How Plastic Money Can Affect Your Credit Health

There is little doubt that credit cards are a more convenient way to carry money compared to hard cash. From daily expenses to buying luxury goods, credit cards are extensively used even in India.
 
And it’s almost a norm to keep more than one credit card. Nothing wrong with that, as long as you can manage them with expertise. How to use the credit card is more important that the credit limit of the cards or how many you possess.
 
What will happen if your credit card is lost in the market while you are shopping? What if you use your credit card more than the prescribed limit?
 
Such things can cause a serious damage to you and your financial health.
 
Pooja and Ravi were living happily in Mumbai till the banks refused to grant him an auto loan. Ravi was a manager in a multi-national company, and drew a handsome salary. Puja, being a housewife, bought all essential household goods including fancy stuff to decorate her house.
 
She preferred to make the payments through credit cards instead of using cash. Ravi had two cards, one he had given to Puja and the other he kept to himself. Like any young couple they often went out for dinner and movies.
 
Then one day they decided to buy a car and applied for a loan.
 
 To their utter dismay, the loan application was rejected. In spite of Ravi earning good money, they failed to get a loan because of bad credit history.
 
Credit score
 
Credit score is a three digit numerical number which ranges from 300 to 900. Credit score is a snapshot of the credit history of an individual. It is calculated by the credit bureaux. The banks and financial institutions provide all the details of the individuals to the credit bureaux to check the creditworthiness of the individuals.
 
Credit history is the result of all past payments of an individual. It is an analysis of the payment history of an individual. Since the credit history of Ravi was poor, the bank was not confident to lend him money for purchasing a car as he had been not been regular while repaying his dues.
 
Also the card that Pooja used for shopping had crossed the maximum limit.
 
The use of credit card should be done efficiently. Mistake made while using credit cards can snowball into a major crisis.
 
On the other hand if used efficiently, credit cards can help you in increasing your credit score. But if used without care they can harm your financial health.
Credit Sudhaar is India’s first Credit Health management & improvement company whose goal is to help clients to Restore, Enhance and Protect their Credit and make them credit healthy.
Courtesy : Rediff
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