How Much Credit Score is Good for Credit Card in India?
The credit score is a score that is shown on the credit bureau report. It can range from 400 to 850 points. It is calculated on the basis of range of data points, such as the timeliness of payments, job stability, credit limit enhancements and other factors. Depending on this score, it is determined whether you can get a credit card or not and especially which card.
The better your credit habits (like paying your cards on time, for example), the better your score will be. In fact, it is something you built over time and with your punctuality. The score is one of the fundamental point that banks take into account to approve you a credit card. Because obviously they try to avoid taking too many risks with customers and that could be a problem when making their payments on time.
So, what score you need to get a credit card?
The points in your credit bureau score that you need to obtain a credit card may vary according to the conditions, the type of credit card you apply for, and the bank or financial institution that issues it. If you have a low score, your card will not be as attractive as those offered to people with a high score, good income and job stability.
Here’s how credit score and credit card approval are related?
Score less than 550:
If your score is less than 550 points then no financial institution that checks credit bureau for authorization will be able to offer you any line of credit, since they consider you a high risk customer with a high propensity of default.
However you can apply for credit card against FD
Score from 551 to 650:
This range of points in your score is listed as average or regular. It is not the best score and very few financial institutions will be able to issue you a line of credit with it.
However, it helps, if you have bank account or salary with the same institution. It is important to note that, if you are authorized to use a card, it could be one of the most basic cards in the bank’s range or have a very short line of credit.
Score from 651 to 700:
This range is considered good and viable for granting a credit card. Here you can choose from a more open range of cards such as: basic, classic, platinum, gold, among others.
If you manage this range in your score, you are likely to get credit for almost any type of financing. In the case of credit cards, depending on your income and age, you can choose from a variety of cards with a less reduced credit line.
With scores of 700-800, gold and platinum cards are the perfect suitors. And this credit score is practically a guarantee that you will not fail to make your payments, and that you are a responsible prospect in terms of your finances and obligations with respect to your credit.
The score of 800 points and above is considered the best, making you a highly probable candidate for virtually any credit card you want. Because you don’t represent any risk to the banking institution.
Remember that with good financial discipline you can enjoy the many benefits credit offers without fear of things getting out of control. You have the tools at hand, all you have to do is use them to your advantage.
As a result of this history, you get a score that represents credit risk. This number is a reference for companies, banks and financial institutions when deciding to grant you credit.
Each financial institution has its own ‘risk appetite’ standards and in addition, can create its own internal scores.
If your credit history has not been the best, this will be reflected in your credit scores, which means that you will have difficulties in approval of credit. For this reason, it is essential that you learn how to increase your score. Because the higher your score, the more likely you are not only to get credit, but also to enjoy better interest rates and lower monthly payments.
Some recommendations to improve your score:
- Pay your loans and/or credit card debt on time.
- Use your credit card in a responsible manner, that is, without reaching the limit of the available space.
- Authorize financial institutions to consult you in risk centers, only when you are sure of acquiring a new financial product.
- Check your credit history periodically and verify the details.
This article has been written by Chandra Mehta.
Chandra is a seasoned banker with 35+ years of experience in banking and financial services industry. He’s a retired banker and has served as Chief Manager and Assistant Vice President in State Bank of India/or its subsidiaries. He has authored many articles on this site (allonmoney.com).