Ever dreamt of owning a home, securing a dream car, renting an apartment or simply enjoying lower interest rates? It all boils down to a three-digit number: your credit score. This seemingly simple number carries so much weight in the financial world.

It is the difference between securing a loan at a low interest rate or being declined. Your score acts as a report card on your borrowing habits, while giving a glimpse into your financial wellness.

But what exactly goes into this score, and how can you harness its potential to achieve your financial goals? We asked the renowned founder of card company- VEMCARD, Alberto pereira de souza Júnior on how credit cards work and tips on building a stellar one.

How Does Credit Card Work?

“Most people have more than one score and your score result can differ based on the formula used or the credit bureau that provided the information used for the score. Fair Isaac Corporation (FICO) score, which is the most widely used credit scoring model in the United States.

Serviço de Proteço ao Crédito (SPC), Serasa, Boa Vista, are among the credit score bureau operating in Brazil,’ Alberto pereira de souza Júnior explains. FICO scores typically range from 300 to 850, with higher scores indicating you have a better credit history and know how to manage finances responsibly. Several things come into play when it comes to determining your credit score:

Payment History (35%)

A consistent record of on-time payments for bills, loans, and credit cards is the single most significant factor influencing your score. Even a single missed payment can cause a significant drop.

Credit Utilization Ratio (30%)

It shows the amount of credit you’re using compared to your available credit limit. Aiming for a utilization ratio below 30% demonstrates your ability to manage credit responsibly.

Length of Credit History (15%)

A good credit history with a mix of accounts held for a longer duration paints a positive picture. This signifies your commitment to responsible borrowing over time.

Credit Mix (10%)

Having a diverse credit portfolio, including credit cards, instalment loans (like mortgages or car loans), and potentially store credit cards, can contribute positively to your score. It showcases your experience in managing different types of credit.

New Credit Inquiries (10%)

Every time you apply for a new line of credit, a credit inquiry is made, which can cause a temporary dip in your score. Be mindful of applying for only the credit you truly need.

Benefits of a Stellar Credit Score

Alberto pereira de souza Júnior says here are what you stand to gain when you maintain a good credit score:

Lower Interest Rates

A high credit score qualifies you for lower interest rates on loans, mortgages, and even car insurance. This results in significant savings over time.

Enhanced Borrowing Power

A good credit score increases your chances of securing loans for major purchases like a house or car. It also allows you to access larger credit limits with Favourable terms.

Lower Security Deposits

Landlords may require lower security deposits when renting an apartment if you have a good credit score, reducing your upfront costs.

Competitive Job Offers

Some employers might consider your credit score during the hiring process, as it reflects your overall financial responsibility.

Tips to Improve Your Credit Score

Now that you understand the benefits of a good credit score, here are actionable tips to improve your credit score:

Make Payment on Time

Make on-time payments for all your bills consistently. A good rule of thumb is to set up automatic payments or calendar reminders to avoid missed payments.

Maintain Low Credit Utilization

Keep your credit card balances low and strive for a utilization ratio below 30%. Consider paying down existing balances strategically.

Let Your Credit Age Gracefully

Don’t close old credit card accounts in good standing, even if you don’t use them frequently. A longer credit history positively impacts your score.

Embrace Credit Mix

Explore different types of credit, like instalment loans, if responsible management is ensured.

Minimize Credit Inquiries

Avoid applying for multiple lines of credit simultaneously and research credit card options beforehand to minimize inquiries.

Tips to Building Financial Wellness Beyond the Score

. Here are some additional tips for for ensuring all-round financial wellness:

Create a Budget and Track Your Spending

Knowing where your money goes is crucial for responsible financial management. Create a realistic budget and track your expenses to identify areas for improvement.

Embrace the Power of Saving

Build an emergency fund to handle unexpected expenses. For this, you can save consistently, even if it starts small.

Live Within Your Means

Avoid unnecessary debt and priorities needs over wants.


Building a good credit score is a journey, not a destination. It requires discipline, consistency, and a commitment to responsible financial management.

By following the tips provided by Alberto pereira de souza Júnior above, you can take the reins of your credit score and drive it to a world of financial possibilities. It’s time to take charge of your financial future, one payment at a time.