CIBIL Credit Report Problems

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CIBIL score for Credit Card

What is the CIBIL score needed for applying Credit Card?

To apply for a Credit Card, a good CIBIL score is always help you get approval without any hassle. Some institutions can offer you a Credit Card even on zero CIBIL score. Applying a Credit Card is also one of the ways to jumpstart a fair credit history if you do not have any. However, overusing the card will affect your CIBIL score negatively, so will any delay or skip of payments. Thus, misusing Credit Card in a way of exceeding credit limit or non paying the bills, will in turn affect your chances in future of getting another Credit card or Loan.

 

CIBIL scores range from 300 to 900. Its is advisable before applying for a Credit Card, check CIBIL score and select the best options based on your CIBIL score. A score of 750 will get one access to a leading Credit Card provider with good terms and benefits. If you have a good CIBIL score, it is recommended to shop around and find the best credit that will suit your needs. For someone with a CIBIL score between 650-750, there might be a few options for Credit Cards. However, they may not qualify for a Credit Card with a high limit. They also will not be eligible for most Credit Cards with great benefits and rewards programs. A CIBIL score under 650 will very rarely qualify for a Credit Card. If one has a score under 650, our recommendation is to improve CIBIL score before applying for a Credit Card.

Some Common reasons to reject your Credit Card Application

  1. Bad credit history
  2. No credit history
  3. Using multiple Credit cards
  4. Non-listed company
  5. Reside in Black listed area
  6. Low income

Bad credit history : Past credit repayment record of the applicant is an important criteria on which banks decide whether or not to issue a credit card to the applicant. All card issuers check the applicant's credit history (CIBIL report) before making a call as to whether or not to issue the plastic card. In case, a person has failed to repay any of her/his old dues timely, it will reflect in his/her CIBIL record, seeing which banks could reject the credit card application. To overcome this hurdle, a person should make efforts to improve her/his credit score/ CIBIL record by paying back all dues. To come in the good books of the banks, timely payments on loans or credit card expenses have to be made for at least six months continuously. A person can also use credit cads to improve his/her credit score.

No credit history : Another common reason for facing rejection from card issuers is the lack of a credit history. It means that those individuals, who have never taken a loan or credit card, can also be rejected by credit card issuers. It is because of the simple reason that if a person has never taken any type of credit, s/he will not have any record with CIBIL. These cases are considered risky by banks as there is no record of such an individual's credit repayment behaviour. In this situation, it is advised to apply for a credit card from a bank with which a person already has a relationship, like a salary account or savings account.  Despite having no credit history, this bank will trust the applicant more than other banks.

Using multiple Credit cards: Generally, card issuers trace the number of existing unpaid loans or credit cards an individual already possesses. If a person is already having multiple credit cards, or is servicing several loans at a time, there are high chances of her/his new credit card application getting rejected. Banks consider applicants with high exposure to any type of credit (loans, credit cards) as risky.

Non-listed Company: Individual's working in non-listed private firms may find it difficult to get a credit card. Usually, banks identify people serving in non-listed companies as people with high risk profiles. Lending institutions feel that people falling under this category have issues such as income fluctuations, unemployment in case of unexpected closing down of the unit, designation exaggeration etc. However, applicants with a good credit history, high income levels and stability in income may see their applications getting accepted by banks.

Reside in Black listed area: At times, credit card companies reject a card application merely because the applicant's profession or area of residence falls in the blacklisted / Cibil defaulter's list. Though, with the availability of credit reports this practice is declining quickly, those who want a credit card but are facing this problem, can go for secured credit cards.

Low income: All credit card issuers have a minimum eligibility requirement which has to be fulfilled by prospective customers who want to own a credit card. If an individual is earning below a card issuer's eligibility norms, her/his application is bound to get rejected. In these cases also, secured credit cards come in handy.

How can Your Credit card affect your CIBIL score?

  1. Paying only Minimum Due
  2. High utilization of Credit card limit
  3. Closing oldest Credit card account
  4. Using only one form of Credit
  5. Not accessing your CIBIL report.
 

Paying only Minimum Due: With a credit card, you are permitted to pay just a minimum amount every month regardless of your actual bill. Many view this as easy credit and find it unnecessary to pay the entire amount due. Paying only the minimum amount due is a mistake that you must avoid. Debt on a credit card is the most expensive form of debt. You will eventually end up paying a huge amount in interest if your rollover balance on your credit card every time. Revolving your credit can and in most cases, leads to a debt trap.

High utilization of Credit card limit: With increased credit limit many of us go overboard. Avoid any offers of an increased credit limit. Secondly, control your utilisation. For example, if you have used Rs 70,000 out of a credit limit of Rs 1 lakh, that puts utilisation ratio at 70 %. Utilisation of over 30% is viewed negatively by loan providers. Your CIBIL score is also arrived after taking into consideration the credit utilisation ratio of your debt to the available credit limit. The higher it is, the more your CIBIL score get negatively impacted, even if you are making the minimum amount due payment every month.

Closing oldest Credit card account: The length of your credit history also determines your CIBIL score to an extent. The longer it is, the better. If you cancel your oldest credit card account it would affect your CIBIL score negatively. Avoid cancelling your account, especially when it is a clean one with a good repayment track record.

Using only one form of Credit: While evaluating your loan application, lenders take a look at your CIBIL report and score. You can improve your score by maintaining a healthy mix of credit such as a home loan, auto loan and a couple of credit cards. If you only have credit cards and personal loans-which are unsecured debts, it may affect your chances of any other loan approval since the lenders perceive you as a high-risk customer. Hence, it becomes vital to have a healthy mix of secured and unsecured debts.

Not accessing your CIBIL report: Most people assume that they are maintaining a good score. But incidences of identity theft are on the rise and someone could apply for a loan on your behalf. The lenders raise enquiries in your CIBIL report every time a loan or credit card is applied for in your name. If you access your report from time to time, you would know if the enquiries are genuine or fake.
 

How can Your Credit Card Improve your CIBIL score?

Biggest myth which people have is that they need to take loan to improve their CIBIL score. Credit cards can be of great use when it comes to improving your credit score.

Below mentioned five points can help you improve your credit score and also control you from overspending:

  • Pay your card bills on time and in full as the card issuer will report your payments of the Credit rating agencies. Your payment history makes up to 35% of your CIBIL score.
  • Think your credit card as debit card, the basic problem with people is they know they have limited money in their debit card so they can make payment to that limit but in credit card you lose your track.
  • Try and keep your balances low, the second most important thing in your CIBIL score is the amount you owe, which accounts to 30% of your score. If you pay your credit card bill in full at the end of the month still you have high credit utilization. To make sure your credit utilization stays low, consider making payments throughout the month rather than waiting for your statement to come.
  • Keeping accounts open is very important. The longer you use credit, the more predictable you are to lenders. Rather than shuffle from one card to another, find a card that meets your needs and keep the account open.
  • Every time you apply for a new credit card, the issuer will check your credit. These kinds of checks can knock some points off your score, too — another reason to avoid constantly applying for cards.
 

Secured Credit Card: How to use and Improve your CIBIL score

A secured credit card unlike a normal credit card is backed by a deposit amount which acts as collateral for the credit provided with the card. The credit limit depends on the credit history and the deposit amount. In today’s world no one likes to be a defaulter purposely however no one can avoid the unforeseen circumstances. There are two types of defaulters in relation to credit cards: Non-wilful defaulters and wilful defaulters. In case of non-wilful defaulters, the borrower does not default intentionally and needs time to pay off his dues. His circumstances force him to default however in case of wilful defaulters the borrowers purposely do not pay the credit amount due on him.

CIBIL scores are linked to the credit cards. CIBIL scores are otherwise known as the credit score. It is a 3-digit number and is derived based on the CIR. In this context it is important to understand how the CIBIL score is advantageous and why it is essential to maintain a higher CIBIL score. In simple terms higher CIBIL score means more chances of getting a loan amount sanctioned to buy a property. In order to maintain a higher CIBIL score one has to maintain a strong portfolio and clear his dues regularly.

A secured credit card has the advantage over the unsecured credit card in that it is a winning situation for both the parties: the bank and the individual. The bank earns dual income in the form of interest from the deposit amount and the income and charges from the credit card. It is a two-way income for the bank. On the other hand, the individual gets benefit in the form of higher CIBIL score which can be used to get a loan amount sanctioned to purchase a property. It is important to understand a point that a secured credit card is synonymous to a debit card because just like a debit card, the individual can spend up to a specified balance which will be available against the deposit amount in the bank. Hence secured loans are a blessing in disguise.


Can a Person with Bad CIBIL score get a Secured Credit Card?

Secured credit cards are often taken against fixed deposit, so you can try having a good bank balance if not great credit history. The bank can then recover the dues from the funds you hold in case you default. However, there is no point in defaulting and letting your savings run dry, thus keep up an excellent credit score to get credit cards easily. Thus, a Person having a Bad CIBIL score can also have the Secured Credit Card.

 

About Us :

Millennium Credit Solutions has set the industry standard as a reputable organization among Credit Repair and Debt Settlement agencies. We are committed to obtaining the best results possible for each client. Most of the reports have errors and you have the right to correct it and We know how to use them for your benefit.

What is the CIBIL Score required for a Credit Card?

CIBIL scores are generally in the range of 300-900. A good CIBIL score may fall somewhere in the range of 700 upwards. Most banks and financial institutions follow a similar pattern of assigning credit to your rating hence knowing one bank’s minimum CIBIL score for a credit card should be a reasonable basis to determine minimum requirements of banks in general.

Banks usually accept a CIBIL score in the range of 700-750 and above to issue a credit card to an applicant. This is subject to the applicant meeting all other eligibility requirements.

 

 



 

At Millennium Credit Solutions, we believe that life is easier with excellent credit. We have a dedicated staff devoted to assisting you with your future financial needs. We provide advice and information on how to best manage your current credit to maximize the impact to your qualifying ability.