CIBIL Score for Credit Card

Over the recent years, credit cards have become an indispensable tool for the working class. A credit card enables extended credit in the hands of a user at any given point of time. It functions like a mini-loan for which the borrowed amount is repaid on a monthly basis through Equated Monthly Installments (EMIs) over a period of time. The function of a credit card is not only limited to providing easy access to credit but also to help in building a good credit rating for the card holder.

What is a Credit Card?

A credit card is a card issued by the bank which provides a line of credit to the customer. The customer can utilise this card for purchasing goods or services and the credit card bill is paid on a later date subject to a specific rate of interest. A credit card also improves your credit rating. It is a suitable option to improve your CIBIL score and Credit Information Report (CIR) provided all the payments are met on time. Almost all banks, offer the facility of credit cards with a large spectrum of services such as cashback and reward points which are determined by the spending limit.

Eligibility for a Credit Card

The eligibility for getting a credit card varies from one provider to another. However, the basic criteria are as follows:

At least 18 years of age
A regular source of income to repay one’s credit card bills (whether salaried or self-employed)
A good credit history

Having a good credit history is highly dependent upon your CIBIL score and Credit Information Report (CIR).

Benefits of a Credit Card

Credit card increases your purchasing power; the cardholder has a higher limit based over and above their monthly income.
All credit cards offer reward facility which can be redeemed after a specific time period. This can be in the form of reward points, waiver on fuel surcharge, etc.
Selective credit cards also offer interest-free EMIs (Equated Monthly Installments) option.
A credit card serves as an extended line of credit. It can help you meet any financial contingencies.
Helps build credit history. (The following is explained in detail at the latter half of the article).
Good alternative to cash, a credit card can be used for all buying purposes when you run out of cash at any given point of time
Eases financial stress as you have a substantial time period for repayment.
Provides information on your spending habits, a credit card statement is issued on a monthly basis which has all the information regarding the expenses incurred with the card.

CIBIL Score and Credit Card Application

Every credit card application goes under a thorough screening by the bank before issuing it to the customer. An important part of the process is to ascertain the creditworthiness of the customer. This is done by accessing credit reports and scores from CIBIL who provide this information on request.

TransUnion CIBIL Limited collects and maintains records of payments regarding credit cards. These records are submitted to TransUnion CIBIL by the respective banks and credit institutions on a regular basis. This information is utilised to create Credit Information Reports (CIR) and credit scores which contains the credit history of an individual borrower. A CIR assists credit institutions to evaluate and approve credit card applications.

How to Check Your CIBIL Score?

Follow the mentioned steps the know your CIBIL score online:

Visit the official website of CIBIL - cibil.com/freecibilscore.
Fill in the requested details as mentioned in the online form.
Enter your postal address and phone number.
Pay the nominal fee for the report.
Post payment, CIBIL will provide your CIR and CIBIL score via email and post.

CIBIL Score Required to get a Credit Card

There is no fixed minimum CIBIL score to apply for a card, but it is recommended that you ensure that you have a score of at least 750 before you apply for a card.

A CIBIL score is a 3-digit number between 300-900 that gives financial institutions complete details regarding a customer’s credit history and payment record. Generally, a score of 750 is considered as ideal for a credit card application while a score of 900 showcases that the customer is highly creditworthy and the credit card application is likely to be processed faster. Individuals who maintain a score of 700 plus are categorised by banks as being relatively low-risk borrowers who have previously demonstrated responsible repayment behaviour. Hence, banks are more willing to approve a credit card application from such a customer.

Note: In India, there are six credit bureaus which are authorised by RBI to issue credit reports and credit scores - CIBIL, Equifax, Crisil Limited, ICRA Limited, CRIF High Mark and Experian. The CIBIL score is generally the most widely used in India.

Maintaining a Good Credit Score

In order to maintain a good credit score, it is necessary to build a credit record. You can follow these simple steps to keep a good score:

The first step is to identify the cause of your low score in order to rectify it.
If you don’t have a credit card, ensure that as a first-time applicant, you apply to the bank where your salary account is held. This justifies a regular source of income.
You could also check if the company that you work in is in the good books of the banks. It will increase your chances of getting a credit card.
If your application has been rejected, ensure that you apply after 3 months minimum as too many applications at the same time will result in multiple rejections which will further downgrade your credit score.
Do not overspend your credit limit on a regular basis. This gives banks a negative impression about your spending habits.
Pay your complete credit card bills on time. Make sure that you don’t miss out on any payments or EMIs.

Credit Cards for People with a Low CIBIL Score

Generally, a credit card is not issued to a customer with a low CIBIL score - that is below 750, as banks do not want to get into bad debts or undertake the risk of delayed payments. Other reasons for a low credit score could be because of a family emergency that requires extra expenditure and leaves you deprived of funds to make full repayments. If you do not have an existing credit card or have never held one, the CIBIL report will never get generated and there may not be enough information to determine your credit rating. This might also cause your credit score to be low.

In case you have never held a credit card and your CIBIL report is non-existent, banks offer secured credit cards. A secured credit card can be availed under the condition that you open a fixed deposit (FD) with the bank that is issuing the card. The reason for such a condition is because incase the customer is unable to pay the credit card bill, the outstanding amount will be deducted from the fixed deposit. By making timely and full payments on the card, the customers can rebuild their credit history and thereby, increase their score.

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FAQs on CIBIL Score for Credit Card

What is a CIBIL score?

A CIBIL score is a 3-digit number ranging from 300-900 which highly determines an individual's credit worthiness and the bank’s decision whether a credit card application should be approved or not.

What is the full form of CIBIL?

CIBIL is an acronym for Credit Bureau Information (India) Limited. It is India’s first Credit Information Company (CIC) founded in August 2000. The current name of CIBIL is TransUnion CIBIL Limited.

What is the minimum CIBIL score required for a credit card application?

There is no fixed minimum CIBIL score to apply for a card, but it is recommended that you ensure that you have a score of at least 750 before you apply for a card.

How can you check your CIBIL score?

You can get your CIBIL score and CIR from the official website of CIBIL cibil.com/freecibilscore for a nominal fee.

What is a secured credit card?

A secured credit card is a credit card which can be availed under the condition that you open a fixed deposit (FD) with the bank that is issuing the card.

What is a credit card?

What is the minimum eligibility for a credit card?

The basic criteria for a credit card application for an individual is: at least 18 years of age with a regular source of income and a good credit score.

How is a Credit Card different from a Debit Card?

In case of a credit card, the money you spend is borrowed money which you are required to repay to the bank before the due date, while in case of debit card, the money is your own money. For a debit card, the amount is directly deducted from your savings or salary account.

What is the CIBIL score that you need to get a credit card?

The minimum CIBIL score for credit cards that most financial institutions insist on is 750. The closer the score is to 900, the better chances an individual has of getting the credit card application approved. There may be some companies who will be a little lenient in terms of the required CIBIL score for credit card. However, the associated terms and conditions can seem rather stringent. It is therefore advisable to first work towards ensuring that the three-digit number is on the higher side, and then sending in an application for a credit card. Always make sure to enquire the required CIBIL score for credit cards before dropping in an application to the company.