Credit Card Tips: Stop using your credit card in this way immediately, or your CIBIL score will be ruined...

Nowadays, almost every working professional and business person uses a credit card. Lured by online shopping, EMIs, cashback, and reward points, people use their cards without thinking. But this carelessness can prove costly in the long run.

Many people don't know that certain bad credit card habits directly harm their CIBIL score. When the score drops, banks start considering you a high-risk customer and may refuse to give you personal loans, home loans, or even car loans.

Paying only the Minimum Due is the biggest mistake.

The biggest mistake credit card users make is paying only the minimum due amount. This makes the bank think you've made the payment, but in reality, heavy interest starts accumulating on the remaining amount. This interest keeps adding up every month, and your total liability increases rapidly.

The habit of paying only the minimum due signals to the bank that you are unable to pay the full bill. This is considered poor repayment behavior, and your CIBIL score gradually starts to decline.

Excessive use of Credit Limit
If you use your credit card limit excessively, it's a warning sign. This is called the Credit Utilization Ratio. According to experts, it should be below 30%.

Using too much of your limit makes the bank think you are overly dependent on credit. This makes your credit profile look weak, and future loan approvals become difficult.

Even one late payment can be costly.
If your credit card bill is even one day late, it directly impacts your credit history. Many people think that a delay of 2-3 days won't matter, but that's absolutely not true. The late payment entry goes to the credit bureau. This can immediately lower your CIBIL score, and this record remains for several years.

The habit of taking EMIs and loans repeatedly is dangerous
Converting every purchase into an EMI is also a bad habit. This increases your monthly liability, and a large portion of your salary gets tied up beforehand. Banks consider such customers overleveraged. Banks become very cautious about giving new loans to such customers or simply refuse them. Having multiple credit cards increases risk.
Some people get 4-5 credit cards, lured by offers and limits. But each card has a different billing date, due date, and limit. Even a small mistake can lead to a missed payment, affecting all your cards. This weakens your overall credit profile. However, if you manage them well, you can benefit from them.

Why do banks refuse loans? Know the reasons.

When your CIBIL score is low, banks consider you a high-risk borrower. Banks fear that they might not get the loan back from such customers. Because of this, the loan is either rejected or offered at a very high-interest rate, which further increases the EMI.

How to use a credit card correctly?
Pay the full bill on time every month
Do not use more than 30% of your credit limit
Do not rely on minimum due payments
Choose EMIs wisely
Check your card statement at least once a month

Conclusion
A credit card is a convenient financial tool, but misuse turns it into a risk. If you don't change your habits, your CIBIL score is bound to drop, and getting a loan from the bank will become difficult. Only with proper use can a credit card become a useful financial tool.

Disclaimer: This content has been sourced and edited from Dainik Jagran. While we have made modifications for clarity and presentation, the original content belongs to its respective authors and website. We do not claim ownership of the content.