CIBIL Score ranges from 300-900, 300 being the lowest, and 900 being the highest. Any score above 700 can get you approved on credit card applications, though this can vary on the type of card and the institution you are applying with. Moreover, your credit limit is also determined after evaluating your credit score. Kindly note that credit score is not the only criterion that is checked when you apply for any credit card. Other factors such as your net monthly salary, company you are working with, age, etc are also considered.
An individual with no credit score can get also get a credit card if he/she meets other requirements which are as follows:
- Age- The age of an applicant must be at least 18 years of age.
- Income- Whether salaried or self-employed, the applicant must have a regular source of income.
- Credit history- The applicant must have a good credit history. In the case of New-to-credit (NTC), the applicant must have a good source of income.
It is important to note here that all the banks do not cater to the requirements of an NTC customer. So, if you are an NTC individual, you need to check this beforehand while applying for a credit card with any bank.
Why do lenders check your credit score before approving credit cards?
Checking your credit score helps lenders to know about your current financial standing.
Here are a few things that a creditor looks in a credit report:
- Payment History- The payment history helps in analyzing how timely you make your payments and whether you have ever made any defaults earlier or not. This gives a clear idea of how responsible you are when it comes to handling your debt.
- Credit Score- Lender looks at your credit score to know how your creditworthiness. A credit score of 750 and above will help you to get quick credit card approvals.
- Bankruptcy / Settlement- A bankruptcy or settlement is a piece of negative information that will stay in your credit report for about 7 years. As the information gets older, the impact of the same is reduced. A lender would want to know if you have ever declared bankruptcy or settled a loan before approving your credit card application.
Credit cards for low CIBIL Score
When you have a low credit score, you cannot get quick approval on credit cards, but there are many other ways in which you can obtain credit. It is important to note thatcredit cards for low cibilscoreapplicants will not offer the same perks or benefits as offered on a regular credit card. Oftentimes, the credit limit is also lower. On the bright side, you can use this as a tool to build your credit score over time. Additionally, before you apply for a credit card with a bad credit score, you should be able to prove that you can repay the amount comfortably. Failing to do so further lowers your chances of approval.
Alternatives individuals have when they have a low credit score-
You can look at these alternatives if you have a low credit rating-
1. Get a secured credit card- A secured credit card is a type of credit card that is backed by a cash deposit. This deposit acts as collateral, providing the card issuer with security in case the cardholder cannot make payments.
2. Credit card issued by your primary bank- Your primary bank may approve a credit card application if you have been a long-term customer, as they have a better understanding of your finances and risk profile.
Tips to improve your chances to get a credit card-
The following are the few ways which you can use to improve your chances of securing a credit card-
1. Pay off your existing credit card debt-
If you have any existing credit card debt, it is best to clear it before getting a new card. Since the credit card company will evaluate your payment history, if they notice any outstanding debt in your credit card account, it might reduce your chances of credit card approval.
2. Apply for the right credit card
Each credit card has a different set of eligibility requirements. Therefore, you need to check whether you are eligible for the particular card. For example, an individual who got approved for HDFC credit cards will also get approved for SBI credit cards.
3. Space out your credit card applications
It is advisable not to apply for credit cards frequently at too many institutions at the same time. It is important to space out your credit card applications to avoid being shown as if you are credit hungry. This will also reduce the impact on your credit score.
