Understanding The Concept Of Credit Cards And Credit Scores

Understanding The Concept Of Credit Cards And Credit Scores

Credit cards are among the most used payment methods and for good reason, they have the ability to help you buy any product or service even when you do not have the required money with you.

Basically, a credit card is a tool that allows you to borrow money from the bank and when you use the borrowed money you go into debt are required to pay the money back to the bank within a certain amount of time. If you fail to do so then you will fall into financial trouble and furthermore, your credit scores will be affected.

Some of you may be wondering “what is credit score?

A credit score in one sense is a measure of your credit worthiness and also helps the bank evaluate if you can pay back a loan in time or not.

A CIBIL [Credit Information Bureau (India) Limited] score is what is considered a credit score in India. It is a 3 digit number that acts as a representation of your credit score and history.  Your credit score is between 350 and 900. An outstanding score would be between 700 and 900. If you continue to keep a decent CIBIL score, you can have access to a range of advantages, like low interest rates on loans, higher loan amounts, simple and fast acceptance, more flexibility for repayments, etc.

Improve Credit/CIBIL Score

You should always maintain a good CIBIL score because there are several great advantages that you will be able to reap.

Tracking and monitoring your credit reports is extremely important if you want to maintain a good credit score. This move is crucial if you’re going to improve your CIBIL ranking. You have to review and maintain your credit report. Your credit report gives you a rundown of all things associated with credit cards and shows you where you might have defaulted or rendered late payments, leading to a decreased credit score.

In addition, the credit report provides valuable documents that you must and should utilize to fix your credit rating if you encounter errors. You may notice mistakes in your interest, principal amount, date, etc. you ought to go to the financial institution in such scenarios and get them resolved. That being said, you have to get this done as fast as you can, or you’ll end up spending a lot more than you need to.

Another choice is to go to the authorized CIBIL website. As previously mentioned, you ought to do this as quickly and efficiently as possible, ideally during the first 30 days. When you make adjustments to your credit report, you should hope that your credit score increases. That being said, make sure you get this done before you apply for other credit cards.

You could increase your credit rating by raising your credit limit. When you increase your credit cap, please remember that it is definitely not a licence to spend money. Raising your credit cap helps in reducing your credit usage ratio, therefore maintaining your credit score safe. This technique works well, particularly if you don’t utilize your credit card very much.

You may want to make a big acquisition, like a car or a home. If this is the situation, you will have to be on top of your EMI payments. Through doing so, you are basically telling the banks that you have the capability to make payments. CIBIL and other scorers usually take all of this into consideration when calculating the credit scores. You might have a large amount of savings. But a bad CIBIL rating can deter you from making the major purchase. Paying your EMIs on a timely basis is one of the most effective ways of improving credit scores.

Having to get rid off the credit card debt is another crucial thing that you have to do. Unpaid loans and EMIs shall count as balances. Please ensure you spend the money only when you need it, this way you can make payments on time. If you have outstanding payments and balances each month, you should expect your credit rating to be impacted. It’s a fallacy that the credit card balance improves your credit score each month.

Would you like to improve your CIBIL score? Then getting rid of the credit card debts as fast as possible should be first on the list. Ideally, should not be using more than 2 credit cards, otherwise you risk the possibility of delayingyour payments.

Making Credit Card Payments

There are several ways through which you can make your credit card payments, for example, you can use Cred to pay credit card bills.

Of course that is not the only way but it definitely is one of the most efficient ways. Read on further to know more about the different ways through which you can make your payments.

Try to use the National Electronic Funds Transfer Scheme (NEFT) for transfering money to your credit card from your bank account, using NEFT ensures that the transfer take place on the same day. You will be permitted to use whichever bank account you have. Enable your internet banking services and then head over to the ‘Transfer Fund’ option. Then pick the NEFT method of payment and process the payment. NEFT transfers take place on the same day. Just make sure you make the payment within the agreed upon timeframe.

Real Time Gross Settlement (RTGS) is yet another payment method that you can use. RTGS will allow you to send money to your card on the very same day only if you authorize them well in advance. This method of payment is ideal for big payments. Making big credit card transfers is a smart way to ensure you clear the debt well in advance without having to incur interest.

Both of these payment methods allow credit card payments. You should visit their corresponding sites to do this. Bear in mind that you would have to enter your credit card number, the credit sum to be billed, the banking info and the IFS or IFSC branch code. When you do not remember your IFSC, you should search the authorized website or call the customer care center. These payments will take 2 working days to be processed. Bear this in mind when you make the payments.

Utilizing your bank account is a simple way to govern your credit card expenses. all you have to do is login to your bank account, enter your card information in order to make your payment. You should expect your transaction to be processed on the very same day in a manner similar to NEFT and RTGS.

If the financial institution offers you the choice of listing the billers you need to pay, try including your credit card to the list. This way, you’re going to get time limits and due amounts, just like how you to get your monthly bills. rIn addition, you can set up automated payments (or auto-pays) that enable you to make payment for you credit card bills on a specified date each month. Doing this would help you protect yourself from delayed payments of credit and the debt you might possibly suffer as a result.

About the Author: Ajay

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