Applying, availing and managing a credit card is one of the the easiest methods of building and improving your CIBIL score. Applicants need to build and maintain good CIBIL score for credit card approval. However, the minimum score required shall very from lender to lender. Applicants with high CIBIL scores are considered more responsible with their credit and are likely to get easily approved for new loans and credit cards and vice-versa. Therefore, lets understand how a CIBIL score defines the credit card approval, as well as the helps in meeting the eligibility criteria.
Impact of CIBIL Score for Credit Card Approval
To be eligible for a credit card, the applicant should have a good credit score. Usually, any credit score above 750 and as close to 900 is considered good by financial institutions. Several Banks do accept a credit score between the range of 700-750 for credit card approval. Few banks also consider the approval of credit cards for applicants with even low credit scores. However, applicants also need to meet other eligibility criteria defined by the lender in terms of age, income, occupation, residence, credit history, etc. to avail new credit.
Generally, banks and NBFCs do check CIBIL score before the approvals of credit card applications. For applicants who are New to Credit or with No Credit History can start applying for secured credit cards (credit cards against fixed deposits) and start building their credit score.
Suggested Read: Best Credit Cards for Beginners in India
While applying for credit cards, applicants will need to submit their valid PAN card and other KYC documents for processing. PAN card is considered as an essential document for banks and financial institutions to check the applicant’s credit score and report.
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Minimum CIBIL Score for Credit Card Approval
The minimum CIBIL score requirement for different card issuers or lenders shall vary from applicant to applicant. Usually, the minimum CIBIL Score considered by various lenders for credit card approval is 700 or above. However, the generated credit scores shall vary, as per various credit bureaus, such as TransUnion CIBIL, Experian, Equifax and CRIF High Mark. Most of the lenders consider TransUnion CIBIL score for loans and credit card application’s approval.
Why Banks/NBFCs Check Credit Score for Credit Card Approvals?
Since credit cards are unsecured and no collateral/security is required to be submitted by the applicant, so the banks have to take higher risk when issuing a credit cards to customers. 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 applicant’s payment history, debt repayment behaviour and the credit utilization.
When an individual applies for a credit card and submits the documents, he/she allows the bank/NBFC to initiate a hard enquiry on his/her credit profile. The bank would get to know the individuals’ credit utilization ratio, credit history, number of active accounts with past payments, missed payments Days Past Dues (DPD) in this account, etc. If not satisfied or convinced with the credit report, banks can reject their credit card applications.
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Know why even Good Credit Score is not enough
Banks keep changing the approval criteria for their credit cards. Some common reasons why one may be denied a credit card even after maintaining a good credit score are as follows:
- Multiple active accounts (Loans & Credit Cards)
- Too much debt (even if one pays them off on a regular basis)
- Higher Credit Utilization Ratio – 30% or above
- Short credit history
- Recent delayed payments, charge-offs, DPDs or other negative items
Credit Cards for Applicants 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 with low CIBIL score.
A good way to start rebuilding credit is to get a secured credit card without CIBIL score. Secured credit cards are offered against Fixed Deposits. 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.
Best Secured Credit Cards in India
Secured Credit Card in India is a card that is mainly issued against Fixed Deposit of the applicant. Below mentioned are the Top 5 Secured Credit Cards in India:
- Paisabazaar Step UP Credit Card
- SBI Card Unnati
- Axis Insta Easy Credit Card
- Kotak 811 #DreamDifferent Credit Card
- ICICI Bank Instant Platinum Credit Card
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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. How will I get a credit card?
Ans. There are a few banks that offer credit cards to people who are new to credit or with no credit history. In order to build your credit history or credit score, all you need to do is to apply for a secured credit card. Secured credit cards are issued against your fixed deposits.
Q. Do I have to pay for checking or downloading my CIBIL Score?
Ans. No. At Paisabazaar.com, you get free access to credit scores and reports with monthly updates. Check and download your CIBIL report here with no impact on your credit score.
Q. Does having multiple credit cards improve credit score?
Ans. Your number of credit cards is also taken into consideration at the time of evaluating your credit score, as multiple card usage may lead to lower down your credit utilization ratio. If your expenses remain constant while using a two credit cards, then your credit utilization may reduce if your monthly credit limit is increased by the usage of multiple credit cards. Therefore, it may help to gradually improve your credit score.
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