Never exceeding 40% of your credit limit has a very beneficial effect on your credit score. This shows your credit limit is high but you have not burnt it up and have plenty in reserve. This logic helps you attain a much higher credit score. This is the same logic that suggests you should not close any credit card accounts, as they collectively will provide you a high credit limit, which is good for the score.

Your credit card can be the single most important factor in improving and increasing your credit score. On the other hand it can also plummet your score to dark depths if you are not careful. Think smart and use your credit cards to your advantage. Here is some pointers on what to do and what not to do in order to achieve this reality.

1. No debts so far. Opting for a brand new credit card for the first time.

This makes sense for your credit score. Making use of a credit card judiciously will help you improve your credit score. Just make sure you open your credit card with a respected and popular brand name.

2. Opening a new credit card account.

When you already have a couple of credit cards, opening a brand new credit card account can cause a dip in scores. By all means obtain a new credit card if you are not planning to get into more debt, else think several times before opting for one.

3. Low credit limit.

Keep a tab on the credit limit of your credit card. Open a credit card account with a company that will provide you with the highest credit limit possible. High credit limits, even if they are not used will add merit to your credit score and improve it.

4. Closing credit card accounts.

Even if you do not use your credit cards, don’t rush to close them. Keep them as long as you can. If you must close them, then do that over a period of time. Closing too many too quickly will harm your credit score significantly.

5. Choosing the ideal credit card to close.

The number of years you hold a credit card account has an impact on your credit scores. Hence, let your oldest credit card be, if you must close a card opt for the most recent cards and close them one at a time, maybe once a month over a period of time.

6. Rotate usage of multiple credit cards.

It is a smart move if you utilise different credit cards for your various different expenses instead of constantly using only one credit card for most of your purchases. Make it a point to use each credit card you have once in six months. Some credit card companies might even close your account if they feel you don’t use the card at all. In such instances, it affects your credit score. To be on the safer side, try and use every card from time to time.

7. Bargain for a lower interest rate

If you have never defaulted on a payment for a few years, make use of your good repayment track record and speak to the bank officials for a better bargain. Request them to lower your interest rate citing the good track record you hold with them. Keep following up with your bank from time to time and you may just get your wish!

8. Request for an increase in credit limit

You may have purchased your most recent card because of the higher credit limit. If at a later date you wish to close some of your cards and you know it makes better sense to close the most recent card, you have a dilemma. The most recent card has the highest credit limit. The oldest card has the lowest credit limit. What do you do? In such instances, if you have a good repayment track record, approach the bank and negotiate for a higher credit limit especially since you have been their customer for quite a few years. Most banks will oblige and you can then proceed to close the most recent card if you absolutely must do so.

9. Keep a self imposed credit limit, which is much lower than the actual credit limit

Never exceeding 40% of your credit limit has a very beneficial effect on your credit score. This shows your credit limit is high but you have not burnt it up and have plenty in reserve. This logic helps you attain a much higher credit score. This is the same logic that suggests you should not close any credit card accounts, as they collectively will provide you a high credit limit, which is good for the score.

10. Paying off credit card dues quickly will dramatically improve your credit score.

Try not to encourage too much credit card debt. Be wise and pay the dues quickly and keep rotating your cards. Paying off dues will cause a spike in your credit score, which is highly favourable.

Abitha Deepak

About Abitha Deepak

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Abitha is Content & Research Head at She has a Master’s degree in Mass Communication and has 14 years of experience in Journalism and Creative Writing. She has initiated and executed several content projects online & offline. She has strong writing, conceptualising and editing skills. She writes on Loans, Credit Cards and Money Management.

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  1. how to know one credit scor?

    mohammad / Reply
  2. does creadit score really has significance and critical indian market?

    vijay / Reply
  3. Do not get credit cards from any bank because you get it on your way. Always apply for a credit card in the bank which you deal with for a long time, probably in which you have a salary account or a savings account.

    Keshav / Reply
  4. Unless u r money savvy / have pots of money but with a miserly approach / a financially shrewd person , DO NOT GO IN FOR A CREDIT CARD !!
    The 10 points given r immature or cleverly done. If u frankly feel that u do not have the will power to control urself financially, then close the credit card(s) u have ,at the earliest.
    Go in for a debit card if u want.
    Suggestions/ advice etc r subjective.It all depends on ur perception, personality and financial maturity.While HIRE PURCHASE SCHEMES give u an opportunity to lead a life with all facilities, prioritise vis a vis ur paying capacity and think on a long term basis keeping at least 25% for a rainy day.Only exception can b for buying a REAL estate, where u must think and act on REALISTIC terms- dont b a victim of the idiom " FOOLS BUY AND THE WISE MEN LIVE IN IT !"

    • this statement is correct. never fall into credit card. .trap, it is like drunker. voice. it eats ur brain,health,,wealth, family relations. etc. never fall into prey,

      krish / Reply(in reply to CREDIT DEBTOR)
  5. I have a credit card used from a long time and due to personal requirements i have corssed the limits and keeping in mind the credit score's i have been requesting for a EMI options which the bank denies and henceforth i am struck up paying huge amount of interest, kindly advice me how can i persue the bank for good payment options ??

    Farooq / Reply
  6. in some banks taken deposits, R.D. current a/c we taken cheque books regularly visit banks, the banks not provide fixed deposite covers and cheque book covers ,documnt leeves the papers quality is very poor , but advertise ment leaves are etractive , we take this branch mangers , there is no action.please concern this.

    ramamurthi / Reply
  7. Good article

    Muthu / Reply
  8. I am sorry to say that the advise provided will only get you into more debt, and one day you will struggle to pay off the debt. This will affect the credibility to borrow more funds in the future either to buy a house or investment property.
    I am an experianced banker with a Multinational Company…..Speaking from experiance.

    Prabs / Reply
  9. My definition of a credit card is "buy things which you do not want with money which you don not have!"

    swaminathan / Reply
  10. Do not use Credit card use Debit Card !!!! A Good Advice

    Atul / Reply
    • If u can fully clear the credit card bill on the due date, it is very good. do not pay the minimum amount and keep the balance. it will empty your bank balance. it is better to plan,spend and then clear the credit card bill on the due date. only wise spending and paying will save you. good luck guys.

      SRIRAM, Chennai / Reply(in reply to Atul)
  11. go to cibil site

    mohan / Reply
  12. The entire matter on the credit card usage is well put even for a first timer to understand.
    I'd like to add a warning too from my experience. Never pay cash.Hand over the cheque with the counterfoil indicating the bill number ACROSS the bank counter to obtain a STAMPED ACKNOWLEDGEMENT.
    Dropping in a Drop Box gives you no receipt which invariably goes against you when it is claimed no payment is received.

    nagesh kini / Reply
  13. Speaking from experience, my dad who has long been retired, ruined his lifetime of savings paying off credit card bills. The fact he had 5 credit cards didn't help matters. In the end, he was so much in knee debt to these credit card companies that he barely was capable to pay the MINIMUM amount. He also went for several of those "flexible" EMI payment schemes. I finally had to hand over him my bank account savings of 1 lakh rupees so he could close two of the most troublesome cards. My dad still has to pay something like 6000 per month to these credit card companies because of those ridiculous EMIs, a trend which should be over by the end of next year March. After that, I'll make him close the remaining credit cards he owns.

    I've learnt a costly lesson from my dad's experiences – NEVER consider these credit card companies as your friends. Just use them for interest-free purchase up to 50 days and always clear your COMPLETE payments before due date. I own 3 credit cards of my own and I try to rotate them in the best possible way to get maximum interest free period on each transaction. Credit cards indeed offer you a lot of convenience, but never fall in a credit card debt trap. If you are already in the early stages of a credit card debt trap, try to get out of it as quickly as possible. Only spend as much you can afford to pay back. BE WISE.

    Sahil / Reply
  14. Credit scores have a very high impact in India today. It is also in its infancy and full of mistakes. It is important to get your credit scores from cibil and verify it before going in for a loan. I am having a turnover of about 9 crores and have no loans at the moment. My cibil score shows 6 outstanding loans and i am trying to get clarifications from banks of cards and loans closed in 2000 to 2003. They do not correct their data and you have to bring proof which you may have conveniently cleared.
    There has to be a strong body to ensure banks report the correct matter and accountability for reporting has to be there.

    Peter Paul / Reply
    • I perfectly agree with paul, as some of the loans cleared by me way back in 2009 still showing some few balance as outstanding. Need to understand how to close that genuine cases where CIBIL statement is showing an errreneous report. can some one guide on this???

      kumar / Reply(in reply to Peter Paul)
  15. The shoppers will come with a new scheme especially for your card. They call for freetrip to malaysia if you spend for Rs. xxxxx, Slowly they will take you to debt trap and death trap.

    Why not MSN not publishing the list of suicides caused by these credit cards.

    Anand / Reply
  16. credit card is not bad but paying minimum amount is bad…. listen to your father advice… pay always in full and you can have a wonderful life with no burden….

    love / Reply

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