Credit Score on Credit Card Approval

To be eligible for a credit card, the applicant should mostly have a good credit score. Usually, any credit score above 750 and closer to 900 is considered good by financial institutions. Several banks do accept a credit score between the range of 700-750 for credit card approval.

Few banks also consider the approval of credit cards for applicants with even low credit scores. However, applicants also need to meet other eligibility criteria defined by the lender in terms of age, income, occupation, residence, credit history, etc. to avail new credit.

Generally, banks and NBFCs do check Credit scores before the approvals of credit card applications. Applicants who are New to Credit or with No Credit History may apply for secured credit cards (credit cards against fixed deposits) and start building their Credit score.

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Minimum Credit Score for Credit Card Approval

The minimum Credit score requirement for different card issuers or lenders shall vary from product to product. Usually, the minimum Credit score considered by various lenders for credit card approval is 750 or above.
However, the generated credit scores shall vary, as per various credit bureaus, such as TransUnion CIBIL, Experian, Equifax, and CRIF High Mark. Most of the lenders consider TransUnion CIBIL score for loans and credit card application approval.

Why do Banks/NBFCs Check Credit Scores for Credit Card Approvals?

Since credit cards are unsecured and no collateral/security is required to be submitted by the applicant, so the banks have to take higher risks when issuing credit cards to customers. This is why they need to check whether an applicant is capable of taking up a new debt.

A credit score is a clear indicator of the applicant’s payment history, debt repayment behaviour, and credit utilization.

When an individual applies for a credit card and submits the documents, he/she allows the bank/NBFC to initiate a hard enquiry on his/her credit profile.

The bank would get to know the individual’s Credit Utilization Ratio (CUR), credit history, number of active accounts with past payments, missed payments, Days Past Dues (DPD) in this account, etc. If not satisfied or convinced with the credit report, lending banks can reject their credit card applications.

Know Why Even Good Credit Score is Not Enough

Banks keep modifying the approval criteria for their credit cards. Some common reasons why one may be denied a credit card even after maintaining a good credit score are as follows:

1: High existing EMI to NMI ratio
2: Too much debt (even if one pays them off on a regular basis)
3: Higher Credit Utilization Ratio
4: Short credit history
5: More unsecured loans as compared to secured loans
6: Recent delayed payments, DPDs, or other negative entries in the credit report

Conclusion

Your CIBIL score is an important factor that lenders take into consideration when evaluating your creditworthiness. It is calculated based on your past credit history and is used as a measure of your ability to pay back any loan or credit card debt. The higher the credit score, the better your chances of getting approved for a loan or credit card. 750 is the minimum credit score required for a credit card.