Applying For a Credit Card? 6 Ways to Increase Your Chances for Approval
The COVID-19 pandemic has led most businesses to move to a cashless model and having a credit card has made payments and purchases very easy. Most banks and credit card companies are, however, tightening the standards for approval of new credit cards and this means instant credit card approvals are low.
If you are planning to apply for a credit card, you can increase your chances for approval by following these tips –
- Look up your credit score- Your credit score is one of the first things a bank, NBFC, or credit card company will look up before it issues you a card. A credit score is a reflection of your credit worthiness. The score improves if you are successful in paying off your old dues or loan EMIs in a timely fashion. On the other hand, if you miss or delay an EMI or payment, your credit score could take a beating. Look up and maintain a good credit score.
- Keep your credit utilisation ratio low- Your credit utilisation ratio is the relative share of the credit you use to the credit you are eligible for. For example, if you have taken a personal loan of INR 2 lakhs from a bank with a provision of taking an additional credit of INR 3 lakhs in case of need, your credit availability is INR 5 lakhs and the utilisation is the amount of credit you actually take on loan. The higher your eligibility and the lower the amount used by you, the lower your credit utilisation ratio.
- Look up your eligibility- Various banks and financial institutions have various credit cards with different reward structure, charges, benefits, offersetc. Each credit card usually has a set criterion of age, income and other specific eligibility requirement. An institution like IDFC FIRST Bank, reviews your credit card eligibility depending on the particular tier or class of credit card you are applying for. Understanding this will help you choose the right product and increase your chances of eligibility.
- Pay off your dues- If you have another credit card or a loan from the same lender this could help you get the credit card if you have practiced good financial hygiene and repaid your dues on time. If you have existing loans, it is best to pay them off before applying for another credit card.
- Be transparent- Your bank or lender will assess your income sources and your repayment history before approving your credit card application. This makes it a good idea to include all your sources of income such as your salary or business, income from interest etc.
- Compare various offerings- Compare various credit card offerings to check the best repayment time, interest rates, and other facilities that suit your lifestyle the best, before applying. Getting the product right will enhance your eligibility.