How Can I Build My Credit Score Fast with a Credit Card?
Do you know that your Credit Score helps lenders to determine the amount that can be lent to you? It also helps them to decide if they can actually give you a loan! With a robust credit score, you can always tap credit as per your needs without any hassle. So, it is utmost important that you keep a check on your Credit Score and know what are the effective ways to improve the Credit Score in your daily life. One such tool that you can use in your daily life to build your credit score is your Credit Card.
Given the different types of Credit Cards available from different financial institutions, it could be really helpful to have a brief knowledge about a few of them, first.
Credit Card Types :
You can broadly classify Credit Cards as Unsecured and Secured Credit Cards.
Secured Credit Cards :
If you don't have an income source or if you are totally new to Credit Cards, Secured Credit Card is the only choice that the bank would be willing to offer. This Credit Card is offered against some security such as Fixed Deposit or other modes of collateral.
Unsecured Credit Card
As the name suggests, Unsecured Credit Card is given without the need of any collateral. One can get this card if they have a good Credit Score or fall into regular income earners category. A majority of Credit Cards are issued as Unsecured Cards only.
Cards are basically means to buy today and pay later. Thus, these are mostly availed to power your purchases. This is why the card issuer company divides Credit Cards according to the usage. You can avail any of the following types of Credit Cards according to your needs and interest.
#1 Rewards Card
A highly lucrative type of Credit Card, Rewards Cards “rewards” you on your every purchase and is very much popular among users for this very attractive feature. One can redeem the reward points later in the form of discounts or cash back for the next purchases. Simply Click SBI Card is one of the popular SBI Credit Card in the segment. Credit Cards by Citibank and American Express are also loaded with attractive rewards programs.
#2 Fuel Credit Card
With a Fuel Credit Card in your wallet, you can save decent amount of money while refilling fuel. This card is greatly helpful if you travel a lot daily or running a transportation business as it is beneficial with the Cashback Offers. IndianOil CITI Platinum Credit Card is one of the Best Credit Cards in India for fuel category.
#3 Standard or Plain Vanilla Credit Card
This is the regular Credit Card that most people use. It has all the benefits such as rewards, value back offers besides the standard features of credit cards such as a 20-50 days credit period within which you can draw and repay the amount without any interest rate, milestone benefits etc.
#4 Gold Credit Card
This Credit Card is for those whose earnings are high and the benefits are also equally proportional such as high limit on the credit, insurance on travel, and cashback on every purchase.
#5 Platinum Credit Card
This is one of the most popular Credit Cards owing to the features like shopping and entertainment offers they provide. The annual fee is higher compared to other credit cards however.
Building score with Credit Card...
Credit Cards are the best means to improve one's Credit Score quickly. Let’s find out how you can build your score with the help of a Card. Here are some easy steps:
- If you don't have a Credit Card yet, apply for one at the earliest. If you do not have a credit history and are a new earner, you will be offered a secured Credit Card. Owning a secured card has its own advantages, such as minimum documentation will be required and Credit Score will also not be verified to assess your eligibility.
- Refrain yourself from getting into the temptation of availing more than one Credit Card at the same time. Doing so, would only leave an impression of you as a money-hungry person to the lenders and in turn will affect the Credit Score.
- Maintain a well balanced credit utilization ratio. Also known as balance-to-limit ratio, it helps lender know about your credit limit utilization. Most of the credit firms consider this ratio as one of the key aspects in determining the eligibility. For the given maximum credit limit, try to ensure that you restrict your monthly card usage above 25 % and below 50 % of the limit.
- Clear all the outstanding credit loan repayments as early as possible to regain the Credit Score. Not being able to pay the EMIs or Credit Card loan on time will have devastating impact on the Credit Score and it will bother the next lender for approving a loan to you.
- Improving Credit Score also means that you should keep the credit history healthy and clean. This requires you to use the Credit Card regularly as using the card builds your credit history. You need to swipe or use credit card at least once per month say, for buying groceries, fashion shopping or movie tickets. This way, it will gradually improve the score over the time very quickly.
- Pay your EMIs always full and within the given time. Your repayment history is very vital for the credit bureaus to determine the Credit Score and it is always better to take no risks on paying the EMIs and never skip or delay the EMI payments.
Credit card is your best friend to improve score but!
One can conclude that there is always an underlying opportunity for everyone to either build or repair their Credit Score with the help of a Credit Card and following the above mentioned ways can ensure you are right on the track. Patience is important because credit history doesn't turn gold in a fortnight but it takes place over months of usage.
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