Unveiling the Factors that Determine Credit Card Eligibility

A credit card is one of the most valuable financial assets banks offer, capable of significantly bolstering your credit score for a more stable tomorrow. In India, credit cards have seamlessly integrated into the daily routines of countless individuals, thanks to their convenient availability.

To acquire a credit card, you must meet specific eligibility criteria set by different banks and NBFCs. These criteria differ based on the type of card. Failing to meet these requirements could result in your application being declined, affecting your creditworthiness. Here, we explore important factors to consider when applying for a credit card.

Personal Factors that Determine Credit Card Eligibility

• Age: One of the basic requirements for credit card eligibility is the applicant’s age. You should be at least 18 to be eligible for a credit card. However, certain banks or credit card issuers might require you to be at least 21. The upper age limit for credit card applications is usually 60 years.
• Salary: Given that credit card transactions involve borrowing money from a bank, the bank needs assurance that you can repay the borrowed amount. To ensure this, the bank or credit card issuer assesses your salary or monthly earnings. While the minimum annual income requirement for credit card eligibility varies across banks, it’s generally around Rs. 3 lakhs annually in India.
• Nationality: There aren’t many restrictions concerning the residence or nationality of credit card applicants. However, a few credit cards are available to Indians and NRIs only.
• Employment Status: Employment status is important during the credit card application process. The bank reviews your current and past employment history as part of the verification process. A stable job for a year or more can boost your credit card application.

Financial Factors that Determine Credit Card Eligibility

In addition to personal factors, certain financial aspects affect whether your credit card application gets approved. These factors are just as crucial and should be on your checklist for applying for a credit card.

• Credit Score: Your credit score directly connects to whether your credit card application gets approved. A higher credit score ranging from 750 to 900 is generally considered good for a credit card application. And a poor credit score below 750 indicates a red flag for the lenders.
• Multiple Credit Card Applications: Applying for numerous credit cards is a bad signal for your credit card application. Multiple rejections reduce your chances of approval for the current application. You should compare credit cards in India and apply for only the one that suits you the best.
• Credit Utilization Ratio: Another significant factor in credit card eligibility is the Credit Utilization Ratio (CUR). This is the ratio between your credit card bill and your credit limit. These two factors have an inverse relationship. Spending more leads to a lower CUR. You should spend 60-65% of your credit limit.
• Existing Loans: Several existing loans indicate that you always need financial help and struggle with repayment. This raises doubts about your ability to manage your credit.

Things to Avoid for Strong Credit Score

When you apply for a loan or a credit card from any bank or NBFC, they always check your credit report. These reports by credit bureaus show your clear financial stability – whether you can pay the loan or not. So you must avoid additional requests for increasing your existing loan or credit limit. If you frequently request your lender to raise your credit limit for various reasons, it can make it seem like you’re overly reliant on credit. This behavior will be noted in your credit report. Therefore, it’s best to avoid seeking excessive credit too often.

Opening new accounts too frequently also hurts your credit score. Frequent changes in accounts can lead to a drop in your credit card cibil score.

Tips to Increase Your Chances of Getting Approved

● Make sure you pay back loans promptly and maintain consistent payment behavior.

● Verify the information in your credit report; any mistakes can harm your score.

● Avoid applying for too much credit too often.

● If you have multiple EMIs, distribute them throughout the month.

● Set up autopay for credit card bills and loan installments to avoid missing payments.

● Keep credit utilization low and align it with your budget.

● Opt for secured loans over unsecured ones for better safety and positive credit history.

● Keeping old accounts helps show payment consistency and adherence to schedules.

● For a good credit score, convince lenders you’ll repay and avoid bad debts.

Read: Driving Towards Savings: Unlocking the Benefits of Fuel Credit Cards

Conclusion

Maintaining a strong credit score makes it easier to access credit whenever needed. Key elements impacting your credit score, including repayment history, utilization ratio, and credit age, should be carefully examined.

Your credit report outlines your credit actions and trends, requiring careful handling and timely updates with your latest information. So you should always keep these things in mind and compare credit cards in India rather than applying aggressively, which can impact your credit score.

Read: Leveraging Credit Card To Bank Account Transfers For Greater Control Over Your Finances