Can a Credit Card Improve Your Credit Score?

Credit cards have gained a reputation for leading more people than the devil himself down the path to ruin. It can be a piece of cake nowadays when buying a credit card as long as you have the correct paperwork to make them work to your benefit is a far more difficult job. They not only have the power to drown you under an avalanche of perennial debt, but they also have the power to work wonders for your financial wellbeing by potentially strengthening your credit report and having a major positive effect on your CIBIL score.

In order to measure whether or not to offer loans or credit cards to consumers, banks and financial institutions today rely almost entirely on CIBIL ratings. There is no hope for borrowers with a poor credit background or even no credit history at all to receive credit from a lender.

There are several ways to use them to boost your CIBIL score for those who already own one or more credit cards.


With the expectation of paying off the balance over a period of time, most individuals choose to make large transactions using credit cards. Although this may seem like a viable choice, if repayments are not made in a timely manner, it can have a negative impact on your CIBIL ranking.

For example, Karan, a software engineer, recently obtained a credit card from his Bank. Although his financial situation was reasonably secure, he wanted to use his credit card to buy airline tickets worth Rs 70,000 for a holiday to Scandinavia with no debt attached to his name. His holiday, however, incurred expenses that went beyond his intended budget and ate deeply into his savings, forcing him to once again use his credit card to fund parts of his vacation. He finally returned home saddled with over a lakh of credit card debt and very little remaining to pay it off. Things soon turned sour and he realized that he wasn’t making enough to cover his monthly expenses as well as the card repayments.

He approached multiple banks requesting a loan over time but was denied because of the negative effect his credit card debt had on his CIBIL score.

In order to minimize the risk of being weighed down by a maxed-out credit card, keeping this situation in mind, it is always advisable to budget responsibly and use cash to make purchases wherever possible. Doing this will keep your card use to a minimum and help to create a sound money management credit history.


It will help create a good credit history and boost your CIBIL score by using your credit card to regularly pay your internet bills, phone bills, or utility bills like water and electricity. Since these costs appear to be much smaller compared to buying material products, it is possible to pay off the interest they incur on your credit card easily or within a short period of time.


You can also try to make the minimum repayments on or before the scheduled due date, even though you do not pay off the entire sum you owe on your credit card. This will show lenders that you do not have a habit of payment reneging and, in the long run, can be a good credit risk. However, bear in mind that paying off as much of your credit card debt as fast as possible will raise your CIBIL score in no time.

Although this is easier said than done, all it takes to keep your financial status in the pink of health is a little willpower and smart credit card management.