Credit card is the most common way of building and improving one’s credit score. It has become an essential instrument to prove one’s creditworthiness for a loan, mortgage or insurance. Credit bureaus like Experian, Equifax and TransUnion CIBIL apply complex mathematical algorithms and assign a credit score to every borrower in the country.
Credit score acts as the mark of creditworthiness. People with high credit scores are considered more responsible with their credit and are likely to get easily approved for new loans and credit cards. So, let us understand how a credit card impacts credit score and how credit score affects one’s eligibility for credit cards.
CIBIL Score for Credit Card
To be eligible for a credit card, the applicant should have a good credit score. A score above 700 is considered good. Banks generally accept a credit score in the range of 700-750 for credit cards. Some banks may also offer credit cards to people with low credit scores. The applicant, however, will also need to meet other eligibility criteria set by the bank in terms of income, occupation, residence, etc.
Banks check CIBIL score for credit card applications. There are only a few banks that offer credit cards to people who are new to credit. So, to build credit score, one would need to apply for credit card with any of these banks or get a loan first.
When applying for credit cards, customers will need to submit their PAN and other KYC documents. PAN is essential for the banks to check the applicant’s credit score and report. After a hard enquiry has been initiated on the account of the applicant, his credit score may get negatively hit if the application is rejected.
Things to Remember
- If your existing credit card CIBIL score is above 750, it is usually considered good for a credit card application
- Credit score helps the banks judge the applicants’ credit behaviour and payment patterns
- A rejected credit card application can drop the credit score