How a credit card can help improve your credit score
News from Economic Times:

Zulfikar Abbas is a lawyer who has just started his career. He has read about the dangers of using credit cards and how they can lead him to overspend. Abbas uses a debit card linked to his bank account and finds it a good alternative to a credit card. He gets a lot of offers for credit cards and is attracted by the convenience they offer. Does it help to have a credit history and will it add any value to his ability to manage his financial situation efficiently?

Zulfikar Abbas must understand the role that a credit card can play in his financial life to be able to use it to his advantage. He can manage his cash flow by using a credit card to meet his regular expenses. He must also make sure that he pays his credit card bills fully each month in a cycle that is convenient.

Making payments for regular expenses through a credit card is a good way for Abbas to keep track of his expenses. The credit card statement and the charge slips will give him the record to make sure he stays within his budget. Credit cards will also help him meet expenses in an emergency when he may run short of funds. Overdrawing on his bank account in such a situation by using a debit card will come at a cost.

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He tried, but credit was denied
News from Worcester Telegram:

QA Citibank branch manager personally urged me to apply for a second Citibank card. I made it readily known that I questioned my eligibility for a second promotion, but the manager assured me it was OK. I applied and was rejected for the card, supposedly due to credit reasons. Several days earlier I had acquired my credit score and it was perfect. So it makes no sense that I was rejected over my credit. Then I applied for pre-approval for a mortgage and was told my credit score was lower — I think because Citi rejected me for the credit card application. I can’t get Citi to help me get this straightened out. Can you help me?

PHILIP TACKEL, BRIGHTON

A There are a few issues to address here. First, a rejection of an application isn’t what pulls down a credit score. Multiple applications for credit, however, can.

So, just the act of applying for another credit card is something to think about if you’ve got other borrowing you’re planning to do. Also, credit scores available to consumers will not necessarily match those used by a lender.

In addition, as much as a person might appear to be an authority, you are responsible for what you sign your name to. It’s the same as if an electronics store sales person explains why you need an extended warranty. The guidance isn’t unbiased, but you’re the one signing the contract — not them.

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