Credit cards could sometimes lead to bad spending habits causing people to ruin their credit history and lower their creditworthiness. However, credit cards can be used as instruments to help you manage our finances better too. Here are some strategies to use credit cards to undo bad credit history.
Make Bill Payments on Time
If your credit history is bad, using your credit through the credit card is the only way you can repair it in the future. However, you also need to pay back whatever you have charged on the card. If you can use your credit card for all reasonable expenditure and then pay back the dues before the payment deadline is due, over a period of time, your credit rating will greatly improve. Most importantly, consistent bill payments will make you more credit worthy, and more credit card issuers would be willing to offer good deals to you.
Use the monthly expenditure report
Almost all credit card issuers send credit card customers detailed expenditure reports for the month. These reports could be used effectively to look for expenditure amounts that could be avoided. Finances that were wasted in extravagance can be instantaneously spotted, which means you will always be aware of where some of your hard earned money disappears and where you could pull back some savings. The lower the extravagance, the lower your outstanding balances and therefore the better your credit history will be.
Auto debited bill payments
This is one of the biggest benefits of owning a credit card. If your bills are all paid on time, it will greatly improve your credit history. This doesn't just involve your credit card bills but also bills for your utilities like electricity, water, phone or internet. Setting auto debit payments from your credit cards for all these bills ensures that you never miss a single bill payment deadline. This way, over a period of time, you can greatly improve your credit history and credit rating. This is because credit history depends on the consistency with which bill payments are made.
Fear of interests
Fear of credit card interests and taking it as a challenge not to pay additional interests on credit cards, could help you avoiding big expenses. This is how even credit limits can be used properly. You can set targets, so that you never really spend more than what you can afford. That way, your outstanding dues remain low and your monthly expenditure remains under control.
Plastic is always better than cash
Spending with your cash will never improve your credit history, because there is no trail left for it. You will find it difficult to get personal loans or good premium rates for insurance for medical expenses or vehicles. Plastic will not only leave a trail, thereby adding to your credit every time you spend, it also helps you keep track of what you have spent. It is often easier to know where and how you have spent money with a card, than trying to figure out where all that cash went out from your pocket.