Digital payment systems play an essential role in our lives, as we solely depend on them for varieties of purchases and payments, with their remarkable features such as instant transaction, enhanced security, ease of accessibility, and diverse approach in the modes of funds transfer. Having a bill payment app on your smartphone is an essential requirement nowadays.
If we divide the payment options into two broad categories, they can be classified as debit cards and credit cards. If you want to follow the conventional method of purchasing by simply paying for a product or service from your hard-earned money on the spot, then the debit is the option you should choose. Credit cards come in handy when you make a purchase, and your registered bank pays on your behalf, and then you make the repayment of that amount your bank spent within the stipulated time.
These developments have made our lives comfortable to the extent that we need not move an inch to make monthly payments on electricity bill, telephone bills, pending EMIs, etc.
Suppose you are a frequent user of credit cards. In that case, you must be well versed in their pros and cons, as it is vital in calculating your credit score because that is the metric banks and other financial organizations consider to approve your loan. It is essential to decipher the factors on which credit score depends before diving deep to understand Experian credit score.
Experian is a credit information company that operates in many countries. In India, it was established in 2010 and functions under the rules regulated by RBI and the Credit Information Company Regulation Act. They calculate a person’s credit score based on information provided in their credit information report(CIR). This information is generated by analyzing the person’s repayment history of loans and credit card bills. Even if you use the card for mobile recharge, booking a cab, etc.
The factors on which credit score depends;
- Repayment to be made timely-the most crucial thing about a credit card is repaying the bills within the stipulated time. Delaying the due dates will incur interest rates on the exceeding amount and the late fine, thus resulting in a poor credit score.
- Users can choose to spend beyond the prescribed limit by crossing the credit limit. Doing this regularly will increase the debt amount and decrease the score.
- Necessary payment of minimum due-although paying the entire outstanding amount is always ideal, the least you can do is pay the minimum due amount specified by the bank. However, the interest rate will be levied in this situation, but the debt should stay the same.
Various protective measures can be adapted to avoid any financial crunch. Setting up automated payments for monthly expenses like house rent payment, Wi-Fi bills, etc., where the amount will be deducted automatically on the scheduled date even if you forget. Applying for multiple cards simultaneously should also be avoided, you can always split your payment into a suitable EMI of your choice, and there are many other ways to decrease your debts and increase your credit score.