A credit card is an important tool that can be used to build and improve one’s credit score. It has become the most common way to prove one’s creditworthiness for a mortgage, loan, or insurance. Complex mathematical algorithms are applied by credit bureaus such as Equifax, Experian, TransUnion, and CRIF Highmark to assign credit scores to every borrower in the country.
You must check your CIBIL score online through a CIBIL score login once in a while as it is indicative of your creditworthiness. Those with a high credit score are likely to get easily approved for new credit cards or loans as they are considered to be more responsible with their credit. This blog will discuss how a credit card influences your credit score and affects your eligibility for getting a credit card approved.
Impact of CIBIL score for credit card approval
A good credit score of 700 or above is required to prove eligibility for a credit card. Some banks or financial institutions can also offer people with lower credit scores a credit card. However, the applicant must meet other eligibility criteria the bank sets concerning occupation, income, and residence.
CIBIL scores are evaluated by the banks whenever someone applies for a credit card. Very few banks offer credit cards to applicants new to credit. So, applying for a credit card first with these banks is a better option as it will help establish a credit score.
Customers need to submit their PAN and other KYC documents when applying for credit cards. Banks use the PAN to check the credit score and report of the applicant. A hard inquiry is then initiated on the applicant’s account. If the application is rejected due to any reason, the credit score is negatively impacted.
What is the minimum CIBIL score needed for credit card approval?
There are different credit score requirements for different credit card issuers. But it is easier to get approved for a credit card if your credit score is in the good to excellent range. The minimum CIBIL score needed to get most credit cards is 750. You can check your CIBIL score online through a CIBIL score login if you have no idea about it.
Why is the credit score of applicants checked by banks?
As credit cards are unsecured loans, higher risks have to be taken by banks when issuing a credit card to a client. So, they need to check whether an applicant can afford to pay the new debt. A credit score can easily predict an applicant’s debt repayment behaviour.
Regularly checking your CIBIL score online keeps you motivated to take necessary steps like timely loan repayment and efficient fund management till you reach your target score.
When someone applies for a credit card and submits the required documents. The bank is automatically authorised to initiate a hard inquiry on the applicant‘s credit profile. This helps the bank know about the applicant’s credit history, including his past repayments, missed payments or delays in payments (if any), number of active accounts, credit utilisation ratio, and credit cards and loans. The bank can reject the credit card application if they don’t feel satisfied with the credit history of the applicant.
Credit cards for people with a low credit score
Sometimes, the payment of a loan EMI or credit card bill may be missed or delayed because of genuine reasons such as medical emergencies or unemployment. In such a case, special steps must be taken to get approved for a credit card.
A borrower who uses a higher credit utilisation ratio has low credit scores. A CUR above 30% reflects the borrower’s dependency on the loan amount to meet their financial requirements. This shows that they are not financially sound enough to make payments of loans within the tenure.
A good way to start improving your CIBIL score online is by attaining a secured credit card. which is issued against a fixed deposit. If there is any delay in payments, dues are deducted from the fixed deposit amount of the credit card holder. Faulty credit histories can be healed over time by making timely payments.
We hope this blog helps you understand how your CIBIL score affects your credit card application. And what the minimum CIBIL score required for a credit card is. You must check your CIBIL score online via a CIBIL score login at least once a year to keep track of it. Your credit score is probably the most crucial factor considered by lenders while reviewing your loan application. Therefore, to get loan approval, you must work on improving your CIBIL score online. Although it is a time taking process, with efficient planning and considering the methods mentioned above. You can successfully increase your score to prove your credibility to get a loan at a negotiable interest rate.
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