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How much of a CIBIL™ score is required for a credit card

There is no fixed minimum credit score to be eligible for a credit card. Each bank/credit card company has its own criteria for approving an application for a card. In general, however, if you have a credit score of 750 or above, you stand a good chance of being approved for a card.

It is possible to be approved for a card with a score of less than 750, but you may be subject to less favourable terms and conditions like, for example, a higher interest rate or added fees. The lower your score, the greater your chance of being rejected. If you have a score of less than 650 it will be very difficult to be approved for a card.

Another disadvantage of applying for a credit card with a low score is that each time your application is rejected, it causes your score to drop. Applying for credit cards when you have a low score means that you face the possibility of repeated rejections and a continuous drop in your score.

Therefore, it is a good idea to check your credit score before you apply for a new credit card so that you have time to improve your score and ensure that your application is approved.

CIBIL™ is one of the four authorized credit bureaus in India which provide a credit score, the others being Equifax, Experian and CRIF High Mark.

Why do banks check your credit score before issuing a credit card?

When you apply for a credit card, lenders want to know if you will make your monthly payments on time. They will access your credit report and credit score to check if you have a good track record of making your payments on time. If you have a good score, they are satisfied that you are a low risk customer with a low probability of defaulting on your obligations and will be inclined to approve of your application.

Conversely, if you have a low score, it signifies that you might not have demonstrated responsible repayment behaviour – lenders might be unwilling to lend to customers with a poor credit score, as they want to safeguard their money against potential default.

How to maintain a good credit score

Do not exceed 50% of your credit limit : Not only should you never exceed your credit limit, you should ensure that you do not exceed 50% of the limit. Consistently spending more than 50% signifies that you have a problem with spending discipline and might not have enough money left over from your income to fulfil your repayment obligations.

Make timely payments : On time and full payments are one of the best ways to maintain a good credit score and history. Try and pay off your monthly card bill in full and on time - this one action itself will have a substantial positive impact on your credit score.

Do not apply for multiple cards within a short period of time : If you apply for too many credit cards in a short period of time, lenders may also consider you to be ‘hungry’ for credit. If you have too many applications without corresponding approvals, your credit score will be affected.

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