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.
Impact of CIBIL Score for Credit Card Approval
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
What is the minimum CIBIL Score for Credit Card Approval?
The credit score requirement for different card issuers would vary. However, a credit score in the good to excellent score range would help getting approved for a credit card.The minimum CIBIL Score which is required for most of the credit cards is 750. The table below shows the credit score ranges and what they mean:
|Credit Bureau||Credit Score Range||Good to Excellent Score|
|TransUnion CIBIL||300-900||Above 700|
Why Banks Check Credit Score of Credit Card Applicants?
Since credit cards are unsecured loans, the banks have to take higher risk when issuing a credit card to a customer. This is why they need to check whether an applicant is capable of taking up a new debt. Credit score is a clear indicator of one’s debt repayment behaviour and the utilization of available credit limit.
When an individual applies for a credit card and submits his documents, he allows the bank/NBFC to initiate a hard enquiry on his credit profile. The bank would get to know the individuals’ past payments- whether he has missed any payments or has DPD in this account, number of active accounts- credit cards and loans, credit utilization ratio, etc. If not satisfied, the bank can reject the credit card application.
When is a Good Credit Score not enough?
Banks keep changing the approval criteria for their cards. Some common reasons why one may be denied a credit card even after displaying good credit behaviour are:
- Too much debt (even if one pays them off on a regular basis)
- Too much available credit
- Short credit history
- Recent delayed payments, charge-offs or other negative items
Credit Cards for People with Low Credit Score
At times, one may miss loan EMI or credit card bills due to genuine reasons like unemployment or medical emergencies, leading to delay or default on payments. In such a case, one needs to take special steps to get approved for a credit card.
A good way to start rebuilding credit is to get a secured credit card. Secured credit cards are offered against a fixed deposit. At the time of delay in payments, dues are redeemed from the credit card holder’s fixed deposit. Timely payments over a period of time can heal faulty credit histories.
Some good secured credit cards in India are:
- Axis Bank Insta Easy Credit Card
- ICICI Bank Coral Credit Card
- SBI Card Unnati
- ICICI Bank Instant Platinum Credit Card
Q. What CIBIL Score is needed to get a credit card?
Ans. Card issuers would prefer good credit scores, usually above 700. In rare cases, you could also get a card with a fair score if you have an existing relationship with the bank or if you meet the other criteria set by the bank.
Q. I have no CIBIL Score credit card. How will I get a credit card?
Ans. There are a few banks that offer credit cards to people who are new to credit. You can apply with these banks or start with a secured credit card.
Q. Do I have to pay for checking my CIBIL Score?
Ans. No. At Paisabazaar.com, you get free access to credit scores and reports with monthly updates. Click here to check your credit score.
Q. How to check CIBIL score for credit card?
Ans. You can visit Paisabazaar.com to check your CIBIL score for credit card for free. The process is instantaneous and you have to provide only basic details to get your complete credit report.
Q. Does having more credit cards improve credit score?
Ans. Your credit card score (number of credit cards) is also taken into account at the time of evaluating your credit score. But if you are disciplined in making payments regularly, even one credit card can improve your credit score.