good cibil score is not a sureshot guarantee that you will be approved for credit
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get good cibil score is not a sureshot guarantee that you will be approved for credit from screen.
CIBIL Score for Credit Card
CIBIL Score for Credit Card - Know the minimum CIBIL score required for credit cards. Check benefits and which banks offer credit card without CIBIL score.
What is the Minimum CIBIL Score Required to Get a Credit Card?
Free CIBIL Credit Score Check
CIBIL Score for Credit Card | Minimum CIBIL Score Required for Credit Card
Having a low credit score or no credit history might stop you from using best credit cards. Some of the top credit card providing companies have a minimum credit score requirement. CIBIL is among the top credit bureaus companies that provides credit score and report. The score generated by them is called CIBIL score which is a 3-digit number showing the payment history of an individual. The score ranges from 300-900 wherein the higher range represents strength of the score. Financial institutions consider a credit card application suitable on the basis of this score. In this article, we will talk about the minimum CIBIL score required to apply for a credit card or get approval for it.
FREE CIBIL SCORE CHECK
How Much CIBIL Score Is Required for Credit Cards?
The suitable or minimum CIBIL score which is required for most of the credit cards is 750. The applicants having a score below 750 might not get approval for a card at some of the top companies. However, most of the banks also offer credit cards to those who do not have a credit history or score below 750. But, the fact remains that those who have a score of 750 or above are eligible for a lot more than those who are not in this category.
What benefits do you get on a credit card with good CIBIL Score?
Read below the advantages that a good CIBIL score holder gets for credit cards.
Eligible for top credit cards
Suitable for a higher credit limit
Lower interest rate on credit cards
Easy credit card approval
More negotiating power on credit card interest rate
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Can You Get Credit Card Without CIBIL Score?
Yes, you can. Those who have zero CIBIL score do not lose eligibility to apply for a credit card. There are many banks offering wide range of credit cards to those having no credit history since the factors based on which credit cards are given are income and CIBIL or credit score. If you have no credit history but are presently working in a reputed firm and earning quite well, your application might be considered eligible for a credit card. The fact, however, is that having a credit history and good credit score makes you eligible for best credits as mentioned above. There is of course no harm in working towards creating a credit history or improving your CIBIL score if it is less than 750.
How Can You Build a Good CIBIL Score with a Credit Card?
Do you know that your credit card can help you build a good CIBIL score? There are a few basic methods by which you can do so. These are paying bills on time, controlling your credit card expenses, checking your credit reports, clearing off debts as soon as possible. We are showing details of all such methods below so that you can understand better. Have a look.
Pay Bills on time – The most basic thing to do if you want to build a good CIBIL score is to make a habit of always paying your credit card bills on time. Reason: repayment history contains the highest weightage (35%) among all the aspects that make your CIBIL score. So, when you pay your bills on time, your repayment history will build stronger. Every credit card has a due date within which you have to pay the total due or minimum due amount (5% of the total dues). Always try to pay the full due amount if you want to build a good CIBIL score.Control Your Credit Card Expenses – Having a credit card in your pocket can be lucrative at times but don’t use your credit card beyond your repayment capacity. Managing the credit card expenses is like winning the half battle. Let’s understand how. When you spend within your income and repayment capacity, you can pay the credit bill on time and build a good CIBIL score. On the other hand, if you spend beyond your capacity, you may face difficulties in paying the credit card bill.Spend Within the Credit Limit – Your credit card has a certain limit and one of the best ways to build a good CIBIL score is to always spend within 30% the overall limit. An individual, who has a habit of exhausting his or her card limit, might be seen as a credit-hungry borrower. Such an impression, if lasted long, could reduce your CIBIL score drastically. That’s why always try to keep your credit card spends upto a certain limit. This way, you can pay your bills on time.Check Your Credit Report – Sometimes, errors in your credit report can also affect your CIBIL score negatively. To avoid this, always check your credit report thoroughly to see if there is any kind of error whether it is some personal detail or transaction-related. On finding any error, try to rectify it as soon as possible.Set-up Payment Reminders – You can also set up a payment reminder or auto-pay facility for your credit card. This way, you will never miss your credit card payment. With the Auto-pay feature, you can set a fixed amount that will be debited from your account linked with your credit card as soon as your bill generates. Timely payments will ensure you build a good CIBIL score.How to read CIBIL Score and Risk Index?
It is always advisable to understand the Risk Index before arriving at any conclusion. High Risk Index is not the end of the road to avail Loan or Mortgage.
How to read CIBIL Score and Risk Index?
Risk Index
How to read CIBIL Score and Risk Index is one of the most common query from my readers. In layman terms CIBIL Score is nothing but risk assessment / credit worthiness of a potential borrower based on past credit history. Though CIBIL Score and Risk Index is the 1st level shortlisting criterion by the Mortgage Lender. Executives of financial institutions who have access to this data are not competent enough to explain the CIBIL Score / risk index to borrowers. It create panic situation among borrowers. Recently one of my client called me and told that his consumer loan is rejected because his CIBIL Score is very low. I checked with him, what is his CIBIL Score. He told me that his CIBIL Score is 2. Unfortunately 2 is not a CIBIL Score but Risk Index. Worst part is that executive of financial institution referred him to some shady online agency, Which charged Rs 10,000 to Improve CIBIL Score. I explained him that currently his credit history is less than 6 months therefore Risk Index is returned by the CIBIL database which is 2 i.e. High Risk customer. Once the credit history is more than 6 months, he will get CIBIL Score between 300-900 instead of Risk Index between 1 to 5. After 2 months, his CIBIL Score was 670 and agency sent him a long self-congratulatory letter mentioning that they helped him to increase CIBIL Score (Read Risk Index) from 2 to 670. Now he wish to further increase his CIBIL Score from 670 to 750, he has to pay Rs 10,000 more.
How to read CIBIL Score and Risk Index?
CIBIL basically divide all Individuals / potential borrowers into following 3 categories. We will understand CIBIL Score / Risk Index in each category separately.
(a) Individuals with either No Credit History or Credit History not reported to CIBIL.
(b) Individuals with less than 6 months Credit History
(c) Individuals with more than 6 months Credit History in last 2 years
CIBIL Score / Risk Index returned for each of the above mentioned category of potential borrowers is different. Lets check out how to read
(a) Individuals with either No Credit History or Credit History not reported to CIBIL:In this category, the index returned is either NA (Not Available)or NH (No History). What it implies is that individual has No credit history and / or Credit History is not reported to CIBIL by the financial institution. Let me clarify that NA or NH cannot be classified as low score or poor credit history. It simply means there is no credit activity registered or reported. Now one of my client whose CIBIL index was NA, asked me if NA or NH is not viewed negatively by the financial institution then why her Home Loan was rejected. Answer is very simple, some financial institutions have policy not to lend with NA or NH index. In short, in the absence of risk index / CIBIL Score financial institution has no criterion to check risk assessment.
(b) Individuals with less than 6 months Credit HistoryIn this category, CIBIL return Risk Index between 1 to 5 therefore as i explained in above mentioned example that 2 is not a CIBIL Score but risk index of the potential borrower. Lets check how to read Risk index between 1 to 5
High Risk: Index of 1 and 2Medium Risk: Index of 3Low Risk: Index of 4 and 5In my clients case, the loan was rejected because of high risk index of 2. To maintain good CIBIL score, it is advisable to follow good credit practices from the beginning. I observed that most of the Low CIBIL Score cases handled by me were outcome of ignorance of a borrower initially. I always advocate that banks should appoint qualified Credit Counselors instead of executives with not even bare operational knowledge.
(c) Individuals with more than 6 months Credit History in last 2 yearsIn this category CIBIL Score is returned i.e. value between 300 to 900. Higher the CIBIL score, lower the risk and vice versa. As i keep highlighting that high credit score does not guarantee sure shot loan / mortgage. CIBIL Score depend on 70 parameters to arrive at your CIBIL Score. It is critical to find out parameters which are impacting CIBIL Score negatively. CIBIL Score can be linked to credit worthiness of an individual. Lets check credit worthiness
Score between 300 to 600: Very Poor
Score between 600 to 700: OK
Score between 700 to 775: Good
Score of more than 775: Marvelous
Normally people have tendency to compare CIBIL Score / Risk Index. Sometime back, one of my blog reader was quite furious as bank A rejected his Home Loan with CIBIL Score of 760 and approved his friends Home Loan with CIBIL Score of 730. When i checked his CIBIL Report, i found that his credit utilization was high therefore any comparison is non-standard.
Let me admit that Banks and financial institutions are quite proactive in reporting defaults by customer. whereas they skip reporting of good credit practices of customer. One of the most common casualty is Secured Credit Card. In most of the cases, secured credit card details are not reported to CIBIL by the banks. It defeats the whole purpose behind secured credit card. Most of the people opt for this credit card to improve their CIBIL Score or Risk Index. If it is not reported then you should immediately bring it to the notice of a bank.
12 Sure
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Credit Score
Shiv NandaMar 18 •
12 Sure-shot Ways to Improve CIBIL Score
5 mins read Share
Contents showIf you are struggling with credit woes and want to find a quick fix for your CIBIL scores, then understand this – there is no quick fix. Getting your CIBIL scores in order requires both discipline and educating yourself about the options available.
What is Considered a Good CIBIL Score?
CIBIL score is a 3-digit numerical expression that ranges from 300 and 900. The closer your score is to 900, the better is your CIBIL score. A CIBIL score of 750 is considered as ideal for getting a loan on favourable terms. If you have a score that’s less than ideal, you need to take measures to improve it.
12 Ways to Improve CIBIL Score
Review Your CIBIL Report for Accuracy
It’s extremely important to ensure that all information on your CIBIL report is accurate. A mistake or a discrepancy that’s reflecting on your CIBIL report can negatively impact your CIBIL score.
If you notice any inaccurate information, outdated information or missing information, raise a dispute with the Transunion CIBIL and your lender. This is the closest you can get to a quick CIBIL fix.
Get a Mixed Bag of Credit
You’ll want to establish a mix of credit types, with some short-term low-interest loans, a few credit cards, and a few secured long-term loans like car loans or home loans. This helps you build up your credit score and shows lenders that you can manage your finances responsibly. Taking too many unsecured loans might seem like a negative to the banks; therefore, maintaining a credit mix with both secured and unsecured loans becomes important.
Set up Payment Reminders to Pay Your Dues on Time
Consistently paying your bills on time can raise your score within a few months. A single missed or late payment can have a significant negative impact on your credit score. To ensure that you pay your dues on time, write down payment deadlines for each bill in a planner or calendar and set up reminders online.
You can also consider enrolling for auto payments through your lender or bank to have your payments directly debited from your bank account.
Fix Your Credit Utilization Ratio
If your credit card account balances exceed 30% of your credit limits every month, it’s a red flag because your CIBIL score is suffering. Even if you are paying off your balances in full every month on the due date, it may reflect as outstanding in your credit report because your creditor reports the information to the credit bureau once a month and the date could be before your due date. So, it’s a good idea to consider pre-paying some of the balance before the due date to keep you above the 30% mark every month.
Convert Your High-Interest Debt into EMIs Through Debt Consolidation
If you are having trouble making your payments because of the high-interest loan rates on credit card accounts and other loans, convert your multiple debts into EMIs by paying it off using a low-interest personal loan through debt consolidation. You can then choose your repayment schedule according to your financial capability and pay back the borrowed amount through affordable EMIs. The advantage of taking a personal loan to pay off your existing debt is the interest rate; it’s nearly half of credit card interest rates.
Pay More Than Once in a Billing Cycle
Making payments once in a month is good but not great for your CIBIL Score. Your creditors report balances to the credit bureaus every month. If you have big balances, it could mean that you are overusing your credit.
If you enjoy good financial standing, the best thing you could do is pay more than one monthly payment. It definitely reduces your debt faster; it also reduces your credit utilization ratio and improves your CIBIL Score.
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Pay Down “Maxed Out” Cards First
When you are using multiple credit cards, it is advisable to pay down the card that’s about to max out the limit first. This strategy will help lower the credit utilization ratioand give a boost to your CIBIL score.
Build a Strong Credit Age
A good average credit age would be more than 5 years. The longer your positive credit history is, the better is your credit score.
If your credit history is short, there’s not much you can do. One option: Piggyback to be an authorized user on a family member or a friend’s credit card if they have a good and long credit history. However, it’s easier said than done because it may be challenging for you to find somebody who willingly adds you as an authorized user because they would be the ones responsible for any charges you make on the credit card. Other option: Be patient and don’t close any accounts.
If you have no history at all, it may take three to six months from the beginning date to see any activity being reported on your credit reports. One option to establish a credit history is to take a credit card, make small purchases that you can afford to repay, and pay the balance in full every month.
Guys, does anyone know the answer?