CIBIL Score for Credit Card

Credit cards not only make your shopping experience more rewarding and allow you to make payments in EMIs but can also be extremely useful in emergencies. Since credit cards essentially provide you an unsecured line of credit, card issuers always evaluate your creditworthiness before approving your credit card application.

As mentioned above, your CIBIL score can range between 300 and 900, with the higher number being better. A credit score of 750 or above is considered excellent and is usually sufficient to get your credit card application approved. Notably, card issuers also consider other details on your CIBIL credit report such as how many credit cards you already have, payment delays, your debt-to-income ratio, etc. Depending upon these other factors and your relationship with the card issuer, you might also get a credit card even if your credit score is less than 750. However, if your credit score is less than 700, it is extremely difficult to get an unsecured credit card.

Your CIBIL score is a three-digit number ranging from 300 and 900 that indicates your creditworthiness. CIBIL score is calculated by TransUnion CIBIL, one of the oldest and most trustworthy credit bureaus in the country. It is based on your credit history, which includes your repayment record, credit utilisation ratio, and the number of active and closed loan accounts, among other things. Whenever you apply for a credit card, the card issuer always checks your CIBIL score to make sure that you would be able to pay your credit card bills in a timely manner. It, therefore, becomes imperative to maintain a good CIBIL score and a clean credit history if you want your credit card applications to be approved easily.

Your CIBIL score directly impacts the odds of approval of your credit card application. The higher your CIBIL score, the more likely it is that your credit card application would be approved. You may refer to the following table to get an idea of how the approval of your credit card application directly depends upon your CIBIL score

You can easily improve your CIBIL score by incorporating good financial habits. Given below are some of the key financial habits that you must stick to if you wish to improve your CIBIL score:

• Pay Your Dues on Time: This is the single-most important financial habit to incorporate for a healthy CIBIL score. You must be punctual with regard to the repayment of loans and credit card bills.

• Regularly Review Your Credit Reports: It is advisable to keep tabs on your active and closed loan accounts and have a good understanding of your credit report. In case you notice any error or discrepancy, you must flag the same to CIBIL immediately.

• Avoid Frequent Loan/Credit Card Applications: Whenever you apply for a credit card or loan, the bank/NBFC requests your credit report and credit score from CIBIL. Such requests are known as hard enquiries and have a negative impact on your CIBIL score. It is, therefore, advisable not to apply for too many credit cards or loans within a short span of time.

(Note: If you check CIBIL score through Bajaj Markets, it counts as a soft enquiry and has no negative impact on your credit report.)

• Maintain a Low Credit Utilisation: You should avoid exhausting the entire credit limit of your card as it reflects poor financial behaviour. Experts suggest that you should ideally not exceed 30% utilisation of your card’s credit limit.

• Have a Good Mix of Secured/Unsecured Loans: A healthy mix of both secured and unsecured loans in your credit profile shows that you have the experience of handling both types of loans and are, therefore, more creditworthy. Personal loans and credit cards are unsecured in nature, while home loans and auto loans are secured loans.

1. Credit Score: Before you apply for a new credit card, make sure that you have a healthy credit profile. Ideally, you should apply for a credit card when your CIBIL score is at least 750 or above as applying with a low CIBIL score may result in rejection of your credit card application
2. Debt to Income Ratio: You must also make sure that you do not borrow more than what you can repay.  A high debt to income ratio also has a negative impact on your CIBIL score. A debt to income ratio between 20% and 35% is usually considered good.
3. Avoid Frequent Applications: In case your credit card application is declined, it is advisable to wait for at least six months before reapplying. Too many credit enquiries within a short span of time indicate that you are credit hungry and have a negative impact on your CIBIL score.