Credit cards have become one of the most preferred modes of cashless transactions over recent years. Studies show that there are almost 44.2 million active credit cards in operations across the country, a number that increased by almost 9.68 million between 2017 and 2019
The use of credit cards has increased at a steady 28% year on year. It is mostly used at PoS terminals and online retailers. Credit cards also offer various reward programs to attract their customers to route their spending via the cards.
The substantial increase in credit card’s popularity is largely because of the convenience and benefits these have to offer. A cardholder can use it to purchase goods and services within a predefined limit, without depleting his or her savings at any time. They also benefit from a long time frame between which they can repay the due amount.
Reports compiled by various financial institutions show that a large portion of new credit card applicants is young professionals. They often prefer the convenience and hassle-free nature of the services, as well as the various add-on benefits which are often bundled with these financial tools. The process to apply for a credit card has also become significantly easier thanks to lenders introducing online application and document processing methods.
However, despite their conveniences, applying and availing a credit card involves certain steps that an applicant has to complete. Amongst these, meeting the minimum credit card eligibility criteria is considered as one of the most important requirements. It improves your chances of availing a card and utilize it for your financial needs.
Let’s take a look at the eligibility criteria to avail a credit card
The requirements set by financial institutions can be divided into an applicant’s age, financial history, location, profession, and income.
- Age – Most credit card issuers prefer applicants within 25 to 65 years of age. It allows them to select cardholders who are likely to have a regular source of income and high repayment capability.
- Financial history – Financial history is one of the most important credit card eligibility criteria. Lenders lower their risk by selecting applicants who have a good financial history. Credit cards are unsecured advances, that’s why lenders emphasize on applicants with no history of default.
Several financial institutions also look at an applicant’s CIBIL score before approving their request for a credit card. CIBIL is a 3-digit representation of one’s credit history; it is calculated by credit bureaus with the help of parameters like FOIR, types of advances against an individual’s name, repayment history, etc. Lenders usually prefer applicants with a credit score of 750 or higher.
- Profession and income – Applicants employed at a reputed MNC, public, or private companies are more likely to be eligible for a credit card as they have a regular source of income. They are more likely to cater to their financial requirements and repay credit card debt in time.
- Locality – Most credit card companies look for applicants who live in areas where they operate.
Other than that, you are also more likely to avail a credit card if you are an existing customer to the financial institution. You might be eligible for several other features and benefits as well.
For example, companies like Bajaj Finserv offer the facility of 4 cards in one with their Bajaj Finserv RBL Bank SuperCard. You can use it like a normal credit card, a loan card, an EMI card, and cash card according to your requirement.
They also provide pre-approved offers on credit cards as well as several other financial products, including unsecured credits like personal loans and business loans and secured loans like home loans. These offers help make availing finances easier and simpler. You can check your pre-approved offer by sharing only your name and contact details online.
You will also have to submit some documents when you apply for a credit card such as –
Documents required for credit card
- Valid Aadhaar Card, passport, driving license, Voter ID, PAN, etc. as proof of identification.
- Any Government registered ID with your residential address as a proof of address.
- Recent passport-sized photograph.
These requirements may vary between financial institutions; however, these are some of the minimum credit card eligibility requirements that lenders look for.
Improving the chances of successful application
While applying for a new card, you must ensure that you follow some steps to ensure you have a higher chance of approval. Here are some of the methods you need to follow.
- Build a good credit history – Your credit history is one of the most important things credit card companies look for while approving your application. Try to build a good credit history before applying for a credit card. Paying all your previous debts in time, not defaulting on any credit, keeping a low fixed obligation to income ratio, and maintaining a low credit utilization ratio will help you improve your credit score and rating.
- Do not apply for multiple credit cards – Applying for multiple credit cards at once can reduce your chances of a successful application. Credit bureaus will consider you credit-dependent if you apply for multiple cards at once. Financial experts suggest waiting for at least 6 months between 2 applications as it can also affect your credit score over time. Ideally, one should use a maximum of 3 to 4 credit cards at once. It will also help them with repayments and keep the payable interest low.
- Apply for a smaller limit – Lenders will be more likely to approve your application if you apply for a smaller limit on your credit card. It is better to utilize a card for a particular requirement, and then decide the upper limit based on the financial obligation. That way, it will be easier to keep track of the expenses as well as keep the card’s limit lower and avoid overspending.
Following the above-mentioned factors will help you become eligible for a new credit card and improve your chances of approval significantly.