If you’re looking to get a credit card in India, one of the first things you’ll need to do is check your CIBIL score. CIBIL stands for Credit Information Bureau (India) Limited and is a credit information company that collects and maintains records of credit-related activities of individuals and companies. In India, banks and financial institutions use the CIBIL score to evaluate the creditworthiness of a borrower before granting a loan or issuing a credit card.
The CIBIL score is a three-digit number that ranges from 300 to 900. A higher score indicates a better credit rating, which means you’re more likely to get a loan or credit card with favorable terms. The score is calculated based on your credit history, including your payment history, credit utilization, length of credit history, and types of credit. To know what all the factors that affect your CIBIL score, you can go through this blog wherein we have covered all the aspects of CIBIL score.
A credit card is a financial instrument, typically issued by a bank or financial institution, that allows the cardholder to borrow funds with which to pay for goods and services with merchants that accept cards for payment. Credit cards impose the condition that the cardholder must pay back the borrowed money, plus any applicable interest, as well as any additional agreed-upon charges, either in full by the billing date or over time.
Also, Read: Credit Score vs CIBIL Score: Are they Even Different?
1. Credit Limit: This is the maximum amount of credit that a cardholder is permitted to use. The limit is set by the credit card issuer based on the cardholder’s creditworthiness.
2. Interest Rates: If the cardholder does not pay the full amount owed by the due date, the issuer will typically charge interest on the owed amount. The rate can vary greatly based on the card issuer and the user’s credit profile.
3. Rewards and Benefits: Many credit cards offer rewards programs, such as cashback, points, or miles, based on the amount of money spent using the card. They may also offer additional benefits like travel insurance, extended warranty coverage, and airport lounge access.
4. Security Features: Credit cards come with various security features to protect against fraud and theft. This includes the card number, card verification value (CVV), and chip and PIN technology.
5. Annual Fees: Some credit cards charge an annual fee for usage, though many cards are available without any annual fees.
6. Billing and Statements: Cardholders receive monthly statements detailing their purchases, the total amount owed, the minimum payment due, and the payment due date.
7. Balance and Charges: Users can either pay the full balance by the due date to avoid interest charges or pay a minimum amount and carry the rest of the balance to the next month, accruing interest.
Credit cards can be a valuable financial tool when used responsibly, offering convenience, purchase protection, and the potential to build a credit history. However, it’s essential for users to understand the terms of their credit card agreement and be aware of the potential for debt accumulation due to interest and fees if balances are not paid in full.
Also, Read: NBFC Loans Without CIBIL Score: Your Complete Guide
Banks and financial institutions check your CIBIL score before issuing a credit card to evaluate your creditworthiness. A low score indicates that you have a history of defaulting on loans or credit card payments, which makes you a high-risk borrower. In such cases, banks may reject your credit card application or charge higher interest rates and fees.
Managing your CIBIL score and understanding credit can be tricky, especially if past issues are making it hard to get a loan. But even if you’re worried about your CIBIL score, there are still ways to get a loan. There are strategies and options available for those with a low CIBIL score.
To learn more about how to get a loan in this situation, please read this helpful blog. It clearly explains your choices and the actions you can take.
Also, Read: What is Credit Score? Factors, Calculation & Ways to Improve
The CIBIL score range is as follows:
300-579: Poor
580-669: Fair
670-739: Good
740-799: Very Good
800-900: Excellent
CIBIL calculates your credit score based on the following factors:
Also, Read: How to Get Loan Without a CIBIL Score?
Generally, a score of 750 or above is considered ideal for getting a regular credit card in India. This shows lenders you’re a responsible borrower and reduces their risk.
1.But Credit History Matters Too!
Even if your CIBIL score is lower, you might still qualify for a credit card, especially if you have a limited credit history (meaning you haven’t borrowed much before). You might just get a card with fewer benefits or a lower credit limit.
2.Different Banks, Different Requirements
The minimum score for approval can vary depending on the bank that issues the credit card. It’s always best to check their specific requirements before you apply.
3.Tip: Keep Old Credit Cards Open (if possible)
Having a longer credit history can actually improve your CIBIL score. So, if you have old credit cards you don’t use much, consider keeping them open (as long as there are no annual fees). This can help you qualify for better credit cards in the future.
If you have no credit history or a low CIBIL score, you may find it difficult to get a credit card. However, there are some ways to get a credit card without a CIBIL score:
1. Secured Credit Card: This is a straightforward solution for those lacking a CIBIL score. To obtain a secured credit card, open a fixed deposit with a bank and deposit funds. The bank then issues a credit card with a limit of 50 to 100 percent of the deposit, based on their terms. This card helps in building your CIBIL score.
2. Add-on Credit Card: If a family member holds a primary credit card, you can get an add-on or supplementary card. It carries the same benefits as the primary card but shares its credit limit. This option is beneficial for leveraging the advantages of a credit card and managing sudden financial needs.
3. Credit Card Against Savings Account: Some major banks offer credit cards linked to a savings account. By maintaining a certain balance in the account, you can secure a credit card without needing a CIBIL score.
4. Prepaid Credit Card: Ideal for those with a poor CIBIL score or no credit history, prepaid credit cards are provided by major banks. You can load the card with a certain amount of money and use it like a prepaid mobile service, offering a practical way to manage finances and potentially build your credit profile.
Also, Read: 8 Best Ways to Improve Your CIBIL Score Quickly
1. Choose the Right Card: There are many credit cards available in India, each with its own features and benefits. Choose a card that suits your needs and spending habits.
2. Read the Terms and Conditions: Before applying for a credit card, make sure you read the terms and conditions carefully. Understand the interest rates, fees, and other charges associated with the card.
3. Use your Credit Card Responsibly: Once you get a credit card, use it responsibly. Make timely payments and don’t exceed your credit limit. This will help you build a good credit history and improve your CIBIL score.
A strong CIBIL score is a valuable asset in today’s financial landscape. It signifies creditworthiness to potential lenders and can unlock access to favorable interest rates and loan products. For individuals with limited or no credit history, establishing a positive track record is essential to achieving a desirable CIBIL score.
The below points outline two key strategies to initiate the credit history-building process:
1.Secure a Credit Builder Loan:
2.Maintain Punctual Bill Payments:
By implementing these strategies, individuals can embark on the journey toward establishing a robust credit history and achieving a favorable CIBIL score. Remember, building a strong credit score is a gradual process that requires consistent financial responsibility.
To wrap up, getting a credit card without a CIBIL score can be challenging, but it’s not impossible. By following the tips mentioned above, you can build a good credit history and improve your chances of getting a credit card with favorable terms and conditions. Remember to use your credit card responsibly and make timely payments to maintain a good credit score.
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Also, Read: How to Get a Business Loan on Low Credit Score?
It does not inherently affect your score. Nonetheless, missing EMI payments on their scheduled dates can adversely influence your CIBIL rating.
Elevating your credit limit is feasible by demonstrating responsible credit utilization. This proactive approach often prompts card issuers to augment your limit automatically. Alternatively, you may initiate a request to raise your limit by directly communicating with the credit card issuer.
To reach an impeccable credit score of 900, consistently make timely payments on your credit card bills and loan EMIs, ensure a balanced combination of secured and unsecured loans, and keep both your debt-to-income ratio and credit utilization rate minimal.
Indeed, it can. Once you have your credit card, it’s crucial to use it wisely. Aim to use only 20-30% of your total credit limit to positively impact your CIBIL score.
Also, Read: Get a Personal Loan Without Credit Score – 5 Fool-Proof Ways
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