Credit score, also known as CIBIL score, is an essential parameter in determining the credit eligibility or financial credibility of an individual. Financial institutions often look for this score while assessing an individual’s application for advance. It is especially taken into consideration in the case of unsecured advances as the risk is higher from the lender’s end.
In case an individual doesn’t hold a decent CIBIL score, chances of loan application decline increase. Consequently, individuals have an option to take necessary measures to rebuild their credit history. Applying for a first credit card is one of them that enable an individual to rebuild their credit profile.
When do you need to rebuild credit?
CIBIL score is a three-digit number between 300 and 900 assigned by credit bureaus to any individual with a credit history. A CIBIL score of 750 and above is considered decent for availing loans and advances. Hence, an individual must hold the minimum score as a measure of their creditworthiness for financial companies. Thus, individuals with a low CIBIL score or a poor repayment history need to rebuild credit for improved chances of availing advances.
How credit card helps in rebuilding credit?
For individuals who have not yet availed these cards, a first credit card can be an excellent financial tool for credit improvement. Look at the below pointers to know how one can use a credit card to improve credit score.
- Timely payment of credit card bills
Making bill payments of these payment cards in time helps cardholders improve their CIBIL score. Credit bureaus take the timely bill payment in consideration while computing CIBIL score. Therefore, one should know how to pay credit card bills, keep a track and make sure that they pay it off before the due date.
- Payment of bill amount in full
The option for minimum bill payment results in customers tending not to pay the entire bill amount, which can count negatively in terms of CIBIL score. Partial payment reflects the card holder’s inability to pay the entire bill in time. One of the best ways to rebuild credit with the first credit card is thus by paying the total bill amount within the due date.
- Maintaining the credit utilization ratio
Credit bureaus that assign scores to recommend individuals to maintain a credit utilization ratio of 30% or lower. The credit utilization ratio is the part of the credit that an individual utilizes from the available limit. Keeping it within limit thus leaves a positive impact. Knowing such pointers ensures that customers know how to use a credit card wisely and rebuild credit.
- Upgrading the credit limit
With wise utilization of credit cards and after increment of monthly income, customers can opt to upgrade the credit card limit. They must, however, make sure to utilize the increased limit wisely to move towards rebuilding credit.
Know that it is also essential to select your first payment card wisely to make the most of available features while simultaneously moving towards rebuilding credit.
Credit cards like the Bajaj Finserv RBL Bank SuperCard come off as suitable option of credit card for first-timers. They offer up to 50 days of interest-free period, thus allowing cardholders to make the most of available credit while making repayment easy. Plus, their accompanying benefits like interest-free ATM withdrawals, emergency loans and more add to their utility.
Moreover, the card issuer also simplifies an individual’s experience of availing credits by providing them pre-approved offers. Such offers are available on numerous secured as well as unsecured financial products such as personal loans, business loans, home loans, etc. You can check your pre-approved offers instantly by inputting the name and contact number.
Subsequently, customers can rebuild their credit profiles by wisely utilizing their first credit card. They need to keep the above pointers in mind to smartly utilize their card while regaining their financial credibility.