How to Maintain Your Credit Score: Why Not Cancel Your Axis Bank Credit Card
Cancelling your credit card carries significant risks that can impact your financial health for years to come. When you consider closing your Axis Bank credit card, it's crucial to understand the potential detrimental effects on your credit score and overall financial reputation. In this article, we will explore the reasons why cancelling your Axis Bank credit card is not advisable and discuss strategies to maintain a healthy credit score.
Understanding the Risks of Closing Your Credit Card
One of the primary reasons avoiding the cancellation of your Axis Bank credit card is credit utilization ratio. This ratio measures the amount of credit you're using compared to your total available credit. A higher utilization ratio can significantly negatively impact your credit score, making it harder to obtain loans or credit at favorable terms in the future.
Moreover, your credit history and credit score are intricately linked. When you close a credit card, your credit utilization ratio suddenly improves, but it also includes a hit to your credit history, which can negatively affect your credit score in the long term. Additional factors such as late payments and outstanding balances also play a crucial role in determining your creditworthiness.
Perks and Benefits of Your Axis Bank Credit Card
Axis Bank credit cards come with several useful perks and benefits, such as cashback, reward points, travel insurance, and purchase protection. These features can save you money and provide valuable coverage. For instance, if you have two credit cards from Axis Bank, the offers and deals they provide can be quite beneficial. Understanding and utilizing these benefits can help improve your financial health.
Financial Backups and Future Opportunities
Having a credit card is more than just a financial tool; it serves as a valuable backup plan. In emergencies, you can use your credit card to cover unexpected expenses without burdening your finances. Closing this resource can leave you without a safety net when needed. Additionally, when you apply for loans or credit cards in the future, lenders may view a closed credit card as a red flag, potentially affecting your eligibility and the terms you receive.
Tips for Maintaining a Healthy Credit Score
Instead of closing your Axis Bank credit card, there are proactive steps you can take to improve your credit score and maintain a healthy financial reputation. Here are some strategies:
Update Your Monthly EMIs and Credit Card Payments: Ensure that all your monthly expenses, including EMIs and credit card payments, are made on time. Regular, timely payments demonstrate responsible financial behavior and positively impact your credit score. Monitor Your Credit History: Regularly check your credit report to stay informed about your credit standing. This practice allows you to catch and correct any errors promptly and manage your credit profile effectively. Request Credit Utilization Increase: If you have an underutilized credit line, ask Axis Bank to increase your credit limit. This can help you maintain a lower credit utilization ratio without closing your account. Revive Your Credit Card: If your card is inactive, revive it instead of canceling it. Keeping your credit account active shows lenders that you are using your credit responsibly, which is beneficial for your credit score.In conclusion, cancelling your Axis Bank credit card is not advisable due to the negative impacts on your credit score and overall financial reputation. Instead, focus on maintaining a healthy credit score through responsible financial practices. By updating your payments, monitoring your credit history, and utilizing credit effectively, you can ensure a strong financial future.