In the year 2019, there were over 52 million credit card users in India. With the steady growth of credit cards, banks are expanding their reach to urban and semi-urban markets to increase their share in the market.”
Source: Research and Markets
These numbers highlight the importance of credit cards and their rapid growth in the Indian market. With the increasing importance and use of credit cards, it is more important than ever to discuss, analyse, and achieve a good CIBIL score.
This blog discusses the significance of a good CIBIL score for obtaining a credit card, its benefits, and whether you can obtain a credit card with a low CIBIL score.
What is a Good CIBIL Score for a Credit Card?
The CIBIL score ranges from 300 to 900. It is calculated by examining a variety of factors such as the user’s payment history, the balance between secured and unsecured loans, the use of credit utilisation ratios, the number of late or settled payments, hard inquiries within a given time period, and so on.
The table below shows the different credit score ranges and their implications-
|300-549||Poor CIBIL score|
Highlights irregular payment
|550- 649||Fair CIBIL score|
Casual payment behaviour
Too many requests from lenders to review credit reports as part of the loan application process (Hard inquiries)
|650-749||Satisfactory CIBIL score|
Timely payment history
Entitled for credit card and loans
Fewer chances of turning into a defaulter
High rate of interest
|750-900||Excellent CIBIL score|
Responsible payment habits
No defaults in payment
Error-free payment history
No outstanding balance
Higher negotiation capabilities
There are no chances of becoming a defaulter
What are the Benefits of a Good CIBIL Score for a Credit Card?
A good CIBIL score provides numerous advantages to a credit card applicant. The following are some of the advantages:
- The applicant for a credit card becomes eligible for top credit cards and related offers
- Banks and financial institutions provide good credit options to customers who have a high CIBIL score
- Banks charge lower interest rates on loan amounts for applicants with a high CIBIL score
- Applicants with a high CIBIL score get their credit card application approved faster
- An applicant with a high CIBIL score is given preference over someone with a low CIBIL score
Credit Cards For People With Low CIBIL Score
What should you do if your CIBIL score is low?
Let’s get this straight!
A low CIBIL score reflects the user’s credit repayment habits and casual attitude toward the acquired credit. As a result, banks generally avoid providing credit cards to applicants with a low CIBIL score. However, there are some circumstances, such as medical emergencies, job loss, financial damage, or the like, that obstruct a user’s flow of funds and have a negative impact on the CIBIL score. Banks provide secured credit cards to such exceptional customers.
Secured credit cards are those that are issued in exchange for fixed deposits. An applicant can obtain a secured credit card, as income proof is not always required for these credit cards. Because these cards are offered in exchange for fixed deposits, any missed or late payments are recovered only from these deposits. As a result, the risk associated with nonpayment of credit amount is reduced to some extent by secured credit cards. Banks usually provide these cards to low-wage professionals as well.
- Timely repayment of credit amount
- Resisting oneself from making hard inquiries
- Using credit utilization ratio responsibly
- Pay off your debts on time
- Never postpone any credit card payment
- Maintain an error-free credit report
- Try not to spend more than 30% of your credit card limit
- Do not make hard inquiries within shorter time periods
- Ensure not to leave any outstanding amount behind
- Most importantly, calculate the difference between how much you require and how much you can handle
- Poor credit history
- Delayed payments
- Maintain an error-free credit report
- Maximum use of credit utilization ratio
- Multiple hard inquiries within a given time period
- Rejection of loan or credit card applications
- Mismanagement between secured and unsecured loans