Let's understand 5 FD credit Card mistakes that can hurt your credit score:
1. Not Using the Card Regularly
One of the most common misconceptions is that simply owning an FD-backed credit card is enough to improve your credit score. In reality, credit bureaus need active repayment data to evaluate your financial behavior.
If you don’t use your card at all, there is no repayment history being generated. This means your credit profile stays “thin,” and your score may not improve meaningfully over time.
Why this hurts your score:
Credit scoring models depend heavily on usage + repayment patterns. An inactive card contributes very little to your credit history.
What you should do instead:
Use your FD credit card for small, predictable expenses such as groceries, mobile recharges, OTT subscriptions, or utility bills. The goal is not high spending, but consistent usage followed by timely repayment.
2. Spending Too Much of Your Credit Limit
Even if your credit card is backed by a fixed deposit, it still has a credit limit—and how much of it you use matters.
Using a large portion of your available limit (for example, 70–90%) signals higher dependency on credit, which lenders may interpret as financial stress.
Why this hurts your score:
High credit utilization increases perceived risk and can negatively impact your credit score, even if you pay on time.
What you should do instead:
Try to keep your credit utilization below 30% of your total limit. For example, if your limit is Rs. 20,000, try not to spend more than Rs. 6,000–Rs. 7,000 in a billing cycle. This keeps your credit profile healthy and stable.
3. Missing Payments or Paying Late
Payment history is the most important factor in your credit score. Even with an FD-backed card, late payments are reported to credit bureaus and can damage your score significantly.
A single missed payment can stay on your credit report for months and affect your ability to get loans or unsecured credit in the future.
Why this hurts your score:
Late payments signal financial unreliability, which heavily impacts credit scoring models.
What you should do instead:
Always pay your full outstanding amount before the due date. Setting up auto-debit or payment reminders can help ensure you never miss a cycle. Paying the full amount (not just the minimum due) is especially important for building strong credit behavior.
4. Closing the Card Too Early
Many users close their FD credit card once they feel their score has improved slightly. However, this can actually slow down your credit growth.
Credit scores also consider the length of your credit history. A longer, well-maintained credit account builds trust with lenders.
Why this hurts your score:
Closing the card reduces your average credit age and can shorten your overall credit history, which may negatively affect your score.
What you should do instead:
Keep your FD-backed credit card active for 6–12 months, or longer if possible. Even after you qualify for an unsecured card, maintaining the FD card with light usage can still benefit your credit profile.
5. Applying for Multiple Cards Together
When you apply for a credit card, lenders perform a “hard inquiry” on your credit report. Too many hard inquiries in a short period can signal credit hunger or financial instability.
This is especially counterproductive when you are trying to build credit using an FD-backed card.
Why this hurts your score:
Multiple inquiries reduce your credit score temporarily and may make lenders hesitant to approve new applications.
What you should do instead:
Apply for new credit only when necessary. Take time to compare features, interest rates, and benefits before applying. Ideally, allow a gap between applications so your credit profile remains stable.
