Before granting a credit card application, credit card companies consider a variety of factors, including your age, work history, income, occupation, and others. Credit card companies also take your CIBIL score into account.
Even if you otherwise meet the requirements for a bank loan, your application may be denied if your credit score is too low.
The outcome is determined by your credit score. First and foremost, why is it necessary for every potential credit card customer to know their credit score/CIBIL score? Here are some CIBIL score facts to know if you are applying for or planning to apply for a new credit card:
In today’s lending environment, how important are CIBIL scores?
In India, the credit score is known as the CIBIL score; CIBIL is an abbreviation for Credit Information Bureau (India) Limited, a credit information company. It keeps files on people’s and businesses’ credit histories, which banks and other lenders use to determine whether or not to extend credit.
Lenders consider information such as loan and credit card repayment histories to determine a borrower’s creditworthiness.
This information is used by the bureau to generate a three-digit summary of each cardholder’s credit history. Credit scores can range between 300 and 900.
CIBIL uses your credit history, which includes how you’ve handled loans, credit card bills, and other forms of credit in the past, as well as their own proprietary formula, to determine your CIBIL score. Banks use the CIBIL score to decide whether to extend credit to applicants, and those with high scores are more likely to be approved for loans and credit cards.
Allowing people with good credit histories access to credit in the form of loans and credit cards assists financial institutions in weeding out those who are unable to meet their financial obligations. Lenders can also take on less credit risk than if they extended credit to someone with a bad credit history.
So, why is having a high CIBIL score important?
When compared to someone with a poor credit history or a low credit score, the person with the higher credit score will be given priority for loans and credit card applications.
Prime candidates are new credit card applicants with a credit score of 750 or higher. However, according to CIBIL, a credit score of 700 or higher is considered good.
Banks consider a variety of factors other than the applicant’s credit history when deciding whether or not to issue a new credit card. Because of these factors, as well as your established relationship with the bank, you may be approved for a new credit card despite having a credit score of less than 750.
Nonetheless, those with a lower credit score may face higher interest rates, credit limits, and so on. Please keep in mind that there is no set CIBIL requirement minimum for applying for a new credit card. If you don’t know your credit score but have always paid your bills on time in the past, you can apply for a new credit card online.
Maintaining a credit score of 750 or higher will help you get the best interest rates and terms from credit card companies. It is especially important to make payments on time and avoid missing any payments if you are just starting out financially.
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