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How Does A Credit Card Affect Your Credit Score?

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All the transactions on your credit card directly have no effect on your credit score. And, one of the top factors that affect the score is an untimely payment of the credit card dues you are billed every month. But are you aware that using an old account could actually affect your credit score in a negative way?

Credit card for good credit history:

You can make use of credit cards not just for the purpose of shopping from that card but also to create a credit record that is on the positive side for the bank and other financial institutions. If you are a new credit card user or have never availed of a loan from the bank or any financial institute, then you definitely don’t have a credit score. When your credit score will be checked in this scenario, it will come up as a -1 score. This clearly defines that your credit behavior cannot be determined by the lenders. And if you want to create a good credit history then the easiest way to make that happen is to start using a credit card. The major objective behind this is to create a good credit history and have a better credit score. A good credit score will help you get the required financial assistance whenever required in the future.

Credit card payment delay:

The most significant factor of your credit report is the payment history. And it is important for you to know that almost 35% of your credit score is created according to the payment history. So, it is extremely important for you to have a good credit score, or else you will end up having a bad financial history for the lenders. If you have a habit of missing your monthly credit card payments then you are definitely damaging your credit score. Additionally, any delays in the payment are reported directly to the credit bureaus. So to keep away the after-effects of late payments of the card use or your loan installments, it is highly recommended to boost your credit score and develop the habit of ping all your dues within time every month.

The ratio of credit usage:

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The credit usage ratio clearly indicates the money that you have spent using the card and over your available credit limit. In case your credit card usage is nil then your utilization ratio will also be counted as zero. And, if you want to apply for a loan to get financial assistance then you are required to have some balance on the card. Make it a rule that you have to maintain the credit usage ratio between 35% to 40%. And if the usage ratio is higher than this then it might end up lessening your credit score and the lenders will take it as credit hungry behavior. Therefore, it is important for you to be very careful about your credit score and make sure that you make all the payments on time every month. Moreover, if you are pretty confident about your spending habits and you know that you can keep up with your card dues every month then you can try asking the bank to increase the credit limit of the card in order to make it easy for you to spend money whenever you require. If this doesn’t work then you can also choose to apply for SBI credit cards for a new card from any other bank with a higher credit limit.

Getting a new credit card:

Every time you place a request for getting a new credit card you have to go through a strict inquiry of your credit history. And this action will lessen your credit score for some time. But there is no need for you to get worried about this downfall as after a few regular card payments in the coming months, you can easily recover the credit score. The most important point that you have to keep in mind is that if you will try to apply for loans and credit cards at the same time then it will definitely hamper your credit score. Therefore, it is highly recommended to never apply for multiple credit cards. A few people keep applying for the credit card when it is not approved at first, and they unknowingly keep dropping their credit score. You should apply for the card only when it is a necessity. In the present scenario, there are multiple options available through which you can easily grab the best credit card deals and offers. All you need to do to make that happened is just get started with your research work online and come across the best suitable and the most reliable options from where you can get a credit card. But before you plan to apply for a credit card make sure that your expenses are under control and you will easily be able to pay the dues that you will spend from the card.

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