A good credit score goes a long way in deciding how easily a personal loan applicant or a credit card applicant will be able to secure their set out objectives.
The idea behind a high credit score is to showcase that the borrower has a fairly reasonable credit history and he is always prompt in making repayments on time.
In this particular write-up we will decide with proper reasoning the basic concept of credit scores and the most appropriate credit score that one must have to secure new credit cards, personal loans, home loans etc., in easy and seamless fashion.
Basic concept of credit scores in India
India, which is a rapidly growing economy, has a unique way of looking at credit scores. Here, credit scores mostly range from 300 to 900. These scores are calculated by several leading credit bureaus such as: CRIF High Mark, TransUnion CIBIL, Equifax, Experian among others.
Now, a higher credit score indicates a more prompt borrower who has a better credit profile, enhanced creditworthiness. All such factors can influence the approval of credit applications such as personal loans, premium credit cards etc., in an immensely positive way.
Expert views
According toRaj Khosla, Founder & MD, MyMoneyMantra, “A credit score above 750 is ideally considered a good credit score for obtaining premium and ultra-premium fee-only credit cards. Credit score hovering in the range of 750-850 can help you qualify for almost all credit cards. However, the final eligibility will be further subject to other parameters such as income levels, stability/nature of employment, ongoing debt obligations etc.”
“Nowadays, banks increasingly onboarding customers with low credit scores and people who are new to credit by offering introductory and lifetime free credit cards. On the other hand, individuals with a damaged or low credit score (below 650) can also procure a secured credit card, customarily backed by fixed deposits. The credit limit of these credit cards is conventionally lower as compared to normal credit cards.”
Hence, in so far as leading financial institutions are concerned, a credit score of 750 or above is considered as ideal for credit card approvals. Credit card applicants having this score or more, are likely to receive seamless credit card approvals, favourable terms and conditions such as high credit limits and even lower applicable interest rates, easier repayment terms etc.
On the other hand a score of 650 or less will make things equally challenging and complicated if one aspires to secure a new credit card with the same.
What are the options for applicants with lower credit scores?
If you are an applicant with a credit score of less than 700, then you may face several challenges in securing standard credit cards. A bad credit score means that you are not careful and consistent about your repayment history.
Still, options such as secured credit cards that require a fixed deposit as collateral can be a fairly viable alternative. These cards provide easy access to credit but also offer an opportunity to boost one’s credit score over time.
What are the factors influencing credit card approvals?
Given credit score is a significant factor, still lenders consider other aspects as well. Income level, existing debts, past repayment history, employment status and stability etc., while lending funds. Hence, a strong financial profile can sometimes compensate for a lower credit score boosting the chances of credit card approval.
How can you maintain a healthy credit score?
To maintain or further boost your credit score, it is important to pay credit card bills on time, have a healthy credit mix, focus and bring your credit utilisation to the lowest possible level along with consistently monitoring your credit report for factual errors and mistakes. These simple steps can go a long way in helping you keep your credit score healthy.
Disclaimer: Mint has a tie-up with fintechs for providing credit; you will need to share your information if you apply. These tie-ups do not influence our editorial content. This article only intends to educate and spread awareness about credit needs like loans, credit cards and credit scores. Mint does not promote or encourage taking credit as it comes with a set of risks such as high interest rates, hidden charges, etc. We advise investors to discuss with certified experts before taking any credit.
