Using Credit Card and Personal loans impact your Credit Score. This article talks about how to have a Good credit score with Credit card and personal loans.

What is a credit score?

It’s a mathematical score generated and maintained by credit rating agencies, which tells prospective lenders about your credit-worthiness. So if you think you will need a loan sometime in future, then its in your best interest to maintain a good credit score.

A score of above 750 (out of possible 900) is considered to be a good score. Higher the score better is the credit worthiness in eyes of the lenders.

Have a good credit score

How to improve your credit score?

So if you have a personal loan or credit card outstanding or both, here is how you should manage things to improve your credit score:

• First of all, understand how credit scores work. If you don’t have the right understanding, you will not know which of your actions have a positive and which have negative impact on your score. Please get your free credit report.  Our article How to get Free CIBIL Credit Report and CIBIL Credit Score covers it in detail.
• Pay all your dues – personal loan EMIs, credit card dues, etc. on time. This is an absolute non-negotiable. A rare occasion of missing your repayments is fine. But this should not happen frequently. This has the biggest impact on your credit score.
• If you have a credit card, make sure that the amount outstanding on your credit card accounts is not very large. If possible, clear away all your credit card dues as soon as possible using a personal loan (which are cheaper).
• Don’t use the full credit limit of your credit cards. If you have multiple cards, make sure to use some limits on each of them instead of fully exhausting limit of just one of the cards. Lower credit utilization can improve your credit score.
• Don’t take a new loan or credit card unnecessarily. Each enquiry is recorded in the credit report and can bring down your credit score slightly.
• Most important is to not borrow more than what you can comfortably repay. This is the starting point of all troubles can cause you to behave in manner which will negatively impact your credit score.

How to Have a Good Credit Score with Credit Card

The following image shows how to have a good credit score with credit card. Image courtesy Frugal model 

Have a good credit score with credit card

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