Pay Credit Card Bills on Time to Keep Your Credit Score Healthy

Pay Credit Card Bills on Time to Keep Your Credit Score Healthy

According to recent reports, Indian financial market witnessed a rise in the transactions through credit cards by 28% during 2017 – 2018.  Credit cards are now touted as one of the most sought-after payment methods because of their customer-oriented features. It provides lucrative benefits that are tailor-made to cater to the financial requirements of cardholders.

Individuals who are willing to make big-ticket purchases can safely resort to credit cards for online payments as it provides lump sum reward points which can be redeemed to avail discounts and cash backs without inflicting no additional cost.

Nonetheless, individuals can avail a credit card only if they possess a high credit score earned due to timely credit card bill payments. It shows that a cardholder has the necessary repayment capability to pay off their dues in time. It also shows that a borrower has good FOIR (Fixed Obligation to Income Ratio) and is not too much credit dependent.

An individual with a low credit score can refer to the methods mentioned below to improve their credit ratings and stay ahead of his or her dues.

1. On-time bill payments –

Before lending advances to a prospective customer, a lender always checks their credit score to apprehend the risk associated with lending. A track record of good repayment history determines the reliability of a client and helps the lender in assessing his repayment capability. Delayed payment of dues and also paying an amount less than the total due can negatively impacts one’s credit score. Individuals should keep a track on their credit card bill payment date as well in order to avoid missing out repayment deadline.

2. Strike a balance in the credit card usage –

Every individual needs to maintain a credit utilization ratio that requires them to retain a balance between the utilised amount and the credit limit. A less quantum of borrowed amount imposes less financial stress on the individual during repayment, thus making it easier for him to clear off the credit card bill payments.

According to financial experts, borrowers should not use an amount that is above 30% of the credit card limit. Maximum withdraw or borrowing an amount above 50% of the credit card limit can negatively impact the credit reports and can be instrumental in lowering the credit score of an individual.

3. Draw out only the required sum –

Individuals to manage their finances better should learn how to use a credit card wisely, without burdening themselves with unnecessary debts. Cardholders, to put a check on their expenditure, can get in touch with their service provider through the credit card customer care number and direct them to set a limit of less than 30% on their credit card usage. Withdrawing amount up to the highest amount of the card limit can create a negative impact on the credit score.

4. Systematic tracking of credit card statements –

The customers should keep their credit card statements every month to check if the transaction record declared in the statements are accurate. Customers have the provision to contact their service provider using their credit card customer care number to avail instant assistance in case of any financial ambiguity.

Toda, almost every financial Institution offers its customers with a transparent process needed to raise the credibility quotient. Reputed NBFCs like Bajaj Finserv offers credit cards like Bajaj Finserv RBL Bank SuperCard, which allows its users to access its details via the dedicated app. This app helps you by reminding credit card bill payment on time and never miss due dates. Customers can also know about other lucrative features like exciting rewards and loyalty programs via this application.

Consistency in credit card bill payments is a necessary step towards achieving a high credit score. It leads to an increase in the credibility of a loan seeker and also allows them to negotiate interest rates on a line of credit. Achieving a good credit score, i.e. above 750, will enhance your chance of availing credit from reliable sources at a competitive interest rate.

Thus, it is necessary for all credit card holders to adhere to the above mentioned factors so that they improve their credit score and repay their credit card debt without compromising on their overall budget.

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