Credit cards have evolved into more than just a symbol of wealth over time. They have a significant impact on a person’s credit rating. Credit cards help you save money by making purchases more convenient. Using the credit card in a responsible manner helps to improve your credit score. A good credit score allows you to access some of the greatest financial solutions available. Continue reading to learn how to make the most of this powerful financial instrument.
What factors do banks consider while determining your credit score?
Credit cards are unsecured loans, which means that banks do not require you to put up any collateral or security in order to extend your credit. Because banks have no security, they must be certain that the entity to whom they are lending is creditworthy and will not fail on payments.
Because your credit score comprises your whole bill-paying and credit history, from past loan repayments to cell expenses, they are able to do so.
As you might expect, having a good credit score can help you be approved for a loan. The contrary, however, is also true. When applying for an instant credit card online, it is therefore critical to have a good credit score.
How to Raise Your Credit Score
If your CIBIL score is low, you can quickly raise it by doing a few steps, such as:
- To avoid any troubles in your payback history and build a solid credit score, pay your existing credit card bills and loan dues on time.
- Maintaining a credit utilization level of less than 30%
- Applying for many credit cards at the same time is not a good idea. This can harm your credit score because every time you apply for a card, the supplier makes a hard inquiry on your credit report, which lowers your score. As a result, the greater the number of inquiries, the harsher the damage.
- Checking your credit report on a frequent basis to see where you stand and correcting any issues
Pro Advice – You should not keep your credit rating from getting a credit card
In India, credit card users have increased at an exponential rate in recent years. Because of these factors, the number of defaulters has increased over the time. Lenders are growing increasingly reluctant to issue credit cards to people with bad credit. It has the potential to smear one’s dream of establishing a positive credit history and a solid financial profile.
Obtaining a credit card is a challenging but not impossible undertaking. Begin modestly by obtaining a secured credit card with a reasonable credit limit. Hence, your credit score will improve. A savings account backs up a secured credit card. Your credit card uses the account as collateral. It is less difficult to obtain the card. When used correctly, it can help you raise your credit score quickly and move you closer to better credit card offers.
The most important thing to accomplish is to get a strong credit history. It not only aids in the development of a strong financial profile, but it also aids in the development of a solid credit score. Obtaining a secured credit card is straightforward because no proof of income is required. Once you have a secured credit card, make sure you keep it and pay off your payments on time to improve your credit score.
The Bottom Line
Maintaining a minimum CIBIL score of 750 is therefore recommended in order to receive better credit card offers and faster approval. One of the eligibility conditions for obtaining a credit card is a CIBIL score. These points will assist you in determining your credit eligibility in order to obtain an instant credit card. However, there is no minimum CIBIL score required to activate a credit card. You can speak with an executive at your bank or apply online. Your CIBIL score will be checked by the bank executive, and the approval conditions will be communicated. You can check CIBIL score at regular intervals on any of the financial institutions websites for your own confirmation.