How to Build a Credit Score Using a Credit Card

Having a good credit score is essential if you want to get access to loans and other types of credit lines at reasonable rates of interest in the future. However, for people who have never taken on a loan before, building a good credit score may seem like a daunting process. One of the simplest and most effective ways to build your credit is by using your credit card responsibly. In this article, we will look at how you can use your credit card to build a good credit score. 

Understanding the CIBIL/credit score

Credit score is primarily determined by the Credit Information Bureau India Limited (CIBIL). An individual’s CIBIL score can range between 300 and 900, with a score of above 750 considered excellent. The CIBIL score is based on your credit history, including your credit card payments. 

Applying for a credit card

The first step to building your credit score is applying for a credit card. If you are looking to apply for a credit card, look into the IndusInd Bank Pinnacle Credit Card. You can apply for this card online through a 100% digital process and enjoy instant approval. Some other benefits of the IndusInd Bank Pinnacle Credit Card include:

• Instant credit card activation through online KYC and uploading documents
• Buy one, get one movie ticket free when booked through BookMyShow
• 2.5 reward points for every ₹100 spent online 
• 2 complimentary golf games and 2 golf lessons once a month at select clubs

Tips to build your credit score using a credit card

Here are some of the best tips that you can utilise to build up your credit score with a credit card: 

• Use your card for routine expenses such as groceries and bill payments as it helps establish a pattern of regular use.
• Aim to pay your balance in full each month instead of only making the minimum payment. 
• Late payments can severely impact your credit score. Set up automatic payments or reminders to ensure you never miss a bill payment. A history of on-time payments will boost your credit score significantly. 
• Try to keep your credit utilisation on the lower side and usage under 30% of your available credit limit, as it will help improve your credit score. For instance, if you have a credit limit of ₹50,000, try not to spend more than ₹15,000 in any one billing cycle.
• Avoid closing or cancelling old credit cards, since your credit history is an important part of your credit score. Keep your oldest credit card active, even if you do not use it often.

To conclude 

When used correctly, credit cards can be an incredibly valuable tool to build up your credit score. However, building a good credit score takes time, so be patient and follow the above guidelines to develop a healthy credit profile in the long run. If you don’t have a credit card yet, consider applying for a credit card that offers a range of benefits and pay your bills on time to improve your credit score. Use your credit card responsibly and only spend the amount that you can comfortably pay back.