Finance is the booster of a good credit score. Better interest rates, higher credit limits, and chances to get approval on loans – it’s all possible with a healthy credit score. One of the most feasible ways of improving your credit score is to make on-time repayment of your credit card bill.

Your credit score defines your creditworthiness. It is calculated using a number of factors, of which the most important is payment history. Your weight of negotiation lies in the timely repaying of bills, including payment of credit card bills. Late payment attracts penalties, higher interest rates, besides being considered a bad remark against your credit report that lowers your score. Let’s move forward now on how to improve your score.

Tips to Guarantee On-Time Payments

Payment Reminders

Put technology to use for your benefit. Get reminders set on your phone or via email, which would notify you before the payment due date. This will help you know the last date of your bill and you will not forget making the payment. Frequently failing to pay on your time is a costly affair.

Also Read: 8 financial benefits of being a senior citizen in India

Automate Payments

Most banks now offer automatic payments. If you automate your critical bill payments like that of your loans and credit card bill, it will significantly help you avoid late repayments and incur additional charges or interest. The only condition is to ensure sufficient balance so that automate payments can get deducted timely.

Match Due Dates with Salary

If possible, match the due dates of your credit cards with the dates of when you get your salary in account. This assists you in feeling more in control of your budget and making funds available at the time of bill settlement.

Expense Review

Keep a check on the credit card use and do not overspend beyond your budget. Often higher spendings beyond budget cause delays in repayments and continuously doing this leads to negative impacts on the credit score. Try to keep your credit utilisation ration up to 30%.

Pay More Than the Minimum Amount Due

Making only the minimum payment ensures you are not in default, but you attract substantial interest on the remaining balance. Of course, when you can, it’s always best to pay the full balance and avoid paying interest.

Check Your Credit Report

It is advisable to check your credit report regularly or at least once in a month. By accessing your report, you can detect and correct any discrepancies or fraudulent activities that can deteriorate your score.

Benefits of Timely Repayments

Enhanced Credit Score

Consistently paying off the balance in your credit card each month is the way to improve your credit score. A better score means a better price in a loan, lower interest costs, and more convenience in obtaining credit in the future.

Lower interest costs

Making payments on time prevents you from paying late fees and also reduces the interest cost. Paying your balance in full can save you large amounts in interest payments over time.

Higher Credit Limit

If you pay your dues on time and exhibit responsible credit behaviour, your bank will increase your credit limit. The higher the credit limit, the better your credit utilisation ratio can become, and hence a better credit score.

Best Availability of Financial Products

An excellent credit score, anything above 750, will give you access to better credit cards that come with great rewards, personal loans that are easy to instantly avail of with preferential terms, and even the processing of your mortgage applications at competitive interest rates.

It is essential to pay on time for financial discipline. It trains one to be more responsible towards money, to save and spend cautiously, and not to incur unnecessary debt. Hope these tips will help you make great use of your credit cards.

(The author is CEO of Bankbazaar.com)

Disclaimer: Views expressed are personal and do not reflect the official position or policy of FinancialExpress.com. Reproducing this content without permission is prohibited.