How to use a secured credit card to improve CIBIL score? Here's a guide
Procuring and using a secured credit card can turn out to be a useful tool in order to improve your CIBIL score. Here's how you can use a secured credit card effectively to improve your credit score:
Security deposit: Secured credit cards require a security deposit, which typically becomes your credit limit. This reduces the risk for the issuer, making it easier to qualify for even if you have limited or poor credit history.
Regular payments: The most important factor in building good credit is making on-time payments. Ensure you pay your secured credit card bill in full and on time every month. Late payments can have a negative impact on your credit score.
Low balances: Aim to keep your credit card balances low relative to your credit limit. High credit utilisation can negatively affect your credit score. Ideally, try to keep your credit utilisation below 30 percent of your credit limit.
Responsible usage: Treat your secured credit card like any other credit card. Use it for small purchases that you can afford to pay off each month. Avoid overspending and carrying a balance, as this can lead to accumulating interest charges and potentially harming your credit score.
Upgrade to an unsecured card: After using a secured credit card responsibly for a period of time, you may qualify for an unsecured credit card with better terms and benefits. Some issuers may even offer to convert your secured card into an unsecured one if you've demonstrated responsible credit behaviour.
ALSO READ: 8 strategies to boost your CIBIL score
By following these steps and using your secured credit card responsibly, you can gradually build a positive credit history and improve your CIBIL score over time.
Secured credit cards require a security
Read more on livemint.com
