Times have changed and gone are the days when you always had to carry cash to buy something. ‘Plastic money’ or Credit Cards have become a popular, more convenient mode of payment, often replacing cash transactions. Now quite a few of us might like to have a Credit Card but the question is, are all of us eligible? Read on to find out what makes you eligible for a Credit Card and to understand why your application might get rejected by a bank.
Banks typically assess several parameters such as your income, age, Credit Score, employment status and your credit exposure before sanctioning a new Credit Card against your name. So, a decent income, good repayment history and Credit Score play an important role in determining your eligibility got a card. Additionally being employed by a reputable company will boost your chances of getting a Credit Card.
Let’s get a clear picture of the criteria that makes you eligible for a Credit Card and the factors that affect it.
Income level: The first thing that banks take into consideration before issuing a Credit Card is the income of a person. It’s usually easier for salaried people to pass the eligibility checks when applying for a Credit Card than self-employed ones. The reason is that with salaried individuals, the banks are more or less assured about their repayment capability. Incidentally, the higher your income, the higher the credit limit on your card!
Credit History: Another important thing that affects your chances of being eligible for a Credit Card, is your credit history. Banks always take your CIBIL score into consideration before approving your application. So, if you have a bad credit history owing to late payments or defaults on your EMIs, then your chances of getting a new Credit Card are bleak. All hope is not lost though. You can always improve your Credit Score and apply for a card in the future!
Age: Banks typically issue Credit Cards to young people with a decent earning, again, it’s because they are presumed to have better repayment capabilities. Senior citizens who do not have a regular income are less likely to me eligible for a card. The same applies to minors. However add-on Credit Cards are always an option.
Credit Exposure: Banks need to make sure that you are capable of paying your Credit Card dues, before they give you a card. So, if you have been paying your loan EMIs on time, you will definitely be on the ‘favourites’ list of the banks as this acts as an indicator of your ability to manage your finances well.
Your Employer Matters: If you are employed with a well-established company, it could work to your advantage when applying for a Credit Card. Those working with smaller companies, generally have a harder time when it comes to getting their Credit Card applications approved. The reason being that banks tend to be wary about the income, repayment capacity and job stability of individuals in smaller companies.
If you want to be eligible for a Credit Card, it’s essential for you to establish your ability to pay what you owe. So, keep your loans to a minimum and don’t default on your loan and EMI payments. Nothing ruins a CIBIL score more than a default on payments!
In a nutshell, you have to be “worthy of credit” before you apply for a Credit Card.