The CIBIL score is an important factor to consider when applying for a credit card. Credit card firms will give you a credit card with a large credit limit and other appealing features if your CIBIL score is good. A CIBIL score of 750 or more is generally considered good and can help you obtain a credit card with favourable terms.
You can receive a credit card with a low CIBIL score, but you may wind up with less-than-ideal terms, such as a low credit limit, higher interest rates, and other fees. Another consequence of having a low CIBIL score is that your credit score is harmed every time your application is denied. As a result, it’s best to delay applying for credit cards until your CIBIL score improves.
What is the minimum CIBIL Score required to get a credit card?
Although there is no set minimum CIBIL score for applying for a card. It is advised that you have a score of at least 750 before applying.
A CIBIL score is a three-digit number ranging from 300 to 900 that provides financial institutions with comprehensive information on a customer’s credit history and payment history. A credit score of 750 is generally considered optimal for a credit card application. However a score of 900 indicates that the consumer is very creditworthy and that the credit card application will be completed more quickly.
Banks classify people with a score of 700 or higher as generally low-risk borrowers who have previously proven good repayment behaviour. As a result, banks are more likely to approve a credit card application from a customer like this.
Credit Card Application and CIBIL Score
Before granting a credit card to a consumer, the bank conducts a thorough review of the application. Ascertaining the customer’s creditworthiness is a crucial component of the procedure. This is accomplished by obtaining credit reports and ratings from CIBIL, which makes this information available upon request.
TransUnion CIBIL Limited is a company that gathers and keeps payment details for credit cards. The relevant banks and credit institutions transmit these records to TransUnion CIBIL on a regular basis. This information is used to generate Credit Information Reports (CIR) and credit ratings, which contain a borrower’s credit history. Credit card applications are evaluated and approved with the help of a CIR.
Before providing a credit card, why do banks verify your CIBIL score?
When you apply for a credit card. Lenders will make sure if you will make your monthly payments on a timely basis or not. They use your credit report and credit score to see if you have a good track record of making on-time payments. They believe you are a low-risk client who is unlikely to default on your obligations. And they are inclined to accept your application if you have a decent credit score.
A low score, on the other side, indicates that you may not have demonstrated good repayment behaviour. Because lenders want to safeguard their money from future defaults. They may not be able to lend to those with negative credit.
Effect of CIBIL Score on Credit Card Approval
The applicant must have a strong credit score in order to be considered for a credit card. A score of 700 or more is treated as a good score. For credit cards, banks typically accept credit scores between 700 and 750. People with bad credit may be eligible for credit cards from some banks. However, the applicant must also meet the bank’s other qualifying requirements, such as income, occupation, and domicile.
For credit card applications, banks look at your CIBIL score. Only a few banks provide credit cards to persons who have never had credit before. To improve one’s credit score. One should apply for a credit card from one of these banks or obtain a loan.
Final Thoughts
A credit card is often not granted to a consumer with a low CIBIL score – that is, a score of less than 750 – since banks don’t want to get into bad loans or risk late payments. Another explanation for a low CIBIL score could be a family emergency that necessitates additional spending and leaves you unable to make full repayments. If you do not have or have never had a credit card, your CIBIL report will not be generated, and there may not be enough information to determine your credit rating. Your credit score may suffer due to this.
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