What Are Credit Cards and Credit Scores?

Introduction to What are Credit Cards and Credit Scores?

Credit cards are a wise decision only if you can control your impulses. It is mainly due to the fact that it increases your Credit Score. What are Credit cards and credit scores? A credit card allows you to spend within the limit provided to you by the issuer. 

At the end of the month, one can pay the amount. Whereas, a credit score is a score of your creditworthiness. Let us dive deeper and know about the same.

What are Credit Cards?

What Are Credit Cards and Credit Scores

Credit cards are a type of credit product that is based on credit scores. It provides people with the facility to use credit in small amounts. It is a pure borrowing facility. Why Should you get a Credit Card? 

Having a credit card helps you maintain a good credit score and keeps your overall score as good as possible. It helps you pay bills and enables you to enhance your credit score. Also, this facility helps you improve your credit score once you repay the amount when due.

What are Credit Scores?

Every time you apply for a credit card, your credit score is calculated by a third-party agency. One can also check your score online. A credit score is based on the following factors: Payment History, Amounts borrowed, Length of credit history, Credit Card Usage, Discontinuities, Details of collections, Loan Costs Rates, and Interest Rates 

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The total of all the above is considered to calculate your credit score. A good credit score is a 3-digit number that identifies your creditworthiness. When you spend on your credit card, your credit score is influenced by your payment history. It is calculated by a calculation done by a credit card company. You should ensure that the same is maintained as a healthy credit score. 

How does a Credit Card help in building a Credit Score?

What Are Credit Cards and Credit Scores

Using credit cards to pay for your purchase is very beneficial to you. These are aimed at maintaining a track record of your spending and helping you build a Credit Score. A Credit Score is the most important factor used by lenders to decide the chances of giving you a loan. 

Moreover, it can also help you build a good Credit Score. You need to be aware of your spending. Do not spend beyond your means or you might end up in a lot of debt.

Disadvantages of having a Credit Card?

There are not many disadvantages but some people believe that having a credit card has some major disadvantages. They believe that there is an increase in the chances of bankruptcy. But, they should remember that the reason behind their bankruptcy is that they failed to repay the credit card bill. 

So, if you are planning to have a credit card or have been carrying one for a while, it is better to pay the credit card bill in time. 

What are the benefits of a Credit Card?

A good credit card also provides a lot of features. The credit card users can avail discounts and cashback such as:

  • Credit card users also receive about 1-3% cashback.
  • Exclusive access to several airport lounges.
  • Several other discounts and offers at E-commerce sites.
  • Credit Card rewards points or No-Cost-EMI.

How to keep a good credit score

The process to maintain a good credit score is very simple. One can achieve this in various ways like – Pay Bills on time. Never miss paying your bills. This is one of the most important habits that help in maintaining a good credit score. 

You should not have a revolving debt in your account. If your credit card has a revolving limit, your payment history is always good and this will help in the growth of your credit score. 


The credit card offers a very beneficial facility to its users. It gives them complete freedom to spend and earn money. Hence, they should carefully choose the card and pay attention to the things. 

Keeping all these in mind, it is imperative to choose the credit cards of your choice. You will surely enjoy this facility and boost your career.

Featured Photo by Ales Nesetril on Unsplash

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