These days, credit cards are quite popular and are one of the most effective ways of building a credit score. Applicants with good credit scores are considered to be more creditworthy and are likely to get easily approved for new loans and credit cards. You can also get a credit card with a poor credit or CIBIL score but in that case, you may end up with higher interest rates and various other additional fees.
What is a good credit score to acquire a credit card?
When it comes to applying for a credit card, there is no such specific minimum credit score. Actually, it depends upon the bank or the financial institution you are applying at and may vary accordingly. Generally, individuals with a credit score of 750 or even more have a fair chance of securing a credit card or a loan.
So, what about the ones with a score of less than 750? They may be accepted too, but you may attract higher interest rates or extra fees. Remember, the lower your credit score, the greater the chance of getting rejected. Another major con of applying for a credit card with a weak credit score is that it causes your score to lower down by a few points each time your application is denied.
What’s more when applying for a new credit card, it is advisable to review your credit score so that you have enough time to boost it and get your applications approved.
Why do banks review scores of credit card applicants?
Credit cards are unsecured loans, which mean that the banks have to take higher risk when approving a credit application. That explains why it is crucial for them to check whether an applicant is creditworthy enough to repay the bills on time. And what better than credit score to determine one’s debt repayment behavior alongside the utilization of credit limit available.
When applying for a credit card an individual is required to submit all the necessary documents. The bank on their part subjects his credit profile to a hard inquiry. By reviewing the credit report, the lender would get to know the applicant's overall repayment history- whether he has missed any payments, number of active accounts- credit cards and loans, credit utilization ratio. If all of these fail to match the criteria for the approval process, the application is rejected.
What perks do you get on a credit card with a good credit score?
Below mentioned are a few perks you can get on a credit card with a good CIBIL or credit score.
I have a poor credit score. Can I still get a credit card?
In case you have a weak credit or CIBIL score you can consider getting a secured credit card. So, what are secured credit cards?
Secured credit cards are the ones offered against a fixed deposit. When there are delays in payments, dues are redeemed from the card holder’s fixed deposit.
Some good secured credit cards in India are:
Frequently Asked Questions
A CIBIL score of 750 or more is considered to be an ideal score for a credit card. This score will help you to attract better interest rates on your credit card applications.
Further, it assures the lender that you have maintained a healthy credit history so far and hence you are creditworthy enough to secure a credit card or a loan.
There are a few banks or financial institutions that issue credit cards to people who are entirely new to credit. You can either consider applying for those or get a secured credit card.
You can get free access to credit reports from the major credit bureaus. Simply, get yourself a copy and check your credit score.
Yes, obviously you can acquire a credit card with a credit score of 700. But you must keep in mind that the interest rates, credit limit and other fees may not work in your favor. Try to achieve a credit score above to enjoy several perks and benefits.
The number of credit cards you own is also taken into consideration when evaluating your credit or CIBIL score. However, if you are creditworthy enough, even one credit card can help you to improve your credit score.