New Delhi: The demand for credit is going up every year in India. This is the reason that credit cards are becoming a popular tool to get credit from banks. The RBI data for March 2022 shows a debit card user spends only Rs 700 on an average whereas credit card users spend Rs 14,500 monthly on an average.
However, all banks approve the credit to their customers based on the CIBIL score of an individual. At this stage, you may have questions like what is CIBIL score and why it is important?
What is the CIBIL score?
CIBIL score is a 3-digit numeric summary that tells you credit worthiness that banks check to approve loans. The score ranges from 300 to 900, the higher the score, the higher the chances of getting credit in a short time.
In India, there are four credit information companies licensed by the Reserve Bank of India to release credit scores. Among the four companies, Credit Information Bureau (India) Limited (CIBIL) is the most popular as it maintains credit files on 600 million individuals and 32 million businesses.
How to improve your CIBIL score by using a credit card?
Now the question arrives, how can one use a credit card to improve CIBIL score. There are many ways a user can get a good CIBIL score by using credit cards.
Let’s look at some of the measures below here:
Choose credit card wisely: If you apply for credit cards then choose the one that best suits your purchasing habits. It is advised by the experts not to rush for those who come with special offers because the issuer usually do a hard inquiry into the individual’s CIBIL report that may create a negative impact on the CIBIL score and lower it.
Avoid credit card outstanding settlement: The settlement on the outstanding credit card is not considered to be good as such settlements have a negative impact on the credit score. It also shows that the person failed to pay off his dues in full.
Pay bills on time: It is noted that if you pay your due on time, you will be able to boost the CIBIL score.
