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How Multiple Credit Cards Help In improving your CIBIL faster

How Multiple Credit Cards Help In improving your CIBIL faster

  • By Saral Credit
  • May 27, 2022

In case you are one of those who is looking at building the credit score, whether to improve it further to derive maximum benefit out of it or trying to rebuild that credit profile that you lost on account of some circumstances that lead to non-payment of loan obligation, credit cards can come to your assistance in building credit faster.

The logical question here is that how can this form of credit that is available as an entry point into credit world to most the first time borrowers can be of relevance to building good credit and that too with speed. Before we elaborate on this let us first understand a bit about the credit score and the factors that impact it. The CIBIL score, the commonly used nomenclature for credit score is a numerical expression of your chances to default within 24 months of credit line getting extended. This prediction is an outcome of the data available with the credit bureau. The bureau uses the following five parameters to ascertain this probability.

Repayment pattern

Amount owed

Credit mix

Length of credit

New trade lines

Each of the above impact the credit score and the credit cards have a good bearing on each one of these. And may even have a higher weightage over loans on few of these. Let us understand how. First and foremost, if you are looking at improving the already fair credit score and are holding only one credit card, you must open at least two new cards. And in case you are one of those who want to build the bad credit score, take three secured cards to kick start the process. Bear the following in mind while using the card to build the score faster. Do not use the card beyond 30% of the prescribed credit limit. What it means is that if combined limit on your three cards is say Rs 100,000, limit the usage to about Rs 30,000. Using it for a higher amount may be a deterrent in the way to achieve set objective. Using multiple cards is as important as giving variety of nutrients to your physical body. More number of cards depict the maturity to manage multiple credit facilities at the same time and impact credit worthiness. As most of the credit specialists prescribe, take 3 cards and use them wisely. Set payment reminders for all the cards and ensure that you are paying them in time without any default what so ever. Timely payment will again positively impact credit score. Multiple credit cards will impact the credit mix, timely repayment will impact the repayment pattern parameter, a lower usage of prescribed limit across the plastics held by you will have a bearing on the amounts owed by you and most importantly, as the time elapses and these credit cards increase in vintage they will impact the parameter of length of credit. Thus the cards impact four out of five influencers. It goes without saying that whatever may be the objective. To further improve your current credit score or to have your name removed from loan defaulter list, this humble instrument will definitely come to your aid. (a word of caution here for those who have had defaulted in past, that you would also be required to pay up the dues on the delinquent accounts and merely opening new credit card lines will not be of so much of use) So go ahead and apply for these most sought after credit instrument that will not only help you in rebuilding or improving credit health but will also help in saving money if used properly.