Credit Cards tell your History
Buy now – Pay later… Credit Card users get used to this behavior Cautious use of it gives
plenty of benefits; otherwise it puts you in unimaginable trouble. Its
influence on your Credit History and Credit Score is immeasurable.
“At least now I wish my credit score is good,
because I need to have a Credit Card” – these are the words of the famous
American Mathematician John Nash in the context of his getting Nobel Prize in
1994. Even though it is surprising, in fact its importance in deciding Credit Score is indescribable. Credit
History and Credit Score play a very important role not only for getting Credit
Card, but also for getting any type of loan.
It
is in your hands to get a healthy Credit History displayed and to get a finer Credit Score. Once you make flawless use
of Credit Card, it itself takes protective care of your Credit History. Credit Card allows interest-free transactions
for a specified amount for a specified period of time. Purchases you made will
reduce the allotted amount and the moment you repay them, the allotted amount
gets automatically replenished, facilitating you to use it again. The type of
your expenditure and the mode of repayment reflect your actual financial state.
Fluctuations in the Credit Score depend on this.
*Pay promptly – Credit Cards allow loans
without any surety. Suppose, you are
using Credit Card for the last one year and you are prompt in clearing the
bills, your Credit History will be put at a higher level. It puts a strong
belief in the Credit extending organisations that you are sincere in
repayments. They recognize you as a disciplined individual and come forward to
offer you the needed loans.
* Applying for more than
one card:
There may be some benefits in having more than one Credit Card, but applying
for more credit cards within a short period definitely shows its influence on
the Credit Score. The number of Credit Cards for which you have applied will be
shown in the ‘Enquiry’ section of your Credit History. It indicates the
necessity of more loans for you, resulting in restriction or even refusal of
loans to you.
*Cancelling it soon
after getting it: Many people get Credit Cards and immediately cancel
them. It is not a good practice. It should be used at least for a period of 12
months. Details of getting the card and cancelling it will be recorded in your Credit History. Whether you use it or
not, if you keep it with you for at least one year, loan sanctioning
institutions will have an idea about your financial position.
* Using beyond the allowed
limit: Exhausting
the allowed limit of your Credit Card or exceeding the limit - both are not
good. It puts an adverse influence on your credit History. Suppose, the maximum
limit of your credit card is 2 thousand dollars and you utilized 1500 dollars. It indicates that you depend on loans only. When you apply for fresh
loan, your repayment capacity will be calculated basing on this.
*In case of extended cards: Do you have extended
Credit Card? If it is being used by your spouse or children or relatives, keep
an eye on the transactions under this card. Take suitable action for prompt
repayment of the debts under this card. Even though it is an extended card, when
loans are kept outstanding beyond the allowed time, its influence falls on the
original card holder. Result – Credit
Score goes down.
Important
Note
that your Credit Card will be most helpful to you when you promptly pay your
bills and properly utilize it. It gets you the needed loans. It is also
important to periodically check to know your Credit Score. It provided an
understanding on your financial dealings. Financial discipline helps you to get
the needed loans in future easily to reach the targets you fix.
Article published by Wise Money Management
Article published by Wise Money Management
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