It’s Not Hard To Get A Credit Card With This CIBIL Score
Applying for a new credit card, but not sure if your CIBIL credit score is good enough? Or worried that your current score will prevent you from qualifying for a higher limit? Or, perhaps, you’ve a card, but are not sure how to use it in a way as to improve your credit score and open up better loan options for yourself?
Read on to know the answers to these questions and more as well as tips on best credit behavior.
How much score is good enough to get a new credit card?
From a bank’s perspective, credit cards are risky business. It is an unsecured credit (a loan borrowed without collateral) and the default rate is considerably high. Because of these reasons, banks check an applicant’s creditworthiness before approving a request for a credit card.
What CIBIL Score Will Get You Approved For a Credit Card With Best Terms?
As you may know, your CIBIL credit score is a measure of your creditworthiness. To get a credit card application approved, you should have a CIBIL credit score of 750 or above.
Relation between Credit Score and Credit Limit
Credit limit is based on four factors: income, expense pattern, the types and amount of loan taken, and overall risk assessment of you by the financial institution.
A bank reviews your credit report to check where you stand on most of these points. A good credit report, which also means a high credit score, reflects a strong ability to manage personal finances and practice credit discipline. Banks hold these two qualities in high esteem and offer higher credit limit to people who have a history of such behavior, that is, to those with a consistently high credit score.
With that said, you should not worry if initially you do not get the credit limit you hoped for. When a bank issues a new card to someone, it usually plays safe and offers a credit limit that is on the lower side. Depending on your credit card usage as well as payment history, the bank may revise your credit limit after some time.
If your bank offers to increase your credit limit, it means that the bank believes you are following right credit practices. It also means that your credit report is healthy and your credit score is moving in the right direction.
Three tips for good credit behavior
A good credit behavior improves your credit score, which in turn improves your loan eligibility. But what exactly constitutes as ‘good credit behavior’?
A good credit behavior has the following three aspects:
- Credit usage not more than 30% of your credit limit
You run the risk of being seen as ‘credit hungry’ if your credit usage exceed 30% of your current credit limit. Keep your credit usage within this limit, but if that is not possible, don’t hesitate to ask the bank for a credit limit increase.
The bank, however, may or may not accept your request, based on its evaluation of your credit behavior so far. If the bank turns down your request, you should opt for a 2nd card. This will give you some cushion, although your total limit will not increase significantly.
- Pay your bills on time
This one goes without saying. Every late payment dents your credit history and a series of them will cause your score to plummet faster than a dropped bomb.
- Use your credit cards for longer periods
Some people change their credit cards like clothes in their wardrobe. Frequently changing credit cards, however, is looked down by CIBIL because it reflects unstable credit behavior.
What if you don’t qualify for a traditional credit card?
If you don’t have a good credit score, you will not qualify for a traditional credit card. A secured credit card is a viable option here.
A secured credit card is called so because the lender secures the line of credit it offers you with collateral. The amount you deposit is the maximum credit that the lender will give you (though in some cases the maximum credit is 80% to 90% of the deposited amount).
Making payments due on your secured credit card on time can help you rebuild credit, and timely payments for a year or more can make you eligible for a traditional credit card.