What is a credit profile?
A credit profile describes your credit history for lenders. Simply put, a credit profile assesses how you have been paying back any loans that you took in the past. Credit profiles are reported by credit rating agencies. Such agencies basically track your loan history, based on how much loan you availed from a lender, what type of credit you use, the length of your loan and, most importantly, whether you paid back your loan on time.
(Also Read: 7 Credit Card Charges You Must Know About)
Why is a good credit profile important for credit cards?
Credit cards can help an individual either build or mar his or her credit profile, say experts.
A credit card provides you with an option to avail short-term credit, which can be used in case of any emergency. A judicious use of credit cards is very important for maintaining a good credit score. If you do not need to necessarily buy something via a credit card, do not buy it. For example, you can delay purchase of an item not needed on an urgent basis, and pay in cash instead of credit. However, if you do necessarily wish to buy it immediately, make sure that you either pay back the money to your bank on time, or pay the instalments regularly to boost your credit profile.
"If you have money already budgeted for an expense, then using a credit card for it and paying it in full at the end of the grace period is the best strategy," said Rahul Agarwal, Director Wealth Discovery/EZ Wealth. Do not maintain a high balance on your credit card as it will eventually lead to a debt trap, he added.
Election Results for Lok Sabha Election 2019 will be out on May 23. Get the latest election news and live updates on ndtv.com/elections. Catch all the action on NDTV Live. Like us on Facebook or follow us on Twitter and Instagram for news updates from each of the 543 parliamentary seats for the election 2019