Being careless with your Credit Card will lower your credit score

Credit card a.k.a plastic money is indeed one of the best inventions since the 20th century! Banks say that best credit cards sell like hot cakes and almost every account holder at some point of their lives will look to own a credit card.

What is the use of a credit card?

A credit card is a facility that the lender provides to any customer where they can make any purchases they wish. At the end of the month/billing cycle, that customer will have to repay the amount they have swiped to the bank.

This only sounds easy. Some people misuse these privileges and delay in paying their bill. These people need to be educated that using a credit card in a negative way surely affects your credibility. Don’t believe us? Let us show you few ways in which your credibility (credit score) can be affected through your credit card usage.

  • Applying for many credit cards:

Please remember that you must only apply for a credit card when there is a recurring need. When you apply for multiple credit cards it weakens your financial profile. Do you want to know why? Simple! Because the lender will see this as you are desperate for credit.

  • Not paying bills on time:

Pay your bills on time always. When you just repay “minimum amount due” it is seen as a bad indicator and the lender thinks that you cannot manage your finances properly. Hence your credit score will reduce.

  • Utilizing a higher credit ratio:

A credit utilization ratio (CUR) is the ratio of credit available and credit utilized. A high CUR shows you’re high dependency on credit. It is advisable to maintain a lower utilization ratio than 30%* of the available credit. If you cannot do that and require more money, you can ask your lender to increase your credit limit.

  • Credit card account closure:

Please note that closing your credit card account doesn’t mean that your credit history will get erased on their own. You need to pay your bills on time without defaulting. Lenders prefer profiles with longer credit history than short credit history. Hence you need to carefully evaluate your decision of closing your credit card.

If you want to take a smart credit card, visit Ruloans and we shall help you!

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