Are you planning to apply for your first credit card? Go right ahead and discover the ease and security of using plastic as a means of payment! However, you will do yourself a big favour if you check one thing before sending in your application - your credit score. If you do not have a good enough score, then your application will be rejected, which will cause your score to drop even further. This will make access to loans or cards more difficult in the future. Apply only if you have a good score.
How do I apply for a credit card?
The first thing to do is to research all the credit cards offered by the various banks. Decide which one suits your needs the best. Once you have decided on which card you want, you can apply in two ways:
Online: Most banks allow you to apply for a credit card online on their website. You need to fill in personal details like name, date of birth, and employment details like your employer’s name, monthly net income etc. and upload certain documents. Some websites will offer the cards that you might be eligible for.
In person: You can visit the bank, fill in the application and submit it along with the requisite documents. In general, it can take up to 15 days for your application to be processed and approved/rejected.
How can I check my credit score to see if I am eligible for a card?
You can buy a copy of your credit report (which contains your score) from one of the three main credit bureaus in India – CIBIL™, Equifax, Experian and CRIF High Mark. You will need to make a payment to obtain your report. Alternatively, you can learn your credit score for free if you register for Credit Mantri’s free Credit Health Check service. You will not only learn your score, you will also get a brief scan highlighting the issues in your credit report.
What is the minimum credit score to get approved for a credit card?
You should have a score of 750 or above to qualify for a credit card. You might be approved even if you have a lower score, but you will be offered stricter conditions like a higher interest rate or low credit limit.
I am applying for my first credit card. What should I do?
Be aware of the length of your credit history: If this is the first time you are applying for a card, and if you have not taken any loans before, you will have an insuffiecient credit history and therefore, a low credit score. You might not be approved because your credit report does not have a long enough history of your repayment behaviour.
Do not apply to multiple banks for cards: This might increase your chance of being rejected by multiple lenders and will cause your score to drop. Submitting too many applications at the same time signifies that you are ‘desperate’ for credit and need to get it from many sources. You might be rejected for this reason and each rejection by a bank will lead to a further drop in your score.
Apply for a secured card to build your credit score: If you are new to credit cards and loans, then apply for a secured card which is issued against a fixed deposit. You can demonstrate responsible repayment behaviour on that card and build up your credit score so that you become eligible for a regular credit card.