Credit card is one of the most popular ways of forming and ameliorating your credit score. It is an important instrument to prove your credibility for loans, credit cards or any other credit-linked options. Credit bureaus like Equifax, Experian, TransUnion CIBIL, and CRIF High Mark apply the complicated mathematical algorithm and assign a score to every credit borrower.
Credit score serves as a mark of credibility. Individuals with a higher score are looked upon as more disciplined and responsible with credit and are even likely to get approved easily for new credit cards and loans. So, let’s understand here how a credit card may affect your credit score, how your score impacts your eligibility for a credit card and why it is necessary to go for periodic CIBIL score check online.
Impact of credit score on credit card approval
To be eligible for a credit card, you must hold a strong credit score. A credit score of over 750 is looked upon as good. Thus, banks usually accept a score in the range of 750 and above for credit card application approval. Few banks may even provide credit cards to you if you hold a score of below 750. However, note that the card provided is usually of the elementary level with minimal credit card-linked benefits. Only if you hold a strong credit score of 750 and above will you be eligible for credit cards with higher benefits and reward points.
Creditors conduct a CIBIL score check online to decide your eligibility for a credit card. There are just a few creditors that may offer credit cards if you are new to credit. So, building a credit score is one of the important things you must concentrate on before you apply for the credit card of your choice offering higher benefits.
When you place an application for a credit card, you must submit your PAN card and other crucial KYC documents. A PAN card is necessary for creditors or banks to review your credit report and score. It uses your PAN card details so the creditors can fetch your credit report to understand your credit repayment potential and eligibility chances. After the hard enquiry is initiated on your account, your credit score may be negatively impacted for a while. Thus, as fetching your credit report negatively impacts your score, you must ensure not to submit multiple credit card requests. This may not just pull down your credit score massively but also make lenders consider you as a credit-hungry individual eager for credit.
Important things you must note
- A CIBIL score of 750 and above is looked upon as good for submitting credit card and loan applications.
- Credit score assists the lenders in judging your credit behaviour as well as your repayment patterns.
- A rejected application for a credit card can lower your credit score.
What is the minimum credit score for approval of your credit card?
Credit score requirements for distinct credit card issuers may differ. However, a score falling in the good score range would assist you in getting approval for a credit card. The minimal CIBIL score, which is required for credit card approval, is 750.
The table below shows the credit score range and what it means –
|Credit bureau||Range of credit score||Score – good to excellent|
|Equifax||300 – 850||Over 670|
|Experian||300 – 850||Over 700|
|TransUnion CIBIL||300 – 900||Over 700|
Why do lenders review your credit score periodically?
As credit card is an unsecured credit option, banks must take higher credit risk when issuing a credit card to a customer. Here’s why you must check whether you are capable of taking up the new debt. Credit score clearly indicates your debt repayment behaviour as well as your utilization of the available credit card limit.
When you, as an individual, apply for a credit card and submit your documents, you allow the NBFC or bank to initiate a hard enquiry on your credit profile. Bank would know about your past repayment, whether you have missed any repayment or have delayed the repayment, your active accounts, credit utilization ratio and others. In case you are not satisfied, the lender may turn down your application for a credit card.
Was your credit card application turned down?
There are several reasons behind possible credit card application rejection. A few of the crucial reasons for the denial are the lack of credit history, irregular past repayment, application for multiple loans as well as credit cards, etc.
When is a credit score considered good?
Lenders keep changing the card approval criteria. Few common reasons you might be turned down a credit card application after showing strong credit behaviour are –
- A lot of debt (even if you repay the debt regularly)
- A lot of available credit
- Current delayed repayments, as well as charge offs
- Short term credit history
Credit cards for individuals with low credit profiles or score
At times, you might miss out on your loan EMI or credit card dues owing to genuine reasons such as medical emergencies, or unemployment, resulting in default or delay in repayments. In such a scenario, you must take special measures to get credit card approval. A great way to begin rebuilding credit is to opt for a secured credit card. Note that a secured credit card is a card offered against your fixed deposit. When you delay your repayments, dues are redeemed from your fixed deposit account. Timely repayments over a time period may make up faulty credit histories.
A few of the good, secured credit cards present in India are –
- ICICI bank instant platinum credit card
- SBI card unnati
- ICICI bank coral credit card
- Axis bank insta easy credit card
Frequently asked questions –
What CIBIL score is required for availing of a credit card?
Credit card issuers would prefer a strong credit score generally of over 750. In the rare case scenario, you can even get a credit card with a good score if you hold an existing relationship with a bank or if you mitigate the other parameters set by the creditor.
If you have a zero CIBIL score, how can you get a credit card?
There are certain banks that provide credit cards if you are new to credit. In case you are unable to get a regular credit card, you may apply for a secured credit card.