Why is it Important to Pay Credit Card Bills on Time?
The credit score is a numerical expression of your complete financial profile. This score is calculated after collecting information about your credit reports from banks and financial institutions. Any score above 750 is a good credit score.
Do you know that 35% of your credit score is dependent on how diligent you are with paying your Credit Card bills on time?
Here are a few things to keep in mind while settling your outstanding Credit Card bills:
Direct Impact on CIBIL Score
As convenient as it might seem at times to delay the payments of your Credit Card bills, irregular payments of them will badly hurt your CIBIL score. This, in turn, will affect your chances of availing a new loan, be it a Personal Loan offer, vehicle loan, education loan, or a Home Loan.
Maxing Out the Limit
It is important to note that you should never max out your card by more than 75%. In most cases, banks will want to reduce your credit limit if you max out your limit.
Influence on New Credit Card Application
If you are planning to Apply for New Credit Card, it all boils down to your CIBIL score, which will determine if you are financially stable to afford another card.
Trouble from Credit Card Agents
Banks and financial institutions employ external agents to retrieve Credit Card debts. Once the news of your outstanding bills reaches these agents, you will no longer have the option to pay your bills monthly but pay the entire outstanding amount at one go.
Effects of Last Minute Payments
If you happen to make the payments on the last day, the registries at the banks might not be able to update them instantly. This can be risky even if you made the payment before the deadline.
Life Insurance Rates
Insurance companies also make use of your credit report and CIBIL scores to decide insurance rates for you. Irregular payment of Credit Card bills will increase your insurance rates. Timely payments will only save you plenty of money in the long run.
The Closing of Inactive Accounts
If you happen to have an inactive Credit Card account that you haven’t been using, the interest rates of that account will also have an impact on your credit report and CIBIL score. It is imperative to close these inactive and unused accounts so as to avoid any penalties and bad CIBIL score.
High Rates of Interest
Late payments of Credit Card balances will force bankers to charge higher interest rates than the existing rates, which will add to your credit debt.
Unnecessary Penalties
If you make a late payment for a month, the minimum amount will be double for the next month and an additional penalty fee is levied. This puts you under tremendous financial strain.
If the payment of your pending card is delayed even by a matter of minutes, it will have a direct influence on your creditworthiness. One wrong step in this process results in a long drawn financial burden occurring on a recurring basis, and also affects your chances of availing a loan or a fresh Credit Card later in the future.
Also Read: 9 Best Credit Cards You Should Own in 2018
To apply online for Credit Cards, Secured Loans and Unsecured Loans, visit www.mymoneymantra.com, the leading online lending marketplace that offers financial products from 70+ Banks and NBFCs. We have served 2 million+ happy customers since 1989.
Talk to our Loan Specialists toll-free at 1800 103 4004 to know more about our products and offers.
