Credit cards have made life easier for individuals in terms of providing a tool to purchase goods and services, and pay for them at a later date. The paradox of credit cards is that while they’re regarded as one of the deciding factors of a good credit score, one needs a good credit score to get a credit card.
Thus, it’s imperative to understand how a credit score works in regard to a credit card in order to reap its benefits.
A term that you’re likely to come across while applying for a credit card is ‘CIBIL score’. CIBIL score, used interchangeably with credit score, is created when the Credit Information Report (CIR) summarizes an individual’s payment history of all loans and credit cards that they might have availed.
It is a three-digit number between 300 and 900, and it represents your creditworthiness. A higher number represents a stronger credit profile of the individual. Four credit bureaus are authorised by the RBI to issue credit reports and scores.
In India, the CIBIL score of an individual is widely used to ascertain their financial health and issue credit cards. Generally, lenders favour high CIBIL score applicants for credit card approvals, but there are companies that will issue a credit card for a low CIBIL score.
What is a Good Credit Score?
A CIBIL score of 750 and higher is generally considered a good score. It symbolises that the individual has maintained a strong credit history and they can handle their credit well by paying off the balance timely.
It implies that the individual is a reliable borrower who’s able to pay off their debt in time. With a score above 750, you can easily get quick approval for a credit card from almost all major banks and credit card companies.
A score between 550 and 749 implies a subpar level of financial prudence on the borrower’s part, and the lender even perceives a risk of default on credit card payments in this category. A score in the range of 350 to 549 signifies the high-risk borrower, and lenders generally reject credit card applications in this category.
What is the CIBIL score required for a Credit Card?
Although a CIBIL score of 750 and higher is ideal, individuals with a lower score can also be eligible for a credit card, depending on the card company. As there is a higher risk associated with a credit card for low CIBIL scores, it comes at a cost. People with lower scores could be charged a higher interest rate, and get a lower credit limit in comparison with those with a high CIBIL score.
They might also have certain restrictions on the use of their credit card. Since the CIBIL score requirement can vary in the case of different issuers, one must check with the credit card company’s executive for the same. The bank or company executive will conduct a background check on your CIBIL score and explain your approval criteria.
Thus, it can be said that people with a score lower than 750 might not get approval for the best credit cards. Nevertheless, a large number of companies offer credit cards to those who don’t have a credit history, or have a score lower than 750.
It is possible for such individuals to apply for a credit card for low CIBIL scores. You can apply for a secured credit card with collateral, as these cards are issued to individuals with bad or no credit history.
While there isn’t a properly defined minimum CIBIL score required for credit card approval, it is ideal to sustain a minimum score of 750 so you can get better offers on credit cards and quicker approval.
In conclusion, there is no fixed minimum CIBIL score required to get a credit card approved. It differs with each bank and credit card company. Nonetheless, it’s prudent to maintain a CIBIL score of 750 and above.