Tag: credit card application

The Credit Card Secret That Could Boost Your Credit

A credit score plays a very big role in your daily life. The credit score can determine the interest rate when you opt for a loan or any financial product. Even if you have a good credit score which is suffice for taking a loan, there is no harm in boosting your credit score a bit before going for the loan. If you have 700 hundred as a credit score which is excellent but gaining an extra twenty will do you no harm.

But how do we achieve it in short span of time?

So here are some credit cards secrets on how you can boost your credit score from good to excellent which will save you a lot of money.

Don’t keep your credit utilization zero, use it wisely.

It is suggested by experts that one should use some limit of their credit card instead of not using them. We Indians have the tendency to opt for a credit card just for backup purposes and never use it, but this will affect your score more severely rather than using it. Use your credit card for grocery shopping or so which most of the people tend to do it via cash. This practice will not only help you boost your credit score but you also get award points. Determine your usage limit every month.

Pay your bills on time

Once you have used your determined credit limit, do make sure you pay your credit card dues on time. A we all know we need to make payment every 50 days of the limit used, the more regular you are on making payments the more your credit rating boosts. Use your credit card wisely and make payments time to time.  Vice versa if you do not make the payment on time the credit score goes for a toss and then it’s a long way to go.

Don’t close unused credit cards.

If you get a credit card try making small transactions on a regular basis and do not close the credit card account. If you make a decision that you do no need a credit card and paid all the dues related to the same this will affect our credit score. Always keep your credit card open and make small transactions on a regular basis but do not close it.

Don’t get a new credit card unless you need it

Don’t go for a new credit card unless you need one. Getting a new credit card means you will have to use it and sometimes the credit card converts from need to luxury. As you start making luxury expenses, you realize you are paying more than what you expected on the credit card bills. Again you will be stuck with overdue and will find no way out of this.

 

Check for errors on your credit report

Not only you need to pay your dues on time but also check on your cibil report from time to time. You can opt for a free cibil report from various online portals and check for errors, just don’t go through any banks to check your cibil score, so it will indicate that you were applying for a loan and were getting rejected on the same. Get a proper idea about your credit score ups and downs.

This is a few things you can control about credit scores and take it to your advantage. It’s easy to own a credit card, but you can avail the benefits of it if you use it wisely and know the hidden features upfront.

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How different is a Secured Credit Card from a Normal Credit Card?

A few decades back credit cards were something not heard off, however in present times they are almost like a necessity for quite a few. Almost all banks offer a wide range of card variants, with different credit limits, different rewards structures, varied joining fees or no fees etc. Apart from the above differences, credit cards can differ in another aspect too; they can be either secured or unsecured. Unsecured cards are what we know as normal cards issues by card companies. Below we focus on understanding the difference between both.

shutterstock_319847573What is a Secured Credit Card?

Secured credit cards as the names suggests are issued against a security. So if you want a secured card the bank will ask you to have a fixed deposit with them; the card will be issued against the deposit held by the bank. The credit limit will be fixed at 60 to 70 percent of the deposit value. So if the deposit value is Rs. 80,000 then the credit limit for the card holder could be anything ranging from Rs. 48,000 to Rs. 56,000 depending on the issuer’s guidelines. Rest the card works the same as a normal credit card.

How are Secured Credit Cards Different?

The first difference is obviously the way in which these cards are issued. Secured credit cards require a deposit while other cards do not require any such deposit for being issued. For issuing an unsecured card the card issuer focuses on the credentials and the income eligibility of the applicant. The sanctioned credit limit in these cases depends on the income eligibility of the applicant. While for a secured card it will be based on the size of the fixed deposit and the card issuer’s policy regarding how much percentage of the deposit they are willing to extend as credit limit. Owing to this reason unsecured cards offer more financial flexibility to an individual.

Unsecured credit cards are meant for those with a good credit score or those who do not have a blemish on their credit report while a secured card is the opposite. It is specifically meant for those who do not have a good credit rating which will make it difficult for them to get a card in the normal course. Thus for those with a low credit rating these cards could offer a perfect solution. So if you want to get a card issued despite a low rating or are wondering on how to boost your credit score then a secured card can help you. Card issuers are assured that they have a safety net to fall back on in case the card holder defaults.

All card issuers will not issue secured cards thus the options of getting them are limited while almost all financial institutions do offer a host of variants for normal credit card. Secured credit cards may be more expensive than normal credit in terms of fees and interest rates. They are generally offered by banks that also have deposits as part of the products and services offered to its customers.

So if your credit card application is not being accepted as you have defaulted on your EMIs or dues in the past or because you have made too many loan enquiries then a secured credit card could offer you a way out. It could not only help you in getting a card but also in rebuilding your credit rating.

Are multiple cards a blessing?

Are multiple cards a blessing?

Credit cards have changed the entire way money is handled around the world. The number one reason why credit cards are so popular is because they are convenient and universal. Whether it is travelling internationally, shopping online or picking out your favourite cuppa at a coffee shop, your credit card comes to your aid just about everywhere. There is however a lot of caution issued around credit card usage, as they can turn into potential debt traps if they are used recklessly.

However, if you are a disciplined person by nature and can flex total control over your finances, multiple credit cards can be a big blessing. In fact, you may even be able to handle multiple credit cards and reap its advantages. In fact, judicious use of your credit cards can help your increase your credit score and thus give you timely access to credit. Whether it is home loan rates or car loan rates, a high CIBIL score of 750 and above (out of 900) will work to your advantage. Here is a list of how having multiple credit cards can put you at a vantage point.

Never be without money

The most obvious thing that comes to mind about credit card usage is the convenience it involves. With multiple credit cards on your person, you never have to bother about carrying around physical cash. Credit cards are accepted just about everywhere and even if one card does not work at a time or a transaction gets declined on it, you always have a backup when you are carrying multiple credit cards. Besides most credit card companies are efficient and cautious, so in case of a fraudulent transaction that is made on your card, in case your wallet gets stolen, you get to know of it immediately through an SMS immediately. You can immediately call up the credit card company and block your card and be assured that the loss is not a physical loss of funds from your account.

Use different cards for different purposes

If you are a disciplined and organized person by nature, multiple cards can be used for different purposes. For instance, you can keep one card reserved for shopping whether it is online or at a retail store, because it offers the best cash back policies. Another credit card may have tied up with a major airlines company, thus adding onto your frequent flier miles, thus giving you good deals or waiving off your entire ticket price in case you have accumulated a lot of air miles. Spending small amounts on multiple credit cards not only gives you the advantage of organizing your expenses it helps you keep exact track of your outflow.

Better reward points and better payment facilities

Each credit card comes loaded with some reward or the other. Some offer better cashbacks, some add on to your frequent flier miles and yet others get you the best deals every time you refuel your car. When you carry multiple cards you can gain from the best advantages of all the cards and reap the benefits of multiple rewards from different credit card companies. But before you do that, it is must for you to understand the reward structure on each card. Before you pick out the credit cards, make sure you check out the reward points on each and pick the ones that are best suited to your needs.

Also when you are making small purchases on each of your credit cards that come with different billing cycles, you have the advantage of staggering your payments instead of having to pay all the outstanding amount at one go. This saves you money and also helps you have better control over the outflow of your money.

Improves your CIBIL score

Finally, multiple cards when used simultaneously also enhances your overall credit limit and thus keeps your credit utilization low. Credit utilization is the total amount of credit you are using as against the total credit made available to you. Financial prudence advocates that your credit utilization should not be more than 30-40%. When you are using multiple credit cards and spending small amounts on each you automatically end up keeping your credit utilization low and thus improving your CIBIL score over the long run.

Thus, as you can see, the multiple usage of credit cards, comes with a whole host of advantages. The caveat to this is that you must be a disciplined user and make timely payments on each of your credit card. If you fail to do this, or do not have any control over your spending, your credit card will not only land you into a pile of debt, your credit score will come crashing down. Thus when you are using multiple cards use them with extreme amount of caution and care and see it boosting your CIBIL score as well as your confidence in your money management skills!