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How To Rebuild Your Credit Score With A Credit Card

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A credit score is a crucial factor that helps the credit lending organisations determine how dependable you are in repaying your loans within the specified time. 

If your credit score is favourable, your acceptability as a loan borrower increases. Eventually, the credit lending organisations offer you more loans along with new credit cards at favourable terms. Similarly, when your credit score is not up to the expected level, you do not qualify to apply for a loan or a credit card.  

Therefore, you must take the credit score very seriously and follow the best practices to enhance your credit score. 

  1. Be careful about defaults

If you do not pay the loans you have taken against your credit cards on time, it will add to your list of defaults. 

With each default, your credit score will go down and along diminish credibility for loans or credit cards. Therefore, make a loan repayment schedule and pay the loans before the due date. 

  1. Maintain the credit utilisation ratio

The credit utilisation ratio is another essential predictor of your credit score. 

Credit utilisation ratio refers to the ratio of the total credit available for you against a particular credit card and the amount you have used till date.  

Therefore, if you have taken a considerable percentage of the credit and a very nominal percentage of the loan is remaining with you, it will negatively impact your credit score.

So, when you take loans, keep a simultaneous record of your credit utilisation ratio.

  1. Avoid unnecessary credit accounts

There is a common myth that opening an array of accounts to build a better credit mix helps improve your credit score. Maintaining too many credits can invite unpleasant consequences such as increasing your tendency to spend unnecessarily and making your expenses exceed your financial budgets. It will eventually hamper your credit score. 

Maintaining too many credit accounts also increases the probability of strict enquiries, and can harm your credit score.

If your focus is to improve your credit score, it is highly recommended that you restrict to a few credit accounts that you can handle.

  1. Unused credit cards help

Credit cards you have never used to take any loan ever can help boost your credit score. Every credit card makes you eligible for a certain amount of loan, and this unused card is also not an exception. When you keep it unused, the unutilised loan amount gets added to your credit utilisation ratio. Therefore, your credit utilisation ratio decreases. 

On the contrary, when you surrender this card, you lose your eligibility to get the loan amount. So, the ratio of loans taken by you and the amount you are eligible for also decreases. Simultaneously, the credit utilisation ratio increases and your credit score drops. 

Therefore, you should retain your unused credit cards if you can maintain them without spending any money as service charges or membership fees. 


Credit cards can be very handy for emergencies as well as availing offers and discounts from your favourite merchants. Using your credit cards smartly will improve your overall credit limit and provide you added advantages, such as an increase in credit limit with banks, quick loan approval and processing, etc.

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