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27 FEBRUARY, 2020
Your credit card is not just a means to shop and earn points, but also a tool to build your credit report. Yes, your credit score is highly influenced by the way you use your credit card. For example, if you delay your credit card payments, it affects the credit score negatively and vice versa. Maintaining a good track record is crucial because it is considered as one of the primary factors to determine your eligibility for different types of loans.
Here are ways to maintain a good track record for your credit card.
Being Punctual while Paying the Bills
When you miss or delay any bill, such as credit card bill, EMI, etc., it gets recorded on your credit report. If you wish to develop a good credit report for your credit card, you must avoid delaying payments. You can set-up alerts to remind you of paying bills on time or use the option of auto-pay. If you have missed any payment in the past, pay it right away and try to be punctual from next time.
Keeping Older Accounts Open
It is a general belief that long credit history results in a higher credit score. So, if you have an old account, then you should consider using its card. This way, you will be able to build a good credit score eventually because scorers consider the age of your account.
Making your Credit Report Error-free
You must check your credit report regularly. Your credit report plays a crucial role in the process of determining your credit score. Therefore, it has to be completely error-free. The mistakes in a credit report can be anything, such as a false record of you missing any payments, etc. If you spot any such mistakes, you need to contact the creditor to rectify the mistake.
Thinking Before Applying for New Loans
Making various applications to get loans has a very bad effect on your credit report. Generally, people apply for a loan when they need money. So when you make multiple enquiries to get a new loan or credit card, the creditors consider that you are someone who is in a constant need for money. This, in turn, reflects on your loan repaying capacity and finally leads to a bad credit score. Therefore, apply for new loans when you are completely sure about your loan requirement.
You can build a good track record for a credit card by using the above ways. A good track record is beneficial for you. This is because, when any financial organization finds out that your credit record is good, they consider you as a very responsible and financially stable person. As a result, they provide you with good interest rates on loans.
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