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How Can Credit Cards Impact Your Credit Score?

How Can Credit Cards Impact Your Credit Score?

Last Updated : Dec. 23, 2022, 11:41 a.m.

When it comes to credit score, your credit cards can play an important role. Depending upon how you use the credit cards, your credit score can be increased or decreased. Here, in this post, you will know how some of your common credit card habits can make or break your credit score. Owning a credit card is good for your credit report as it helps in building your credit score so that you can borrow loans in the future. It shows how you can handle different types of debt. Your credit mix accounts help lenders determine your credit risk.

What Happens to Your Credit Score When You Apply for a Credit Card?

Whenever you apply for a credit card , the lender does a credit check. If you apply more often for a credit card or loan, a large number of credit enquiries are made that can lower your credit score. While applying for a new credit card, your credit score may temporarily drop. One factor that helps to determine your credit score using the credit card is the amount of debt you use from the card limit, which is called the credit utilization ratio.

The less you use the credit card the lower your credit utilization rate is, which is better for your credit score. However, if you apply for a new credit card, it raises your total credit limit to which your credit utilization ratio drops to 25%. Doing so could help maintain a good credit score .

Closing Credit Card Accounts

You must want to close the credit card accounts which you no longer use. But wait, it could hurt your credit score. The age of your credit card accounts helps calculate your credit score, if you close an account that’s been in a good standing position for years, closing it can lower the age of accounts in your credit report which can affect your credit score.

Having High Credit Card Balances

Though credit cards can be a powerful and convenient tool to make online and offline purchases, they can damage your credit score if you use them too much. When your revolving credit card balance is due for a long period, it begins hurting your credit score. So, try to avoid unnecessary expenses on credit cards to maintain a good credit score.

Making Late Credit Card Payments

One of the most common reasons for a low credit score due to a credit card is when you keep paying the dues late. Your payment history contributes 35% to your overall credit score and is the most influential factor. If you’re making late credit card payments or not making payments at all, your credit score will reduce. But if you pay your bills on time, you can maintain a healthy credit score.

Benefits of a Good Credit Score on Credit Card Shoppers

  • You can apply for a credit card without any trouble as the lender may approve your request based on your credit history,
  • Negotiate to have a high credit limit when your credit score is high
  • High credit scores will give you access to the best credit cards on the market.

How to Check Credit Score in India?

To check your credit score, you can visit the official Wishfin website, which is the official partner of two renowned credit bureaus -Transunion CIBIL & Experian. You can find your credit score within a few minutes at Wishfin for Free. Follow the steps below to get your free credit score from Wishfin.

Free CIBIL Score Check

Steps to Check CIBIL Score at Wishfin

Steps to Check Experian Credit Score at Wishfin

  • Visit the official website Wishfin
  • Click on ‘Experian Free Credit Score Check’ in the page bottom
  • Enter your first name, middle name and last name
  • Mobile number
  • Email address
  • Click on ‘Submit’

Then an OTP will be sent to your registered mobile, enter the OTP and complete the process. After that login and check your credit score for free.

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