When it comes to applying for a credit card in India, your cibil score for credit card plays a crucial role. This score is a reflection of your creditworthiness and is one of the primary factors that banks and financial institutions consider when determining whether to approve or deny your application. If you’re unsure how your cibil score impacts your chances of getting a credit card, or how to improve it, this blog is for you!
In this blog, we’ll explain what you need to know about the cibil score, how it affects your approval chances, and tips to improve it.
What is Cibil Score and Why Does It Matter for Your Credit Card?
Understanding Cibil Score
Your Cibil score, also known as the CIBIL TransUnion Score, is a three-digit number that represents your creditworthiness. It is calculated based on your credit history, which includes how well you manage your existing credit accounts, such as loans and credit cards. The score ranges from 300 to 900, with a higher score indicating better credit health.
For example, a score of 750 or higher is considered excellent and makes you more likely to be approved for a credit card. On the other hand, a score below 600 may result in a rejection, as financial institutions perceive this as a higher risk.
Why is Cibil Score Important for Credit Card Approval?
Banks use your cibil score for credit cards to evaluate how responsible you are with borrowing money. Your score helps them predict the likelihood of you repaying your credit card bills on time. If you have a high score, it signifies that you’ve been diligent with repaying past loans and credit card bills, thus making you a low-risk borrower.
A higher score increases your chances of:
- Getting approved for a credit card.
- Receiving higher credit limits.
- Accessing better interest rates and offers.
How Does Cibil Score Impact Your Credit Card Application?
While each bank may have slightly different criteria, the general cibil score for credit card requirements in India are as follows:
- Excellent score (750 – 900): You are likely to be approved for most credit cards with favourable terms.
- Good score (700 – 750): You have a decent chance of approval, but may not be eligible for the best cards or the highest limits.
- Average score (600 – 700): You may still get approved, but your options could be limited to cards with lower limits and higher interest rates.
- Poor score (below 600): This score is considered risky, and it might be difficult to get approved for a credit card.
How a Low Cibil Score Affects Your Credit Card Application
If your score is below the acceptable range, financial institutions might be hesitant to approve your application. They may see you as a high-risk borrower and may either reject your application outright or offer you a credit card with a low limit and high interest rates. In some cases, you might be asked to provide additional documentation or a security deposit.
How Cibil Score Impacts Credit Card Terms
Not only does your cibil score for a credit card influence approval, but it also affects the terms of the credit card offer. Those with higher scores might qualify for cards that come with:
- Low interest rates
- High credit limits
- Rewards programs
- Cashback offers
On the other hand, if you have a lower score, you may get offers with:
- Higher interest rates
- Low credit limits
- Fewer benefits or none at all
How to Improve Your Cibil Score
Pay Your Bills on Time
Your payment history is one of the most significant factors that contribute to your cibil score. Ensure you make all your payments, including credit card bills, loan EMIs, and utility bills, on time. Setting reminders for due dates or automating payments can help avoid late payments.
Reduce Your Credit Utilization
Credit utilization refers to the percentage of your available credit that you’re using. If you regularly max out your credit cards, it negatively impacts your Cibil score. A good rule of thumb is to keep your credit utilization below 30%. This shows that you’re managing your credit responsibly.
Avoid Having Multiple Credit Accounts Simultaneously
Every time you apply for credit, it leads to a hard inquiry on your credit report, which can slightly lower your score. Applying for several credit cards or loans within a short time frame can signal financial distress and negatively impact your *Cibil score for credit card.
Review Your Credit Report for Errors
Sometimes, errors or inaccuracies in your credit report can drag down your Cibil score. Regularly check your report for discrepancies, such as incorrect personal information or accounts that don’t belong to you. Dispute any errors with Cibil and have them corrected.
Maintain a Healthy Credit Mix
A healthy credit mix means you have a combination of different types of credit accounts, such as credit cards, personal loans, or auto loans. This shows that you can handle various forms of credit responsibly, which can positively influence your cibil score.
Conclusion
Your cibil score is one of the key factors in determining your eligibility for a credit card in India. A higher score increases your chances of getting approved for premium cards with better terms. On the other hand, a low score can limit your options or result in higher interest rates. By maintaining a healthy credit history, paying bills on time, and managing your credit utilization, you can significantly improve your chances of getting a credit card with favourable terms.
Stay proactive in managing your credit score, and explore your options for improving it today, so you can unlock the best credit card deals available to you.
FAQs
Can I get a credit card with a low Cibil score?
Yes, it’s possible, but it may be more difficult. You might receive offers with lower limits, higher interest rates, and fewer benefits. Some credit card issuers might offer cards specifically designed for those with lower scores, often called secured credit cards.
How can I check my Cibil score?
You can check your cibil score by visiting the official cibil website or through many online platforms that offer free credit score checks. It’s advisable to check your score at least once a year to stay on top of your credit health.
How long does it take to improve a cibil score?
Improving your cibil score can take anywhere from a few months to a year, depending on how diligently you follow the steps to improve it, such as paying bills on time and reducing credit utilization.
Does a credit card limit affect my cibil score?
Yes, if you keep your credit utilization ratio low (i.e., using less than 30% of your available credit), it can positively impact your Cibil score. However, using your full credit limit frequently can harm your score.
Can I get a credit card with no cibil score?
If you have no credit history, some banks may offer entry-level credit cards or secured credit cards, where you need to provide a security deposit. Over time, as you use the card responsibly, your credit score will build.
