Credit cards are a convenient way to pay for goods and services. It comes with a predefined credit limit set determined based on your credit score, which you can use to make all kinds of purchases. Having a high credit score enables you to secure a higher credit limit and cover the cost of emergencies if required. Getting a credit card may be difficult with low credit, but quite easy with a healthy credit score.
Knowing your credit score allows you to buy a type of credit card that best serves your needs and preferences. If you wish to build your credit, you will have to find a credit card issuer that can approve you for a credit card. Also, if you have excellent credit, you will find the best credit cards known for maximum rewards and other benefits.
What Is a Credit Score, And How Does It Affect Your Credit Card Application?
Your credit score is provided by the Credit Bureau. It is a 3-digit number that generally ranges between 300 to 900, and helps credit card issuers evaluate the risk associated with the credit card borrower. Your credit score is one of the crucial factors considered by the credit card issuers to approve your application. A credit score within the range of 800 – 900 is excellent, 750 – 799 is very good, and 650 – 749 is considered average.
If you have a credit score below the range of 700, your credit card application will likely be denied, or you will receive higher interest rates. Having credit scores between 500 to 600 may get you credit cards with low limits and high interest rates. However, you will get an unsecured credit card if your credit score is 750 or greater.
There are two crucial components in your credit score calculation when it comes to credit cards – payment history and credit utilization. Other factors that influence your credit score are the average age of your credit card accounts, the number of inquiries made into your credit, and the credit mix.
You can improve your credit score by paying your credit card bills on time and in full. It would be wise not to carry more than 30% of your credit limit. Having maximum unused credit indicates that you can handle your finances well.
Finding a Credit Card Based On Your Credit
Whether you have excellent credit, good credit, or average credit, you can get a credit card that you are eligible for based on your current score. When you apply for a credit card, your lender will make a soft inquiry on your credit report to determine if you qualify for any of their credit cards. Unlike a hard inquiry, a soft pull does not negatively impact your credit score. If you do not meet the credit score requirement of your credit card issuer, your application will not be approved.
After submitting your application, your credit card issuer conducts a verification check and reviews your income and credit history. If you meet the requirement, you will receive your approval via email, and your credit card will be couriered to your residential address.
Secured Credit Cards
If you have a poor credit score, it does not mean that you should give up hope. You can still apply for a secured credit card to build your credit score. It is known as the standard credit card. You will need to deposit a certain amount of money to obtain your credit limit. You can convert your secured credit card into an unsecured credit card within just a few months by making on-time repayments.
Your credit limit is low when you get your secured credit card. Your credit card issuer will gradually increase it if you make sure to pay your credit card bill on time and in full. After several months you should be able to see an increase in your credit limit and credit score.
Credit Cards With Good Credit
Having a healthy credit score allows you to secure the best credit card in India. For instance, if your credit score is 750 or above, you can get credit cards with low-interest rates, cashback, reward points, and other perks. There are numerous benefits that you can get depending on the type of credit card you choose. There are credit cards designed to earn airline miles or rewards for making purchases at hotels, stores, etc.
Before applying for a credit card, you will need to check your credit score. Knowing your credit score enables you to choose a credit card based on your needs and affordability. The higher your credit score, the maximum benefits you can get.