Your credit score is a critical factor that can make or break your chances of getting your credit card and loan application approved. There are hardly any alternatives to a high credit score to get a credit card. When you apply for a new card, the card issuing company will closely scrutinise the following factors:
- Your credit report
- Your credit history
- Your credit score
Therefore, checking your score is a crucial step in assessing your creditworthiness. This is why lenders use it to determine whether you’re a reliable borrower. A higher credit score dramatically improves your odds of being accepted. Here is a brief overview of the role of a good score and how you can achieve it.
Understanding the Fundamentals of Credit Score
It is a three-digit number which demonstrates whether you are able to manage your finances well or not. If your credit score is high, it shows your impeccable financial record of responsibly managing credit. To keep your credit score high and healthy, you should work on:
- Timely payments
- Maintaining a healthy credit utilisation ratio
- Maintain an error-free credit report
- Have a good mix of types of credits
On the other hand, a lower score could signal concerns for the credit card issuer. It indicates that providing you with a credit card increases your risk of financial loss due to you failing to make payments. For the same reason, the card provider might decline your application.
The minimum credit score varies for all issuers; some may have a higher score, while others may issue a card with a comparatively lower score. Most companies have high credit score requirements for their premium cards. These premium cards are popular for their lucrative perks and their excellent reward structures. This is why it’s imperative to ensure a higher score for maximum benefits.
Factors that Determine Your Credit Score
By understanding the factors which determine your credit score, you can plan out your finances to improve your chances of quick approval. Here are some tips to help you achieve your goal:
- Credit Card Usage and Management
A key factor that determines if you are good at handling credit is how much you use your card and how often you pay bills on time. It is important to maintain your utilization ratio under 30% and settle your bills punctually.
- Overall Credit History
Starting from keeping the utilisation ratio low and paying your bills on time to clearing your debt correctly, all these add to your credit history. So, if everything is on point, you will have a good score.
- Types of Credit
Credit bureaus assess if you can manage various kinds of credit when determining your score. Having both secured and unsecured credit cards can lead to a higher score.
- Previous or Existing Debt
In case you have a pending debt then it shows dependence on credit. If you make timely payments of your EMI, it will positively impact your score. Further, how often you borrow and apply for loans and credit cards also matters.
Find Out the Minimum Credit Score Required for Credit Card Approval
Generally, if your score exceeds 650, it will be viewed as a good credit score, and your credit card application is likely to be approved. Nonetheless, to obtain even more advantageous credit offers, you should aim for an improved score of at least above 700. Achieving a score above 750 grants you several benefits, such as expedited approval for your credit card application.
Effective Ways to Improve Your Credit Score
Now that you know why credit scores matter, it’s wise to improve your score before you apply for a credit card. Here are a few tips to help you achieve that:
- Pay your bills on time
- Keep utilisation ratio under 30%
- Pay off your existing credit debt
- Check your credit score frequently to note the change
- Report any discrepancies immediately
- Avoid applying for credit cards frequently
Why is having a Good Credit Score Important?
- It enhances your chances of getting approval.
- You can get a better credit limit on your card.
- You can enjoy better terms with your credit card company.
- Interest rates are going to be significantly lower for you.
- You can get a higher amount of loans if you require one.
In case you haven’t used a credit card before or you have a low credit history, start your journey with a secured credit card. An excellent option for that would be the One Credit Card. You can pledge a fixed deposit and use the FD amount as your credit limit. This way, you can improve your credit score over time by making use of that card.
If you do have a score over 750, then you can apply for a regular One Credit Card. Both cards are loaded with offers and deals which you can use to make purchases. You can also earn 5X reward points on your top spending categories and use them as per your preferences.
The best part of this card is the mobile application, OneCard App, which you can use to control your card. It also helps you to complete each of your payments securely and allows you to enjoy quick OneCard EMI conversions or reward points redemption. With its many partner offers, you can save more, too. To savour all the benefits, all you have to do is download the app now and apply for the card.
