Tuesday, April 23, 2024

Connection Between CIBIL Score and Credit Card Approvals

If you are considering applying for a credit card, you may wonder how credit scores impact your approval chances. Your credit score is also called the CIBIL score, a three-digit number. This number of three digits shows your creditworthiness and previous financial activities. It varies from 300 to 900, where a score of above 700 is considered good, while a score of below 700 is average or low. High scores indicate low credit credit risk. Lenders like banking institutions and credit card issuing companies use this score to assess your credit ability and offer you the most reasonable terms and benefits.

You can check your CIBIL score on the CIBIL score app frequently to ensure there are no inconsistencies and errors and that the details are up-to-date. The article will explore the relationship between CIBIL scores and credit card approvals and how to boost your credit score to get your preferred credit card. Moreover, you will also learn about online tools like a free CIBIL score check for monitoring and managing your credit health.

Effects of CIBIL Scores on Credit Card Approvals

Credit cards and CIBIL scores impact each other in many ways. The effects these two have on each other explore their relationship. When applying for a credit card, you need to perform a free CIBIL score check to ensure your eligibility. If your scores are appropriate, you can proceed with your application, but if your scores are low, you need to improve it. Although you can use the official credit bureaus’ websites to check your score, using the CIBIL score app makes it convenient to check your score frequently. Lenders and credit card issuing companies check your score to ensure they lend money to the right and capable person.

Coming back to the connection between CIBIL scores and credit card approvals, the two impact each other in the ways stated below:-

Card Repayment History

When utilising a credit card, it is advisable to be cautious of how and when to repay the amount borrowed from your lender. For example, your credit score will positively affect if you repay the overdue amount within the given time frame. However, your CIBIL score will be adversely impacted if you consistently miss payments, repay past the due date, or pay the minimum amount. If you default on your credit card payments, the adverse effect that your credit scores will have will be worse than delayed payments. Note that credit card repayment is crucial to building a good credit score. Hence, always repay your borrowed amount on time.

Credit Utilisation Ratio

CUR, or the credit utilization ratio, is another important factor when calculating your CIBIL score. But what is the credit utilization ratio? The credit utilization ratio is calculated after considering your overdue debt and dividing the same by the overall credit you have. The result is expressed in percentages. But how does this affect your CIBIL score? It is advisable to keep your credit utilization ratio below 30%. Failing to do the same can adversely affect your CIBIL score.

Credit History’s Length

If you are not utilising a credit card and are thinking of shutting it down, your decision may impact your CIBIL score. The length of your credit history affects your CIBIL score. Since your previous credit card is the key to setting up your credit history, it can assist your CIBIL score. It assists a lender in evaluating how your credit ability has developed when you held your previous credit cards.

The Number of Credit Cards

Even though having numerous credit cards can benefit you and extend the credit allotted to you and the CUR, it can also impact your CIBIL score. Refraining from applying for multiple credit cards and holding them is advisable. Excessive credit cards can create problems during repayments, resulting in a drop in your CIBIL score. Multiple credit cards also depict that you are heavily dependent on credit.

You can use the CIBIL score app to check your score, a mobile app that lets you access your credit score and report on the go. Alternatively, you can also use the free CIBIL score check service, which is web-based and lets you check your credit score and report for free once each year. With the help of these two tools, you can monitor your credit health and work towards improving it.

Conclusion

To wrap up, CIBIL scores are crucial factors that ascertain your eligibility and better terms for credit cards and loans. Good credit scores can fetch you quick approvals, low-interest rates, and more perks. Nonetheless, a low credit score can hinder your chances of getting your preferred credit card. Hence, it is necessary to monitor your CIBIL score frequently and work towards improving it if your scores are low before applying for a credit card. You can also use online tools like the CIBIL score app to track your credit health and take appropriate actions. Furthermore, you can also visit the official website of any credit bureaus operating in India and opt for a free CIBIL score check. If you maintain a high CIBIL score, you can achieve your financial aims and enhance your financial prospects.

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