Using a credit card responsibly can help you maximize the advantages it offers and it also presents you with the chance to build a solid credit history. Whether you’re getting a cashback credit card or a travel credit card for frequent travel, we recommend that you to use your card wisely.
Good spending habits and having control over your credit card will help you generate an excellent credit score. Such scores are vital if you want to obtain other credit products such as mortgages and car loans in the future.
Your issuer monitors your behaviour, and any mismanagement can hurt your score. Let’s look at how you can use your credit card to build a solid credit score.
Pay Dues on Time
One of the best ways to build a solid credit score is to pay your balance on time. Payment history is important in determining your credit score, and late payments can wreak havoc on your credit profile.
Paying off the balance in full is always recommended to avoid incurring any interest charges. However, if you cannot pay off the full balance at the end of the cycle, make sure to pay at least the minimum balance. Late payments can incur hefty fees and reduce your credit score.
Keep the Utilization Ratio Low
Keeping your credit utilization ratio at 30% or lower is a good practice. Going above and beyond this limit might indicate to the lender that you’re at risk of defaulting on payments. The utilization ratio is also fundamental in determining your credit score. Keeping it as low as possible can significantly improve your credit profile.
Increase Limit
Increasing your credit limit can be a great way of reducing your credit utilization ratio. A higher credit limit gives you the luxury of spending more without significantly impacting your credit utilization ratio. Having said that, you might not be able to increase your limit immediately if you have recently obtained a credit card.
Practicing good credit habits and acting responsibly are key factors in increasing your credit limits. These factors also ensure that you maintain a healthy relationship with your lender, which can be key in getting new credit cards or future credit products.
Applying For a Credit Card in Canada
If you’re planning to get your hands on some of the best Canadian cashback credit cards, head to Great Canadian Rebates. Our online platform allows you to compare various credit cards on offer, their rewards structure and more and select the one that best suits your needs. Whether you want a travel credit card or the best cashback card for online shopping, we have it all. Visit our website for more information.