Many people shy away from applying from a credit card, thinking it is too much of a hassle and too big a commitment. However, if you use your credit card right, you can leverage it to increase your credit score.

Why is your credit score important?

Financial institutions use your credit score to decide whether you should be granted a loan or not. It helps them verify whether you are trustworthy and capable of handling your loan and payment obligations.

So, if you plan to take any loan in the future, be it a home loan or even a car loan, a good credit score will go a long way to get your loan approved faster, and at a better interest rate.

The easiest and fastest ways to boost your credit score with your credit card.

1. Make full payments on time

Use your credit card for regular expenses and when the bill is due, make sure to pay it in full and on time.

When you continuously make regular, timely payments each month, your card issuer records this and reports it to the bureaus when you need loans.

It ensures that you have a history of managing your borrowing well. Besides, paying your credit card bills on time saves you from paying any interest as well.

2. Keep a spending budget for your credit card

Your account balance never changes when you pay for your purchases by credit card. The money is only deducted when you pay the bill at the due date.

This can sometimes lead you to overspend as you don’t know how much money is going out of your account.

That is why you need to keep a budget for your credit card and track how much money you are spending.

This will help you from spending beyond your means. It will also boost your credit score as it proves that you know how to limit your expenses according to your capacity.

3. Don’t over-utilise your credit card limit

Credit cards allow you to take credit up to a specific limit. However, if you use the credit very close to its limit, that means you have more expenses than you can afford.

Besides, it also indicates that you may miss out on bill payments in the future since your credit utilisation is so high.

So, to boost your credit score, keep your credit usage to 30% of your credit limit or lower. If you are over-utilising the credit, you can pay off the bill twice a month to keep the credit utilisation low.

4. Keep an active account

As soon as you open a credit card, use it. Use it on a daily basis and keep it active and open so that the credit bureaus can track your spending nature and how you handle your credit.

If you keep switching between different credit cards and keep closing and opening different accounts, your account’s average age becomes lower.

It also hurts your credit score as it looks like you cannot stably stick to your decisions and cannot prioritise your choice.

5. Choose an average credit card

If you are a first-time credit card user, there’s no need to go for the card with the best facilities and offers. This is because as a first-time user, you can make mistakes.

If you are linked to a highly reputed credit card with strict rules and regulations and default on any of their rules, it would go on your credit history permanently.

So, go for a credit card which is more suitable for new users with better flexibility. This will help you to get your credit score improving gradually over the period of your usage.

Keep your credit card spending transparent and regular. Be disciplined with your money and payment obligations and you will see how your credit score climbs.

Remember, you control the card, not the other way round. Make the most use of it and let it benefit you in the long run instead of thinking of it as a ticking time-bomb.

This article was written by Fahri Ahmed of PropertyAdvisor.my, Malaysia’s most comprehensive source of property data, property analytics and insights.