What CIBIL score is required to apply for a Credit Card?

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When applying for a Credit Card, understanding the importance of your CIBIL score is essential. A good credit score enhances chances of your application getting approved and influences the credit limit and terms you receive.

This guide aims to provide a detailed insight into the CIBIL score required for Credit Card applications, including why it matters and steps to improve your score.

Understanding CIBIL score

A CIBIL score or credit score is a three-digit number ranging from 300 to 900 and represents your creditworthiness. It is calculated based on your credit history, which includes your repayment behaviour, credit utilisation and duration of credit history.

Lenders use this score to assess the risk of lending to you. The higher your score, the better your chances of securing credit on favourable terms.

What is the required CIBIL score for a Credit Card application?

The minimum CIBIL score for a Credit Card approval starts at 750. A score of 750 or above is seen as a good score and indicates lower risk to lenders, increasing your chances of application approval.

Factors influencing the required CIBIL score

• Type of Credit Card: Premium Credit Cards often require higher CIBIL scores than basic or Secured Credit Cards
• Income level: Higher income can sometimes offset a lower credit score, indicating a better repayment ability
• Existing debt: A lower debt-to-income ratio can improve your chances even if your score is low
• Credit history: A long, positive credit history sometimes compensates for a lower score

Why is a good CIBIL score important?

A good CIBIL score is crucial for:

• Approval chances: A higher score increases chances of a Credit Card application getting approved.
• Credit limit: A higher score can lead to higher credit limits, giving you more spending power. You can also avail a Personal Loan on Credit Card (PLCC).
• Interest rates: You may qualify for lower interest rates, reducing your cost of borrowing.
• Better terms: A good score can improve the overall terms, including fees and reward programmes.

How to improve your CIBIL score?

Timely payments

Ensure you pay all your Credit Card bills, Loan EMIs and other dues on time. Late payments negatively impact your credit score. Setting up reminders or automatic payments can help you stay on track.

Reduce outstanding debt

Try to pay off existing debts as much as possible. High outstanding debt affects your Credit Utilisation Ratio (CUR), a critical factor in determining your credit score. Aim to keep your CUR below 30% of your total credit limit.

Avoid multiple Credit Card/ Loan applications

Each time you apply for a Credit Card or Loan, an inquiry is triggered towards your credit report, which can lower your score. Avoid applying for multiple Credit Cards or Loans in a short period.

Maintain a healthy credit mix

A mix of credit types, such as Secured Loans (Home Loan or Auto Loan) and Unsecured Loans (Personal Loans or Credit Cards), can positively impact your credit score. However, ensure you can manage the repayments comfortably.

Check your credit report regularly

Regularly checking your credit report helps you stay informed about your credit status. It also allows you to identify and dispute any errors that might negatively affect your score. You can get a free credit report from CIBIL once a year.

Tips to apply for a Credit Card with a low CIBIL score

If your credit score is below the preferred threshold, you can still take steps to improve your chances of Credit Card application approval. Here are some practical strategies to consider:

Apply for a Secured Credit Card

Secured Credit Cards are issued against Fixed Deposits. This means you provide your Fixed Deposit as a collateral, which reduces the risk for the bank or financial institution. Lenders will offer Credit Cards to individuals with low or poor credit scores because of the Fixed Deposit that acts as a collateral.

• How it works: You deposit a certain amount of money into a Fixed Deposit, which acts as a collateral for the Credit Card. Typically, the credit limit is a percentage of the Fixed Deposit amount.
• Benefits: Using a Secured Credit Card responsibly, making timely payments and maintaining low balances can help improve your credit score. As your score improves, you may qualify for an Unsecured Credit Card.
• Example: If you deposit ₹ <50,000> in a Fixed Deposit, the bank may offer you a Credit Card with a limit of up to <90>% of that amount.

Opt for a Credit Card from your bank

If you have a long-standing relationship with your bank, such as a Savings Account or a Salary Account, the bank may be more inclined to offer you a Credit Card even if your credit score is low. Banks value existing customer relationships and are sometimes willing to consider factors beyond just the credit score.

• Relationship benefits: Banks can access your financial history with them, including your account balances, transaction history and salary credits. A positive history can work in your favour.
• Personalised offers: Some banks offer special Credit Card schemes to their existing customers, which might not be available to new applicants. These offers could include lower interest rates, annual fee waivers or customised credit limits.
• Example: If you have been maintaining a Salary Account with a particular bank for several years, the bank might offer you a Credit Card with favourable terms, even if your CIBIL score is not ideal.

Show proof of stable income

A stable and sufficient income can significantly enhance your chances of getting a Credit Card despite a low credit score. Lenders may consider your repayment capacity based on your income level.

• Income verification: Be prepared to provide proof of income, such as salary slips, bank statements and tax returns. These documents show your ability to repay the borrowed amount.
• Supplementary income: If you have additional sources of income, such as rental income, freelance work or investments, include this information in your application. Multiple income streams can make you a better candidate for lenders.
• Example: If you earn ₹ 1,00,000 per month and have a steady job, providing this information along with your application can convince the lender of your repayment ability, offsetting a lower credit score.

Conclusion

Understanding the requirement of a good CIBIL score for a Credit Card application is essential for making informed financial decisions. While a higher score significantly improves your chances of approval, those with lower scores still have options. Responsible credit behaviour is crucial in maintaining a good credit score and enjoying better financial opportunities.

ICICI Bank offers a range of tailored credit card solutions and customer-centric services, making it an excellent choice for individuals seeking to enhance their financial journey with a reliable and supportive experience.

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