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Tuesday, September 27, 2022

What Are The Current Credit Card Eligibility Factors?

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A credit card is the most important instrument for getting the most out of your savings. In India, the best credit cards offer a wide range of benefits, discounts, and cashbacks. Banks, on the other hand, are slow to approve credit cards. They consider a number of variables while deciding whether or not to issue a credit card to an applicant. When applying for a credit card, the applicant’s CIBIL Score is crucial.

Some of the elements that banks consider when determining whether or not credit card users are eligible are as follows:

Credit Ratings

The way a person manages his or her credit-related activities is predicted by his or her credit history. An applicant with an excellent credit history is more likely to be approved for a credit card. To assess your repayment capacity and credit limit, lending organisations look at your credit history as well as your annual income. Lenders look at your repayment history, credit history duration, and the number of credit accounts on your credit report. Those with credit scores of 750 or above are more likely to be approved for credit cards.

Occupation

The type of employment you do at your current company will have a bigger impact on whether or not your credit card application is approved. If you have steady employment in a reputable company, you can easily apply for a credit card. Employees of lesser-known or smaller businesses are not suggested because a company’s financial failure may have a detrimental impact on its employees’ repayment capabilities. Because salaried employees have a more consistent cash flow than self-employed individuals, they have a better chance of acquiring a credit card quickly.

Debt-to-Income Ratio

Your credit card company will take into account your credit utilisation ratio. If your dues exceed the authorised amount, your application’s acceptance may be jeopardised. It’s critical to keep your debt-to-income ratio modest. You can apply for a credit card if your debt-to-income ratio is minimal. Because this will damage your credit score, don’t utilise more than 30-40% of your total credit limit. Also, keep a watch on any loans you’ve guaranteed or co-borrowed, as any late or missed payments may hurt your credit score.

Stability of Employment

Your present employment condition also plays a role in determining your eligibility. Maintaining your current job for more than a year increases your chances of receiving a credit card. To put it another way, you’ll need continuous employment to get a credit card.

Income

Even if you meet all other eligibility standards, your credit card application will be denied if you do not meet your lender’s monthly income criterion. However, within the same lender, this criterion may vary depending on the card type. The monthly income criteria are greater for cards with better benefits.

Location

The applicant’s geographic location influences whether or not his card application is approved. ‘Negative areas’ or ‘black-listed areas’ are defined as inapplicable areas. Credit card applications made from such unfavourable or black-listed locations may be denied, even if the applicants score favourably on other grounds.

You must be at least 18 years old to apply for a credit card. If you are under the age of eighteen, you can apply for a credit card. Cardholders who take advantage of add-on credit cards must be at least 18 years old.

Last Thoughts

A lot of factors must be considered when applying for a credit card. The points described above are the most vital to consider if you want to apply for a credit card without any issues. In India, the finest credit cards offer a variety of cashbacks and incentives. You must, however, meet the required standards in order to receive them. If you are unable to apply for a credit card because you do not meet any of the eligibility standards, you can apply for a secured credit card.

Secured credit cards can also aid in the restoration or how to improve CIBIL score. Credit card purchases are the same as taking out loans because the bank finances the transactions until the due date. As a result, secured credit card transactions are taken into account when calculating CIBIL scores. As a result, credit card applicants who have been declined for a traditional credit card owing to a lack of or poor credit history can use these cards to improve or develop their credit scores before applying for a traditional credit card.

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