Credit cards are one of the most popular financial products in India, with a record 29.8 million credit cards currently operational on the 31st March 2017, as per the Reserve Bank of India.
These statistics also suggest that people in India have also improved their repayment habits; 78% of credit card holders have paid off their total due amounts. From the global scale too, India records an impressive 92% credit card holders paying above the minimum amount due in their bills.
These figures are proof enough that people are using their credit cards responsibly to get maximum benefits from them. You should also know how to use credit cards. So, keep these factors in mind before you apply for your new credit card to get instant approval.
Factors which matter for credit card approval
- CIBIL score or credit rating
The CIBIL score of a user is one of the most vital pointers which financial institutions consider before approving a financial product. Commonly known as credit rating/score, a credit card provider refers to your score before they offer the product.
Once you apply for it, your credit card status will depend significantly on your CIBIL score. Financial institutions prefer a healthy CIBIL score.
Leading financial institutions, Bajaj Finserv offers their Bajaj Finserv RBL Bank SuperCard to individuals who maintain a CIBIL score of around or above 750. It comes with a range of industry-first features including ATM cash withdrawals with an interest-free repayment period of up to 50 days.
Bajaj Finserv provides pre-approved offers as well on credit cards, personal loans, business loans, home loans and range of other financial products. These offers not only simplify the process of getting funds, but they also save time. You just need to provide a few basic details to know your pre-approved offer.
- Defaults –
Your CIBIL score reflects your financial history as well as your current situation. Defaults are important determinants for your current score.
For every provider, it is important that a cardholder knows how to use credit card. These cards provide funds in the form of credit. They do not levy interests on repayments made within the due date or grace period.
One of the points signifying poor financial management is a default. Every time you miss a payment of the credit or loan EMIs, you are tagged as a defaulter. A lending company will inspect the number of such defaults and then decide whether to approve your credit card application or reject it.
A useful tip, financial institutions do not consider a credit account as default until after 30 days from the due date. So, make sure you pay back the total amount due at least by that period. If you are unable to do the same, check your credit card status immediately and contact the provider for a resolution.
- Hard inquiries –
Every time you apply for a financial product from a provider, the latter will consider your creditworthiness first. What follows after your application is a hard inquiry.
A hard inquiry is when a financial institution refers to the credit bureau to know your credit score and credit history. The credit bureau records your hard inquiry. So, when you apply for multiple credit cards simultaneously across a short span of time, it will log multiple such inquiries and label you as a credit-hungry borrower.
Thus, avoid multiple credit card applications to maintain a strong CIBIL score. Also, make sure to choose a lender after evaluating whether you are eligible or not.
- Your financial situation –
A credit card provider considers your monthly income before they sanction a card. An applicant’s monthly income is a determinant of whether he/she can repay the funds availed as credit on time without defaulting. Furthermore, it helps determine the credit limit which the concerned user will be able to utilise.
Besides your income, your employment is another factor which comes into play for your credit card approval. Financial institutions consistently prefer individuals with a steady monthly income and a stable history of employment. More than your income proof, which applies to both salaried as well as self-employed individuals, a credit card provider will assess your financial situation as per your current income strength and overall income patterns.
So, whether the financial institution will approve your credit card application or not largely depends on your credit history, your CIBIL score as well as your present financial situation. Keep these factors in mind and successfully apply for a credit card from the provider of your choice.
Gaurav khanna is an experienced financial advisor, digital marketer and writer who is well known for his ability to predict market trends. You can find Gaurav on Linkedin.