How do credit cards help in building a strong credit score? MintGenie explains

livemint.com:

credit cards have become essential in daily life, offering convenience and flexible repayment options, allowing them to take greater control of their finances. They offer benefits like one-time signing bonus, cashback, rewards points, and frequent-flyer miles. Judicious use of cards offering these benefits can help maintain a healthy credit score, which is necessary to avail of other financial services.

Credit cards are also likely to be one of the first credit instruments a consumer uses, and prudent spending and timely payments could help develop a solid credit score, subsequently simplifying the loan process. As per the Reserve Bank of India (RBI), there has been a 47.4 per cent increase in credit spending in FY23 rising from ₹14.32 lakh crore in the previous year. The transactions have seen a surge from 224 crore in the previous year to 291 crore in FY23.

Here are few ways to enhance your credit score through the responsible use of your credit cards: The key rule for credit card use is timely settlement of dues. Try to set recurring payments to clear outstanding balances on your card on time, as late payments will affect your credit and hence your credit score over time. Build a solid repayment history and boost your score.

While getting a credit card has become more accessible, it’s crucial to exercise caution. Each application prompts a thorough credit score evaluation and applying for too many cards at a time might potentially make you look credit-eager and affect your score. Hence it’s also unwise to accept every offer hastily.