Your credit score is influenced by multiple factors, and using a credit card wisely can boost or hurt it. Let’s break it down!
1. Payment History
- Paying on time = Higher score
- Late/missed payments = Significant damage
- Set up auto-payments or reminders to never miss a due date.
2. Credit Utilisation Ratio
- This is the % of your available credit that you’re using.
- Keep it below 30% for a good score.
- If your limit is ₹10L, keep your usage below ₹3L.
- Pay multiple times a month or request a credit limit increase to manage it.
3. Length of Credit History
- Older accounts = Better score
- Closing old credit cards can lower your score.
- Keep your oldest cards open, even if you don’t use them much.
4. Credit Mix
- A mix of credit (cards, loans, etc.) helps, but it’s not required.
- Don’t open accounts just for variety. Apply only if needed.
Tips to Maintain a High Credit Score
- Always pay on time – Even 1 late payment can drop your score.
- Keep credit utilisation <30% – High balances hurt your score.
- Don’t close old credit cards – Length of history matters.
- Limit hard inquiries – Too many new applications lower your score.
- Check your credit report regularly – Spot errors & fraud early.
- Use multiple payments each month – Reduces reported balances.
- Ask for a credit limit increase – Lowers utilisation without extra debt.