Yes, you have read that right. You can update or boost your credit rating using the credit card. You may be having a question like, “I have been using credit cards, but my credit has not improved.” It is the most specific query that you all may have. You may be using the credit card for purchases and bill payments. However, using it is not enough.

You must ensure responsible credit usage. It implies paying the bills in a timely and avoiding unnecessary credit card applications. Yes, these parameters improve your credit score drastically. Alternatively, using it for the right purposes also impacts the credit score to an extent. The blog details how ensuring strategic credit card usage may help your credit rating.

How long will it take to improve your credit rating with a credit card?

It may take a few months to get an ideal credit score by using a credit card. Credit card issuers report the balance once a month to credit agencies. If you pay your credit card debt regularly, you may start seeing the results. Credit card debt is a high-interest debt. However, the results may take time. You may see the changes within 30-45 days of the bill clearance.

Why is having a good credit score important?

A good credit score helps you achieve life goals in a timely. Whether you need a job, an affordable rental, or buy a new car, good credit helps. You may even qualify for better credit cards with high limits. It reveals your potential to carry payments without trouble. Thus, you don’t need to wait until your credit improves. Instead, hit life goals in a timely without any regrets.

7 Strategies to build a credit rating with a credit card

Most students aged 18 use credit cards for minimum or big-ticket purchases. This is because getting a loan could be hard without a valid credit history or score. Well, your credit card mayonly help you build one without trouble. Here is how:

1)   Get a card that matches your lifestyle

It is very important to choose the right credit card. Every individual has different life goals and spending habits. Therefore, one credit card may not align with the needs of the other. It is even possible with couples.

Identify how much you spend monthly. Check whether you can get that much credit limit on a card. You can check cashback credit cards to reduce the cost of spending. Alternatively, check the reward ones that you can use to clear the monthly due balance.

Also, check whether you use a credit card for emergencies. If yes, then it is high time that was stopped. It costs you more than you would have paid with a personal loan. You don’t pay more than a credit card even if you have a poor credit history.

Check urgent loans for bad credit in Ireland ‘smarketplace. Use it for small purchases or bill payments. You may reach an agreement on transparent terms and costs on the same day. Thus, it cuts any surprises along the way. Moreover, paying the dues timely also helps the credit score.

2)      Understand the credit limit you use

The credit limit is the balance that you get after bill payment to use. It differs according to one’s affordability and credit score. Individuals with low credit history may struggle to get high credit limit cards. This is because companies want to cap credit card usage to what the customer can afford to pay. You can use the credit card beyond that limit.

For example, if your credit card limit is €2000 and you used €1900, you cannot use it any further. Moreover, it is advisable to keep the credit usage within 30%. The lower the utilisation, the better the credit score.

Therefore, understanding your monthly expenses helps you know the credit limit. Accordingly, you may seek a lower limit than what you used to. It considerably boosts your credit rating. Credit card is a heavy debt. Therefore, reducing the limit gives some breathing space to your credit report. Hence, the score jumps to a good level.

3)   Choose credit cards for a bad credit score

Yes, you may not qualify with every credit provider if you are behind payments or have CCJ or bankruptcy issues. Therefore, search for the credit card providers dealing with poor credit profiles. Here, you share better chances of grabbing one. Moreover, you may get one at an interest rate that is affordable compared to mainstream cards.

 Credit cards for bad credit history are generally for individuals with little or no credit history. For example, new students, immigrants, or self-employed people may benefit from this type of credit card. You can use this to meet a need or close a purchase without worries. However, you must be able to repay the dues by the end of the month.

4)   Check credit builder cards

Credit builder cards help anyone build a credit score from scratch.  Individuals generally tap it after suffering bankruptcy or starting the credit lifestyle.  It helps repair the profile if you repay the dues in a timely. You decide to pay a specific amount to the loan provider up to a certain date.

Later, you may get the money you pay as a repayment in your account. It just works like a savings account. Yes, you also get interest on your money deposits. Consistent repayments reflect positive behaviour and hence improve your credit score.

5)      Pay debt with balance transfer cards

Balance transfer cards are one of the best ways to pay all your credit card debt at once. It works just like debt consolidation. You can compare the best-rated balance transfer cards that you can get given your situation and finances. Determine the credit card balances with old and costliest debts. Always consider the one with the highest interest rate first.

It will help you optimise your credit score gradually but potentially.  The balance transfer card also gives you breathing room during the interest-free periods. However, always check your approval chances before applying for a balance transfer card. You can use MoneySuperMarket ‘s credit card eligibility checker. It will help you understand the chances of approval.

Paying your costly debts reduces the liabilities. It also cuts the total interest you owe on your dues. Therefore, your credit score improves significantly. Moreover, you can use the interest savings for other financial purposes.

6)   Always check for low-interest cards

You generally get a credit card with the interest rates mentioned. Therefore, don’t forget to compare the interest rates among the potential providers. Identify and fetch the one with the lowest interest rate. Some credit card companies may also help you with some tips that may help you get one. It is especially helpful for those with poor credit histories.

It could be taking a low-limit credit card, paying existing debt, checking on a zero-interest credit card, etc. Taking on a low-interest credit card reduces your monthly liabilities. You pay less than what you would have otherwise.

7)   Pay the full balance every month

It might seem basic, but it is an important tip to boost your credit rating. You must pay the complete balance by the month’s end. It reveals high potential, and hence, your credit improves.  It is especially true if you can within the current salary and the credit limit.

Some companies may provide you with the facility to pay at least a minimum to keep the cost low. Do so only if you struggle financially and cannot pay the complete amount.

You will eventually have to pay the remaining balance with the next bill. Thus, keep your credit utilisation low. Otherwise, you may enter a debt trap.

Bottom line

If you are a frequent credit card user, you may benefit from this. Identify which of these you can rely on to improve your credit score with a credit card. It is possible with responsible financial management. Check how much of your credit limit you use monthly. Accordingly, search for the cards with that specific limit. It prevents you from fetching and paying high interest on credit cards. You can also check interest-free credit cards for big purchases.