Basically there are two destinations that a credit card can take you, one leads to you meeting your emergency needs while the other leads to overwhelming debts. Focusing on the positive aspect, here are some important factors about credit cards:
Provide convenience: The convenience that is provided by credit cards is the biggest advantage where most of the needs can be met easily in just a few operations. As it is portable, it can be carried anywhere, anytime to serve its purpose.
Figuring out the monthly budget: Your monthly expenses can be determined through credit card usage. An overview of all details can be considered for planning a better budget as an itemized bill will be provided.
Additional rewards on usage: There are many financial institutions that provide additional rewards and points for card usage. Mostly, they are really good and can benefit you in many ways.
Importance of credit score
Credit score is considered to be the primary factor for approving anyone for a particular loan. Every lender looks at the borrower’s credit history as that will help in judging their capability of loan repayment. This is done by most of the loan lenders as it offers best results. For example, if a person possesses a good credit score then approval of loan gets accelerated and vice versa. Similarly, insurance premiums will be higher than normal ones. However, there are some loans that lend without checking the borrower’s credit score, such as payday loans. There is a possibility where an employer may check credit score when choosing a prospective employee. Also, if you want to get an extra loan on top of your existing one it won’t be possible without good credit history.
Here are some tips on how to use a credit card to improve your credit score:
- Choosing a credit card: It may be a complicated step as there are many options to choose from. Never inquire for too many new credits at once as that will affect credit history negatively. It can be done as follows:
Instigate an inquiry with a bank to see if they have a card that offers lower interest rates from the bank where you already possess a savings or checking account. You could try and get a retail card but it is bit complicated to get a bank card. If none of them get approved, choose a credit card considering all specifications such as rewards, credit limit, repayment period and other related factors.
- Repay bills on time: All the monthly bills should be repaid on time so that there will be a good impression left on the repayment terms. This would leave a better impression if the payments done are more than the required monthly amount.
- Stay responsible: Prove that you are you are responsible and are trying your best to keep everything on point; like paying your bills on time, remaining with your credit limit and building good communication with your creditors.
I’m Alicia, a tech writer from Manchester UK. I’m into finance and Business. Catch me @financeport