Learn how to build and maintain a healthy credit score by using credit cards wisely. Understand key habits like timely payments, low credit utilization, and responsible credit management.
<p>A strong credit score is essential to overall financial health, influencing everything from Loan approvals to favourable interest rates. <a href="https://www.axisbank.com/retail/cards/credit-card">Credit Cards</a> can be useful and robust tools for building and retaining a decent credit score when used wisely. With responsible habits, you can improve your creditworthiness and keep your score in excellent shape over time. Here is how:</p><p><strong>Use your Credit Card wisely and consistently</strong></p><p>The most fundamental step to building a healthy credit score is the consistent, responsible use of your Credit Card. Make regular purchases within your means and pay off your balance in full and on time each month. This positive payment behaviour demonstrates to banks your reliability and boosts your score. Avoid missing payments, as late payments remain on your credit report for years and substantially harm your score.</p><p><strong>Keep your credit utilisation low</strong></p><p>Credit utilisation, the percentage of your credit limit that you are actively using, significantly impacts your credit score. Experts recommend maintaining a utilisation ratio below 30%. For example, if your credit limit is Rs. 50,000, try keeping your balance under Rs. 15,000. Staying below this threshold indicates that you are managing your credit responsibly and not overextending yourself, which benefits your credit score.</p><p><strong>Use the EMI calculator before making large purchases</strong></p><p>If you plan to make big purchases and prefer to pay overtime, many Credit Cards offer Equated Monthly Instalment options. The <a href="https://www.axisbank.com/retail/calculators/credit-card-emi-calculator">Credit Card EMI calculator</a> helps estimate your monthly payments and total interest costs across different tenure options. This planning tool enables you to choose a repayment plan that aligns with your budget, preventing you from overspending or accumulating high interest, which impacts your credit health.</p><p><strong>Make timely payments every month</strong></p><p>Timely payments are perhaps the most important factor in maintaining a healthy credit score. Set up reminders or automatic payments to ensure you never miss a due date. Consistent, on-time payments not only prevent late fees but also build a record of responsible credit use that positively influences your credit report.</p><p><strong>Keep your account active</strong></p><p>Inactive Credit Card accounts can sometimes negatively impact your credit profile. It is beneficial to use your Credit Card periodically, such as making small purchases and paying them off promptly. This activity shows banks you are an active, responsible borrower.</p><p><strong>Monitor your credit report regularly</strong></p><p>Regularly checking your credit report helps you rectify errors or unauthorised activity that may harm your score. Ensuring all information is accurate lets you take corrective action if necessary, maintaining a healthy credit profile.</p><p><strong>Conclusion</strong></p><p>Building and retaining a healthy credit score requires discipline, consistency, responsible behaviour, and strategic use of your Credit Card. Techniques such as making timely payments, maintaining low credit utilisation, and planning large purchases with tools like a Credit Card EMI calculator make a significant difference. Remember, your Credit Card is a powerful tool. Use it wisely, and it can open doors to better financial opportunities in the future.</p>
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