A credit cards is a great tool for covering unplanned expenses, as well as building and rebuilding your credit score. It is one of the first things a salaried personal fresh out of college takes. It comes with the added benefits like a complimentary movie ticket, reward points or cash back on shopping.Only salaried individuals or people with a good credit score above 700 can get a regular credit card. However, those with bad credit also need credit cards to improve their score. In this article, we’ll discuss how people can choose credit cards based on their credit score and how it will help them to rebuild their credit rating.
Finding Credit Cards based on your Credit Score
Arun Sharma December 30, 2019
How to apply for a credit card
One must know their credit score before applying for a credit card, because your credit score is the first thing that a bank will check before approving a credit card. There are multiple online sites that will let you check your credit score for free. For individuals with bad credit score, this is a severe problem as multiple credit card enquiries can negatively affect the credit score.Nowadays, most of the credit card lenders provide minimum eligibility details on their websites. People can go through these details and check their eligibility details accordingly for the credit card they are interested, before filling out the application form. This way an individual will know if they are eligible for the card they want to opt for and can keep their credit score safe by avoiding multiple queries.
Credit Cards For Building Credit History
Credit cards are great tool for building a credit history. Individuals who have never taken any loans or credit card from the banks don’t have any credit history, because there are no data points to calculate the credit score based on the past repayment behaviour. Therefore by getting a credit card and using it properly, an individual can build a good credit score that will make him eligible for better loans and credit cards in future.For building a good credit history follow the following steps: 1). Regularly spend on your credit card throughout the mont2). Try to spend only within the credit card limit (ideally under 30%3). Always make your monthly credit card payment on tim4). Avoid making the minimum payments because your interest will only accrue further
Credit Cards For Rebuilding Credit History
It’s challenging to get a credit card with bad credit score. Lenders will not provide unsecured credit cards to people with bad credit score, as there is too much risk involved. In this type of situation, an individual can opt for secured credit cards where an applicant has to collateral in the form of cash or fixed deposit. After getting the card, you can use it properly to improve your credit score and become a creditworthy individual.For example, consider you opt for a secured credit card and provide the collateral of Rs. 80000 to the issuer in the form of a fixed deposit. Then the bank will provide a card with a limit of Rs. 56000, i.e. 70% limit of the fixed deposit.
Credit cards are one of the best financial tool for covering unplanned expenses and for building and rebuilding credit score. Whether you have a good or bad credit score, it is always beneficial to choose credit cards based on their features like interest rate, fees, and rewards, not just for the sake of fulfilling your need for credit.
