to strategically use a credit card to attain a positive credit history and financial empowerment. 

What is a good credit score and why do you need it?
 

A good credit score ranges from 700 to 900. Having a good credit history opens a world of possibilities like - 

• Loan approval and low interest rates -
  
  

  Enables faster approval for loans and secures lower interest rates, thus saving money over the loan term.

• Credit card approval and limits -
  
  

  Increases the likelihood of credit card approval and eligibility for higher credit limits.

• Renting opportunities -
  
  

  Landlords often check credit histories when evaluating rental applications. A good credit history can likely increase your chances of securing a rental property. 

• Employment prospects -
  
  

  Some employers consider credit history reports during hiring, particularly for positions involving financial responsibilities.

• Financial flexibility and trust -
  
  

  Provides financial flexibility and access to credit when needed and builds trust with lenders for future favourable terms.

Credit cards as architects of good credit score
 

Understanding responsible and strategic credit card use can significantly impact your credit card history. Here is how you can build a robust credit profile with a credit card - 

• Timely payments -
  
  

  The foundation of a good credit score lies in making timely credit card payments. This showcases financial responsibility and reliability, positively impacting your credit score.

• Credit utilisation ratio –
  
  

  It is the proportion of credit used versus your credit limit. Credit cards offer a flexible spending limit, but keeping your balance below 30% is recommended to show responsible credit card use.

• Credit history -
  
  

  Keeping your older credit card accounts open suits your credit. Credit scoring models like to see a more extended credit history, which is generally viewed as positive.

• Cashback and rewards -
  
  

  Strategic credit card use also includes making use of cashback, rewards, credit card offers and deals, etc., that can help you save money while positively affecting your credit score. 

Check your credit card history 
 

Want to know where you stand? Here are a few simple ways to find out your credit history - 

• Visit any credit bureau's official website
• Fill in the details required and your credit report will be ready

Pro-tip - Different bureaus have different ways to score your credit history. To ensure you have a good credit score across, you can cross-verify on different websites.

Maintain a good credit score with IDFC FIRST Bank
 

Responsible credit card use not only builds and sustains a good credit score but also lays the foundation for a strong credit profile. This opens doors to financial possibilities, ensuring a path towards a secure and prosperous future.

IDFC FIRST Bank Credit Cards offer incredible rewards, attractive interest rates, and are tailored to your needs. The best bit - most of them are lifetime free! Even better - the reward points never expire and can be instantly redeemed on any online transaction. Apply today to embark on a rewarding credit journey. 

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.