A financial institution refers to the credit score or CIBIL score of every prospective customer before offering their financial products or services. The credit score, invigilated and assigned by the Credit Information Bureau (India) Limited, is a measure to judge a person’s creditworthiness. It is thus important to check your credit report and credit score before approaching a financial institution.
Why availing a credit card is difficult with a low credit score?
One of the most common reasons why your credit card application could be rejected is a poor credit score. However, there are ways to deal with such situations. You can either try improving your score or look for ways how to apply for a credit card with a bad or below par credit score.
CIBIL score ranges from 300 to 900. A score below 550 is generally considered a poor score. While a score above 700 is known to be a healthy CIBIL score.
When an individual applies for a new credit card, this credit score determines his/her creditworthiness. Issuers with a low credit score are usually deemed to be risky borrowers by financial institutions, which automatically reduce their chances of availing a credit card or any other advance.
The following factors constitute your credit score, which credit card issuers review to gauge your creditworthiness –
- Repayment history for prior advances.
- Previous debts.
- Credit history length.
- The number of new credit accounts.
- Types of credits being used.
Choosing the right credit card with a low credit score
In cases where your CIBIL score is not high enough to avail a regular credit card, you can consider availing the following alternatives –
- Secured credit cards.
- Credit cards with a high maintenance fee.
- A credit card from your primary bank.
Once you avail of a credit card with a low CIBIL score, you can also look for ways to reduce credit card interest payments.
Proper research about interest rates, eligibility, features, how to apply for a credit card, terms and conditions, etc. is important when you are planning to avail of a new credit card. Choosing the right card in sync to your requirements is also essential.
How to improve your credit score in simple ways?
On following certain points, you can see your credit score gradually improving. If you are planning to avail a loan or a credit card from a reputed company, you must get started with the steps to enhance your credit score. Here are the different steps which can bring a positive change in your CIBIL score-
- Set reminders to pay your dues on time
Failing to pay your dues on time might have a negative impact on your credit score. An individual paying his bills timely comes out as someone who is financially responsible and creditworthy.
- Maintain older credit cards for a strong credit history
An individual must try to maintain old credit cards as long as he is capable of paying the bills in full. This helps in building a strong and healthy credit score.
- Customize the credit limit as per your capability to pay
One of the most crucial features of a credit card is the credit limit assigned to it. You can manage your finances, and CIBIL scores better by opting for a credit limit you can easily maintain. Apart from such advantages, if you are looking for exclusive benefits from a credit card, you can avail of the Bajaj Finserv RBL Bank SuperCard.
It is therefore essential to consider your credit score and fit into the eligibility criteria before knowing how to apply for a credit card.
The endless features and advantages of owning a credit card contribute to the continuous rise is credit card usage. At present, the total number of credit cards in operation is about 49 million. The growth is the usage and popularity of credit cards is likely to increase at a high pace in the following years.