Are You A Beginner When It Comes To Using A Credit Card? Here Is Some Useful Information For You

Credit cards are one of the most widely used methods of payment nowadays. They are used for almost every kind of purchase, online and offline. In addition, with several unique products on the market, people are driven to buy them whether they have money at the moment or not.

Credit cards let you buy any service or a product by letting you borrow money from the bank, that means even if you don’t have sufficient money at the time of buying a service or a product a credit card will make it possible for you to borrow money to buy whatever you want. But there is a catch, you are required to pay the borrowed money back within a certain period of time with the interest.

There are several ways through which a credit card can benefit you but only if you know how to use it the right way. If you fail to do so, then your credit scores will be affected and that could cause serious trouble for you, especially if you’re trying to take out a loan.

Bear in mind all your credit payment history is reported to the credit bureaus by the financial institutions, which is then reviewed by the bureau to determine your creditworthiness.

By making sure you utilize your credit card responsibly you can improve your credit scores.

But the most important thing to remember is that you should get a credit card suits your spending style and also make sure you read all the terms and conditions related to your credit card payments before you choose a credit card because every credit card issuer will have different payment term and details associated with it, like SBI credit card details would be different from the ICICI credit card details.

You should also be aware that there are several different types of credit card that you can get, like secured and unsecured.

When it comes to a secured credit card, you are required to deposit a certain amount of money before you obtain a credit card. When you use the credit card and make the payments on time, the money you deposited will be refunded. Also, secured credit cards do not affect your credit score.

On the other hand, unsecured credit cards do not require any kind of deposit and they have a major impact on your credit scores. If you make your credit card payments on time then it positively impact your credit scores and if you don’t pay your credit card bills on time then it will negatively impact your credit score.

There are several types of unsecured credit cards as well, like a student credit card, reward credit card, business credit card and many more.

Credit Score: What Is It?

In simple terms, a credit score is a determining factor used by the financial institution to determine if you’re going to repay the loan within the agreed upon time period or not.

In other words, it is a measure of your credit worthiness. Credit scores usually range from 300 to 850.

If you have a good credit score then your loan application will be processed and approved quickly and easily.

Apart from knowing what your credit score is, you should also know what are parameters through which it is calculated, here are the main parameters that are used in the calculation of credit scores.

  • Current Debt (30%): make sure you check the amount of money you owe and check if you haven’t used up the available credit limit.
  • Payment History (35%): make sure you go through your credit history to ensure that you have not missed out on any kind of payment.
  • Length Of Credit (15%): this means if you have obtained a credit card before or if this is your first time.
  • Types Of Credit (10%): evaluate the kind of debts you have like, home, auto, and others.
  • New Credit (10%): is this a new loan/credit or if you have applied for loans in the past

Credit Score Ranges

As mentioned earlier in the article, credit score ranges from 300 to 850, here is a small breakdown of how it is segregated.


This means you have a great credit score as this is the highest bracket of credit score. When you have a credit score of 750 and above, you don’t have to worry about getting your loans approved because your loans will be approved as quickly as possible. Having a high credit score means that you are going to pay back the borrowed sum within the agreed upon timeframe.


This means that you have a good credit score and if you apply for a loan with these credit rates then you will definitely get it approved. Furthermore, you will also be charged comparatively lesser rates of interest.


Having a credit score in this bracket means you have a pretty average credit score. You should definitely look into how you can improve it. If you happen to apply for a loan, the chances of it getting approved are high, but it will take quite a long time to get approved though.


A score in this bracket is considered to be poor and if you apply for a loan, chances are that it will get approved but you will be charged a very high rate of interest on the loan.

Therefore, if you fall under this bracket it is imperative that you work towards increasing your credit score.

600 and Below

Having a credit score below 600 is not very beneficial, the likelihood of your loans being approved are very less and in the event that it does get approved the interest rate you will be charged would be very high.

Hence, you need to seriously work on improving your credit score.

Improving Credit Scores

When you’re trying to improve you credit scores, you should first understand the factors that affect your credit score, here are some of them

  • Payment history
  • Age of the credit
  • Imbalance in the debt to income ratio
  • If you place mutiple enquiries for loans at the same time

These are some of the factors that you should look into when you’re trying to improve your credit score.

Always make sure you pay attention to your credit card bill payment details and pay your bills on time. Make sure you track your credit scores to find inconsistencies that may be there, for instance, if you’ve cleared your loan or credit card bills and if that isn’t updated, it will affect your credit scores for no reason. To avoid situations like that you should always track your credit score on a regular basis. Also, do not apply for multiple loans at the same time, the financial institutions will then question your ability to pay them back. When you apply for a loan, make sure that you apply for a loan that you know you can back pay within a certain timeframe.

If you do not make your payments on time, the bank will then report it to the credit bureaus. To make sure the credit bureaus increase your credit score, you have to complete your payments on time.

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